Scroll Top
Hospitality Property School Podcast

Today I’m very happy to be able to chat with Mark Ross-Smith, CEO & Co-founder at Loyalty Data Co, the parent brand of StatusMatch.com, and our topic is loyalty programs and how they can work for you.

As I mentioned, Mark is the CEO & Co-founder at Loyalty Data Co, the parent brand of StatusMatch.com, he is also the editor of travel data daily, was the head of loyalty at Malaysian Airlines.

Gerry (00:00):

Our interview today at the Hospitality Property School is going to be with Mark Ross-Smith, CEO and co-founder of Loyalty Data Co., the parent brand of StatusMatch.com. He is the editor of Travel Data Daily. He was head of loyalty at Malaysia Airlines. And Mark has written numerous articles about loyalty programs, specifically about airline loyalty programs. Now, some of you might be wondering how this topic might apply to the hotel industry. If you currently do not have or not planning to introduce a loyalty program at your property, you are leaving money on the table. And Mark’s history with loyalty with the airline industry can be related to the hospitality property industry. All that being said, Mark, are you ready to jump into this?

Mark Ross-Smith (00:54):

I’m here and ready, Gerry. Yep.

Gerry (00:56):

Good, good. Now, years ago I was flying consistently as a tour operator and manager and I had a wallet full of airline loyalty cards, but I never really took advantage of the perks available. Would you mind explaining what a loyalty program is?

Mark Ross-Smith (01:18):

Sure, let’s dive into it. I think if you ask some airline or hotel CEOs what the answer to this is, they’ll say something like this, “Oh, that loyalty thing, it’s not really our core business. We give out some gold cards and cost us a bunch of money because we’ve got to pay for free breakfast and lounge access and upgrades and this and this and this and this and this and this.” The truth is, today, especially in airline loyalty programs run their own P&L, a lot of times they’re separate companies that in some cases generate billions in profit independently of the airline.

(02:00)
We saw in 2020, 2021, a lot of the financials of some of these airlines come out in the loyalty program to the point where the loyalty program was worth more than the entire airline itself. So is it really an airline these days? Is it really a hotel brand these days or is it a marketing company that has this operational aspect as operational division? Is it a marketing company that also flies planes? Is it a hotel? Is it a marketing brand that has a bunch of rooms that they try and sell as well? It’s like a side business, right?

(02:37)
Because the real business, the real value is in this loyalty thing. And since the value of these programs came to light, what is a loyalty broker? What is the role of a loyalty program I think has changed in the past couple of years too, where you and me think of it as points and upgrades and all this kind of fun stuff. There’s a bit of magic to it, a bit of mystery, and I think that’s why people like to engage with these loyalty programs. But it’s like a swan on the lake. It looks so elegant on the surface, but underneath this is… Going crazy, all this stuff and there’s a real business behind it. And if you can nail it, if you can get it right, it can be extremely profitable for a hotel or an airline brand.

Gerry (03:25):

Whoa, okay. Now the last couple years have been challenging for the airline industry. Is there still a demand for a loyalty program?

Mark Ross-Smith (03:34):

I think not just yes, I think it’s thriving and I’ll explain why. We obviously just talked about the value of airline loyalty programs, how it can be worth more than the airline. One example is American Airlines-

Gerry (03:50):

And that’s still the case.

Mark Ross-Smith (03:53):

It’s actually even more today. It’s actually improved since then in favor of running a loyalty business and getting that loyalty business right. Spirit Airlines just at the end of ’22, so this is a month or two ago, they raised 500 million bucks at a $4.2 billion valuation. This is just for the loyalty business, not for the airline. At the same time, the airline itself was worth 2.3 billion on the market. So what that means is the airline’s worth negative $2 billion because the loyalty program’s worth so much. And actually I think it was last week, Delta Air Lines announced that their loyalty card spent, these is people using the credit card earning miles.

(04:39)
And basically the loyalty program generates money when they sell miles to banks mostly. That revenue was up 40% on the same quarter in 2019. So what that suggests to me is loyalty is more interesting for more people today than it ever has been. I think people, they’re coming back into travel in the last year and it’s expensive to travel a lot of places right now. And so people are looking for that extra benefit, that extra perk, that extra something they can get back because they’re now paying a lot more to what they used to do a lot less. And so they’re looking for that payback. And so they joined the loyalty program. Might as well owns some points, right?

