The writing was on the wall back in 2011 when the New York Times covered the beginning of the boom: independent hotels were on the cusp of a surge in occupancy and revenue. Sensing competition, the global brand leader for Le Méridien and W Hotels warned that hotels not affiliated with giant chains would be at a disadvantage because “They could not, for example, match the loyalty programs or the corporate marketing efforts of the big chains.”

Four years later, RevPAR at independent hotels was up 8.8%. Market segments including millennials and wealthy leisure travelers are expected to continue to drive this trend with a marked preference for interesting hotel experiences.

Chains are agitating for a piece of the action with the introduction of “fauxtiques”—would-be boutiques offering a standardized “unique” experience. They bring with them huge budgets and teams of experts set on mass-producing what independents have been doing all along.

As big brands move into the lifestyle sector, how can independents fight back?

Above all, independents should continue to do what they do best—delivering true one-of-a-kind experiences, experiences like original architecture, partnerships with local breweries and farms, and connection to the spirit of their cities. This is what’s drawing travelers, and enriching local neighborhoods.  But they should also arm themselves with a tool essential to competing with chains: a points-based loyalty program. Points are a powerful way to attract and retain guests and increase revenue in the face of chain competition.

HOW CHAINS USE POINTS TO SECURE GROUP BUSINESS

They give away free stuff: It’s a fact: points for free nights are the coin of the realm amongst meeting planners. Meeting planner proposals almost always include point incentives at the chains, so no matter how attractive your event space, how talented your caterer, or how competitive your pricing, points give them an edge—and give hardworking meeting planners a well-deserved vacation. 

HOW INDEPENDENT, BOUTIQUE HOTELS CAN COMPETE

Put points for free nights on the negotiating table: With a points-based loyalty program, independent hotels can go head to head with chains in group negotiations. With points, you can reduce discounting, win multi-year contracts, protect long-term accounts being wooed by chains, and increase ancillary spend.

Once you have points in your negotiating arsenal, the effects are almost magical: meeting planners and group guests are so attracted by the allure of free nights that exponential ROI rolls in. One independent Florida resort used $2,092 worth of points to secure nine accounts in just six months, which brought in $2,756,328 room and banquet revenue. That’s an ROI of 1,318X. And six of the accounts are now long-term contracts.

Leverage a nation-wide network of independent hotels: A loyalty program that aggregates independent hotels provides a network advantage: new leads for group business are supplied from within the network, and the marketing reach is nationwide.

HOW CHAINS USE POINTS TO ATTRACT FREQUENT TRAVELERS

They pay their most valuable guests back: Frequent travelers are 4X more likely to consider loyalty membership very important when selecting a hotel. (Source: Market Metrix.)  A guest who crisscrosses the nation on frequent business travel will look within a chain network for her next destination, because she wants to earn points as payback for all the nights she’s spent away from home.

HOW INDEPENDENT, BOUTIQUE HOTELS CAN COMPETE

Offer points for free nights to your most valuable guests: Offering points to road warriors for their nights on the road levels the playing field for frequent travelers. When combined with a national network of independent hotels to choose from plus the marketing initiatives of a loyalty program, the chain advantage disappears.

HOW CHAINS USE POINTS TO CUT OTA COSTS

They reward direct bookings. Loyalty points and attendant perks like upgrades are only awarded to guests who book directly through the hotel or the hotel’s site. The result? The average OTA share at chain hotels is less than half that of independent hotels. (source: STR, TravelClick NADR)

HOW INDEPENDENT, BOUTIQUE HOTELS CAN COMPETE

Reduce OTA dependency. Cutting OTA share by just 10% by awarding points to direct bookers can save hundreds of thousands of dollars. Find out how much your hotel can save by using this OTA cost calculator.

HOW CHAINS USE LOYALTY TO BUMP UP STAY FREQUENCY AND SPEND

They invest in loyalty because it works. Chains have been working on this assumption for years, investing millions in loyalty programs to secure the resulting increase in spend and stay frequency. Maybe it’s the ineffable good feeling that results from being given something—no one knows for sure. But what is known for sure is that guests who enroll in loyalty programs stay more often and spend more money at the hotel.

HOW INDEPENDENT, BOUTIQUE HOTELS CAN COMPETE

A study of independent hotels proved it. The Cornell School of Hospitality used a rewards program for independent hotels to prove, for the first time, that loyalty pays. A 2-year, peer-reviewed study showed that guests who enroll in loyalty programs stay 49% more and spend 49% more per year.

So if you’re at the helm of an independent boutique hotel, there’s cause for celebration. You’re at the forefront of an international movement toward experience-driven, personalized travel. Get what you need to stay ahead of the curve: a tech-savvy, points-based loyalty program with a national network. No franchise fees (with a median price of 11.2% of gross revenues), no giant binder arriving from headquarters full of instructions to get rid of your claw-foot bathtubs and directives to install purple mood lighting in the lobby. Just a powerful tool to gain and keep guests who are rightfully yours—true independent hotel lovers—while giving them what they want most.

About the author: Katharine Kearnan works for Stash Hotel Rewards, a chain-like rewards program, without the chain.