You may (or may not) have seen Wyndham’s short-lived promotion on Tuesday, October 11th. It offered a 4:1 points trade and Wyndham status match for Starwood members who donate their entire SPG balance to charity. This was a fascinating and greatly intriguing promotion, and I thought about it from a business perspective. While I proposed the promotion to my lady, I learned it was cancelled before the start time due to fraudulent behavior on the part of users. However, it sparked further analysis from a business and competitive standpoint.
Why would Wyndham offer such a promotion?
From a hotel consultant’s perspective* it makes tremendous sense on Wyndham’s part.
*not a real hotel consultant (yet)
- Customer Conversion – By forcing Starwood members to dispose of all of their points, you are locking in those customers with Wyndham points, to be redeemed on Wyndham hotels.
- Customer Acquisition and Targeting – Typically those who will attempt such a promotion, will be high-value customers with many points, top Starwood status, and/or above average incomes. If Wyndham is able to convert even a small percentage of them, that represents a very easy and rewarding segment of loyal customers.
- Exposure – The recent Starwood & Marriott merger is capturing a large portion of the hospitality and hotel news coverage, and Wyndham is trying to stay relevant and break into the discussion. Their redemption award changes (15,000 points for a free night in every night of every Wyndham hotel) made a big splash in the hotel world when announced, but the engagement has since subsided.
- Social Responsibility – Excellent press coverage when a company spurs charitable donations. Even though the promotion was ultimately cancelled, Wyndham will donate 5 million Rewards points to charity.
By capitalizing on Starwood members potentially unhappy about the impending Marriott merger, Wyndham planned to convert them, or at least draw parity with Starwood’s loyalty program, through a status and points match.
Why would Starwood members participate?
I struggle to come up with a reason as to why Starwood Preferred Guest members would be unhappy with the merger – in a previous article, I discussed the status match between Starwood and Marriott, as well as the massive 3:1 Marriott to Starwood points conversion. This was better, perhaps significantly better, than what was expected or predicted by concerned Starwood loyalists. The only reason I did not plan to jump on it (other than it not having yet started) was my large balance of SPG points – and the caveat that you must donate your entire balance to charity. I was not ready to part with such a large amount.
An analysis of the deal, however, is very promising for Wyndham, should they manage to reduce or eliminate the potential fraud.
- Starwood Platinum status matches to Wyndham Diamond Status. This grants suite upgrades, late checkout, welcome amenity, yet distinctly lacks breakfast as a perk.
- Points transfer 4:1 – Since Wyndham free nights are redeemable for 15,000 points, it would mean for every 3,750 Starpoints donated to charity, Wyndham would provide enough points for a free nights. The cpp (cents per point) is very favorable, reaching close to 8-9 cpp for top of the line hotels. I’ve had my eye on TRYP by Wyndham, in Times Square, where prices could be $200-300 per night.
What are the costs of the promotion?
The costs of the promotion would most likely have been substantial, for the redemption of all the free nights that would have occurred over the next several months or years. Wyndham pays franchisees for every “points” night redeemed. This would cost the corporation a pretty penny. However, they may be partially recouped through increased future business, or through adjacencies (conventions, food & beverage, upgrades, etc.).
Why was it cancelled?
Per the link I obtained from my Wyndham representative, there were “obvious and significant examples of fraud”. These include photoshopping the required screenshots and falsifying the information necessary to receive the points bonus. Rather unfortunate, but they will honor the promotion for all who met the terms and conditions. Regardless, the company committed 5 million points to a charitable donation. Hopefully they will run this promotion in the future with a more secure premise.
What does this mean from a competitive standpoint?
Companies like Hyatt, Hilton, or IHG don’t need this promotion, due to their market share and name recognition. However, they may benefit from status matches (and have done so previously) by attempting to capture high-value customers through the allure of top benefits. Many have status “challenges”, but it is difficult to tap into the largest hotel loyalty program in the world. This is because those with Starwood status now have the same Marriott status. Despite this, you can be sure each major chain is thinking about how to poach from the others!
Featured Image from Wyndham Hotel website.
What do you think of my analysis? Have any questions or different thought process? Let me know in the comments, or reach me directly at TheHotelion@gmail.com! Like my posts? See more here, on TravelUpdate! Follow me on Facebook (The Hotelion, if searching, use a space!!) or on Twitter and Instagram: @TheHotelion