(05:21)
And what that’s done is it started to drive all the metrics within the loyalty system because the loyalty programs that are already set up for this, they’ve got their CRM, their marketing emails, all this kind of stuff to drive that incremental booking, that room night, all this kind of stuff. And so there’s this influx of people into this loyalty program and it’s just started churning that wheel a bit more and it was already set up really well pre-pandemic. And we’re starting to see a lot of that come out now where loyalty programs are starting to make a ton of money. They’re driving new bookings, they’re driving new incremental business at the airline or hotel, may not have ever had without having that loyalty program there, which to me suggests that loyalty’s not just doing its job, it’s succeeding, it’s doing very well.

Gerry (06:15):

Okay. Now I know your expertise is with airline loyalty programs. I know that the larger brands, hotel chains do well with loyalty programs. Now, you might not know the answer to this, but I’m going to throw it out to you anyways. Do you think smaller properties could benefit from any type of loyalty program?

Mark Ross-Smith (06:39):

I mean I’ve stayed at a bunch of small properties, boutique, independently owned… And I mean they’re fantastic some of these. They’re so focused on this customer experience because that’s what they’ve got. They don’t have this big chain behind them saying, “Go stay here and get free breakfast.” They just don’t have that. What they’ve got is your cousin that stayed there two years ago and said, “Hey, you should check this place out. It’s on the beach, it’s in Miami, it’s really nice. There’s this [inaudible 00:07:10] there.” And when you go there, she did it and there’s a story.

(07:13)
There’s always a story. I think this is a competitive edge that especially some small brand independent, they’ve got this going for them. And if you layered a loyalty program on top of that, would that take away from some of that? I think if the answer is if it could add to what they’re doing already, I think it makes a lot of sense to have some kind of loyalty proposition. What that loyalty thing looks like I think may be a little different. It may not be stay here, earn a thousand points and you can use that to… Maybe it’s not that. Maybe it looks and feels a little different.

(07:53)
I mean a good example is probably the GHA Discovery loyalty program. They’ve got what, 20, 30 something like that brands on there. All these brands are sizeable in their own market, but not big enough to really do their own fully fledged thing, especially globally. I think for some brands it makes sense to come together in aggregate and leverage off each other’s brand because not everyone travels to the same destination all the time. You’ve got people flying all around the world doing their thing. They got some stays in Hong Kong and then Singapore and then Germany and then in Rio. And things like loyalty status, which is obviously what our company helps facilitate, is very powerful. It drives a lot of bookings to the point where if you’ve got a gold card in your wallet, you’re more likely to book a hotel or fly with that airline that you’ve got a gold card with than one you don’t.

(08:53)
So it may not be where you book, but it’s going to be the first place you checked. I’ll just check the price of this one, I’ll see what it is because I get X there. So I think if a smaller hotel brand for example is part of this bigger ecosystem, there’s definitely benefits there where it rides on these perhaps millions of travelers that have this gold card from being part of that brand and you’d tap into that customer base already. So in some ways, I’m not sure, it could be cheaper to do that than to spend more money with the OTAs, for example, on commissions there. So I think it depends on the brand, but I think, ultimately, as long as it builds on the customer experience and adds new things because it’s all about the guest really.

Gerry (09:41):

Okay. So you think programs can help a property with its branding?

Mark Ross-Smith (09:48):

Yeah, totally.

Gerry (09:50):

Okay, that makes sense. Now if I owned a smaller independent property, maybe a hundred rooms or something, would it be expensive for me to start up a loyalty program? Is there a lot of technology involved?

Mark Ross-Smith (10:07):

I mean not really. I think hotels, it’s all about guest experience. So just for fun, let’s put that in the center of what we do here because it should be, to be fair, there’s a hundred vendors out there that’ll [inaudible 00:10:24] loyalty platform. There’s no shortage of people will take your money for this kind of thing out there and more or less they’ll do the same thing. They count the nights, they can manage databases, the GDPR compliance, all this kind of stuff that you just need, right? It’s more of a hygiene factor. You pick one, get that out of the way. The real magic is what you want the loyalty program to do. You want to start there because once you get that right, it’s pretty easy to figure out the technology piece. So probably if I was starting a new hotel loyalty program today, I’d probably ignore the hype on personalization and blockchain and AI and all this kind of stuff because I mean guests don’t really care.

(11:12)
If there’s something in the background that does that, that’s more efficient, great, but a guest just doesn’t care. They just want a super easy check-in experience. They want to go to the room, they want to see some, “Wow, that’s kind of cool. I got free bottle of wine, I like this place now.” They want that feel good moment. They want to then, “Oh my friend, I’ve got to meet them for coffee down the road in 10 minutes,” and they’re excited to be there, excited to do something, they’re there doing their thing, whatever their thing is. Is it meeting their friend? Is it for a business thing the next day? Whatever it is, they don’t really care what the engine behind all that, as long as it just works really well. I wouldn’t start with technology, I would start with what you’re trying to achieve.

