Hotel Rewards Program

Building a hotel-focused rewards program to achieve a greater bookings uplift and a higher ROI.

Context

We saw with the Carrot Cash Back (CCB) program that being rewarded for booking on Hopper was a driver of customer loyalty. The flexibility we gave users by allowing them to earn and use cash back on any type of booking, while also offering them attractive percentages on all products, and rewarding them soon after they made a booking, was unique to Hopper.

Still, we hadn’t seen the level of openly expressed customer loyalty that a program like Hotels.com’s now deprecated 10-nights program used to enjoy (stay 10 nights, earn 1 free). Hotels.com announced that their rewards program was being phased out in favor of a single program across Expedia, Hotels.com, and Vrbo, and the customer backlash was immediate. We wanted to give customers a rewards program that they loved, and the punch card-style program Hotels.com had was a proven success.

Looking at Hopper’s business model, hotels were the highest-margin travel product (among hotels, flights, homes, and car rentals). Hopper aimed to be a hotel-first booking app, and the company had recently marked the first month in which hotel bookings outpaced flight bookings. Therefore, testing a hotel-forward rewards program, especially one that users have shown to love, made sense.

Goals

  • Primary: Increase hotel conversions through a hotel-focused rewards program, while achieving profitability. We would compare the performance of the Hotel Punch Card to CCB.

  • Secondary: Eventually, leverage this program as a user acquisition tool as more users chose to use Hopper in order to take advantage of the rewards program.

Approach

We quickly rolled out an MVP Hotel Punch Card program, which tested two schemes:

  • Stay 10 nights, earn a free night voucher

  • Stay 5 nights, earn a free night voucher

We decided to test the 5-night program given Hopper’s current user behavior. Only a small share of hotel bookers booked 10 nights or more over a 3-month horizon, and the average length of stay was 1.5 nights. The concern was that 10 nights might be a too distant goalpost.

We emphasized building a visually appealing and engaging experience that would be at users’ fingertips, including UI elements on the homescreen, in the wallet, and in the hotel funnel, as well as announcing the program through push notification and email campaigns. We staged the work to maximize speed-to-market and quality of learnings.

Users could be in the Hotel Punch Card or CCB, but not both, to avoid confusion and facilitate a clean comparison of the two programs.

Results

As hypothesized, the 5-night variant outperformed, leading to a 10% hotel bookings uplift in the first 3 months. That was a smaller impact than the 16% bookings uplift seen from CCB over the same period. One possible explanation is that Hopper’s user base is very price-conscious, and CCB offers a more immediate gratification than the punch card does. Users prefer earning a smaller amount to apply towards their next booking rather than a bigger amount after 5 or 10 nights stayed.

Furthermore, as an MVP, the Hotel Punch Card program had less ubiquitous marketing than CCB. The team’s next steps included building out the in-funnel merchandising to create stronger user awareness.