Hilton CEO Hopes to Increase Loyalty Member Occupancy to 80% within the Next 5 Years

During Hilton Worldwide Holdings, Inc. Q1 2019 earnings conference call, President and CEO Chris Nassetta discussed the company's loyalty program Hilton Honors. Some important stats he provided include:

• The company ended Q1 2019 with nearly 90 million Honors members, which was up 20% year-over-year.
• During Q1 2019, Honors percentage occupancy reached more than 60%, demonstrating that members are staying with the brand more often.
• On average Hilton enrolls 1.5 million Honors members per month.
• In the last two years, Honors occupancy is up 400 basis points.

Nassetta attributed the company's success with its loyalty program, in part, to the great value proposition it offers guests. "You'd have to be crazy," not to be a member because "you get the best price, guaranteed. Period. End of story. There is nowhere else to get a better price."

He also discussed how being an Honors member offers guests some digital conveniences they won't find anywhere else. One area is removing friction from the booking process. "We're making it a much better experience to dream, shop and ultimately book."

Another area of digital convenience includes the digital tools in the Honors app such as the availability of Digital Keys and Connected Room experiences.

All of these things – value pricing, frictionless booking experience, and mobile app conveniences – when put together create a "real draw" for guests to sign up and use Honors.

Nassetta also discussed how the company has been specifically targeting both its highest- and lowest-level members during the last few years. "We love all our members, and we want everyone engaged," he noted. "The reason we've been able to double our percentage of engage members … is because we've been focusing on both [groups.]"

For its highest-level members, the company has been offering more generous, elite earnings bonuses such as elite rollover nights or the ability to gift elite status to a travel partner.

"[These rewards] make it that much more compelling for those that already give us the largest share of their wallet to continue to stay with us," he pointed out.

For the company's lowest-level members, the company realizes these guests likely won't accrue enough points to trade in for free nights. Instead, it offers the ability to book stays via a combination of points and payment or shop on Amazon using points, or even pool points with other Hilton members.

While Nassetta hopes one day to have 100% of Hilton Hotel occupancy filled by members, he realizes it might be more of a "pipe dream" than reality. However, that doesn't mean he feels 60% is good enough for the brand.

"I think we're amongst – if not the – highest in the industry in percentage of [loyalty] occupancy at the moment," he noted. "However, I think we could do a lot better. But my gauge is not what others are doing, it's what I think we could do."

So what does Nassetta feel is a realistic percentage of loyalty occupancy?

"Over the next five years, my goal would be that we're in the 70-80% range," he said.