Gerry (11:55):

Makes total sense.

Mark Ross-Smith (11:56):

Generally loyalty program, what you’re trying to achieve is, I mean, trying to make more money, trying to get the person to come back and stay more or spend more. Or maybe it’s a revenue protection thing where you get a bunch of people that are staying property and they’re staying less and less and so you want to try and get them back. I’d start with the end goal in mind and whatever that is and work backwards. Because the technology piece, at least in my view, is probably the… I mean it’s important, but it’s third, fourth, fifth thing that you’re going to look at before you do anything else.

Gerry (12:31):

So it’s not something that I should stress over right away. I should actually think it through before I jump into it.

Mark Ross-Smith (12:39):

Yeah, it’s not like you’re running hotel brand, you got a loyalty program and it’s not like the latest iPhone that comes out and you need to get the latest one. I need to go get it because this new system has some amazing blockchain that integrates with this and does this. I mean if that really aligns with the strategy that you’ve got and what you’re trying to build as a brand, great. But I wouldn’t go out there.

(13:07)
I mean my wife is guilty of this, “Oh, I need the 60 megapixel camera on a new phone,” and that’s the reason to go out and spend $2,000 on a new phone. So for a hotel brand, I wouldn’t be doing that because I mean as we know some technology is not cheap and you’ve got time, integration, staff resources, training if there’s something, all this kind of extra added cost. So I think ultimately if it makes sense to do it. Financially, you do it, but you wouldn’t lead with it. You wouldn’t lead with the technology piece, you would lead with the guest experience piece, which I think every hotel in the world would agree with.

Gerry (13:43):

No, that’s good. That eases things a bit. Have you found a common thread for companies that are running successful loyalty programs? That might be a little bit of a strange question, but is there some type of consistency you’ve noticed?

Mark Ross-Smith (14:02):

I think it’s designed for the audience in it’s intended for. We’ve touched on that this a bit today, but who really is the intended audience? Is it John the 40-year-old business traveler that stays two nights and he does that once a month? Is it Mary who her corporate booking travel agent does all her bookings? She’s got no choice. She has to stay with the brand because there’s some larger contract or deal in place. Is it the family of four that’s coming through and stays there for two weeks once a year because you’re in a boutique location, everyone wants to stay there kind of thing. Who really is the core customer? And I think when you build some loyalty proposition around trying to maximize the revenue benefit for those people and the brand or trying to attract more of those types of people.

(15:05)
So your perfect customer for airlines especially, your perfect customer is not… When the CEO of the airlines out there and the wife is out there doing yoga and her friend says, “Oh, your loyalty program should do this and this,” that is probably not the type of customer that you want. Great customer. It’s probably not the core customer. It’s probably not where all the money is, right? So I think this is where you get into the data side of it and look at who is your best customer, who is spending the most, how can you get more of those. How can you get more Johns that are business travelers that not price sensitive, they’re booking direct, they’re booking last minute, whatever it is, how can you get more of those and build something around that? I think brands that get it right have done that. They’ve figured out who their customer is and just laser focused on that. And what that could mean is you are ignoring 80% of people that stay with your brand or fly with your airline, because it’s the whole 80/20 thing.

(16:07)
You’re going to drive a lot of revenue from a small amount. In the airline industry, people with a silver gold status with the airline, they’re generally in the top 5% of the loyalty customers. They generate about 30% of ticket sales for the airline. So for a bunch of airlines, you could almost ignore everyone else and just focus purely on people that have a silver, gold, platinum type status just because they’re just worth so much. Main focus on that and the ability to get more revenue or do more with those people is a lot higher than someone that flies once a year. So I think it’s just about to your question, what’s the common theme? It is just brands that do it right. And so in hotels, I think like Hilton, your Marriotts of the world, they’ve all got 50 brands each under that and each of those brands has their own thing going on.

(17:05)
But there’s a common loyalty proposition across that. But the reason that works is because you get to choose your own adventure. So you earn your points at one of their brands and then you earn… I’m making this up, but like IHG, you earn it at your more reasonable cost Holiday Inn stays and then you try and redeem it in InterContinental, right? So you can arbitrage your points kind of thing like that. And that makes sense for a lot of people. So I think it’s just all about understanding your customer and that comes down to the data.

