Marriott and Sonder have entered into a 20-year licensing deal that allows members of Marriott’s loyalty program to earn points at Sonder’s properties. This partnership is part of a trend of similar licensing tie-ups between major hotel groups, including Marriott, Hilton, IHG, and Hyatt. These deals are strategic in nature, with different objectives such as member acquisition, retention, and increasing spending within the network. Loyalty licensing partnerships are not new, with examples dating back to IHG’s agreement with Las Vegas Sands in 2010.
One key driver of these partnerships is the difficulty the major hotel groups face in entering certain markets, such as Las Vegas. The loyalty tie-ups allow them to gain access to these markets, while offering guests a wider range of options. Additionally, these partnerships help hotel groups meet targets for net room growth, especially in a challenging environment with low traditional hotel signings and high acquisition costs. Investors look for steady growth in net room numbers from hotel groups, which can be achieved through strategic alliances.
Hotel groups are focusing on growing their loyalty programs to compete with online travel agencies, banks with loyalty programs, and rivals like Airbnb. Loyalty programs have evolved into powerful customer data analysis tools that allow companies to offer tailored marketing and services to customers. By capturing new customer segments and offering special rewards, hotel groups can stay relevant and attract a diverse range of clientele. The scale of loyalty programs is a key driver of these partnerships.
A major benefit of these tie-ups is the boost in engagement from current loyalty program members. By offering more choices and partner brands, hotel groups can drive greater loyalty and direct bookings. Lower distribution costs and a higher level of engagement are driving the interest of hotel groups in pursuing these soft loyalty tie-ups. The potential for future deals in the luxury and lifestyle sector is also high, with analysts suggesting potential candidates for future partnerships.
Marriott’s recent deal with Sonder is a strategic move to grow its offerings in urban, apartment-style accommodations across multiple markets and countries. By expanding their reach through partnerships like this, hotel groups can meet their growth targets and appeal to key demographics, including younger travelers. The performance of hotels and short-term rental sector stocks within the ST200 index reflects the success and potential of these loyalty licensing partnerships in driving growth and engagement for major hotel groups.