Gerry (17:44):

So basically that’s common sense you would hope most people, most businesses.

Mark Ross-Smith (17:51):

I think so, yeah.

Gerry (17:52):

You would hope so. The person looking to set up a loyalty program, do you think they have to have the proper mindset? Now you alluded to or you talked about finding your right customer, but would you think there might be anything else involved in the mindset before jumping into something like this?

Mark Ross-Smith (18:14):

Gosh, you’re pulling my leg, did you? I [inaudible 00:18:16] a bit too much. Loyalty is a bit of a special area in travel and you either get it or you don’t. I’ll give you an example in airline. The really interesting airline loyalty programs are run by people who are frequent flyers themselves. So they might be airline people, they might have had that in their career, but they have gone out and earned elite status, they’ve earned the gold status on merit themselves on their own time with their own money.

(18:57)
They’re a real customer of their own product. And if you’re setting up something from scratch today, I’d be looking for people that have been there and done that kind of thing, they’ve been customer, they felt the pain. They felt the pain of trying to fly back home on a Friday night and they’ve got a middle seat in row 87 on a 12-hour flight in the back of the plane. They’re hating life at that point, but they do it because they’re trying to get home to their family because they haven’t seen their kids in three weeks. It’s that kind of thing, right?

Gerry (19:34):

Yeah, I’ve been there, done that.

Mark Ross-Smith (19:37):

Exactly. You’re qualified.

Gerry (19:39):

Yeah.

Mark Ross-Smith (19:40):

So I talk about how I think at some point airlines and hotels are taking away staff benefits might be a good thing for certain levels of the organization because if you’ve got seat levels traveling around on basically free tickets everywhere, they’re never really a customer. You know what I mean? They’re checking in a different place at the airport, they’re not earning points. They don’t need to own the points and miles because they get basically free flights anyway or free stays if it’s a hotel, cheap stays I will say. They’ve got no incentive to ever save up points or to even think about a suite or pay for business or first class because again, it’s cheap or free. So I think there’s a lot of value in… And this is not just surveying people, survey best customers and say what should we do? I don’t think it’s that.

(20:32)
I think it’s at the heart of building a loyalty proposition from scratch, especially in travel, you need people around it that have been there and done that. They’ve got the scars from being in that middle row and screaming babies with no lounge access and the in flight entertainment’s down, the Wi-Fi doesn’t work. Every possible thing’s gone wrong. I think if you’ve gone through that, you’ve earned your stripes and you’re probably a good candidate to think about how to design a loyalty program because you’re just going to start designing it in a way that solves not only your problem, but then the same thing that millions of other travelers would want as well or don’t want.

Gerry (21:11):

It’s interesting, I’ve talked to hotel owners who have never spent a night in their own hotel and that’s exactly the same thing. They have no idea what their guests are experienced. So when you tried to tell them, “Maybe you should train your employees to do this, this and this,” they go, “That’s just going to cost me money. Why would I want to do that?” No understanding. So yeah, I like the way you said that they should test everything out before they jump into it. I like that.

Mark Ross-Smith (21:41):

That’s crazy.

Gerry (21:42):

It is.

Mark Ross-Smith (21:44):

Many years ago when I was in the telco industry, I’d sold a business there and I had a bit of money and I was already traveling a lot in staying in hotels and stuff. You’re going to laugh, the first thing I went myself, I’m like, “I want to live in a hotel. This is my dream. I’m going to live in a hotel.” So I ended up buying a place in this like a service department and it’s now part of very major chain and I lived there for five years in this place and I could order, there’s room service stuff I could order, part of it costs a lot of money. But I could with that, I could get someone to come clean my room if I wanted. I remember when I “checked-in”, the agent said, “Oh no, no, the keys, well, just go to the check at the reception desk and they’ve got your keys.”

(22:36)
And when I went to the reception I said, “I’m Mark Ross-Smith, I’m here to check in.” And she’s tapping, she’s like, “I can’t find you anywhere in the system.” I said, “No, I’m checked-in permanently.” So she’s like, “Oh yeah, yeah, yeah.” And she gets out the little swipe cards and writes my room number on it and she says, “Enjoy your stay.” I kept that little booklet, the key cards they gave me. I thought that was kind of cute. But I think living in a hotel is a fantastic experience. I think everyone should do it because you really get to see what happens in a way that you don’t see from any other angle.

Gerry (23:19):

Absolutely. Yeah. Just real quick side, I’ve worked a lot of tours on cruise ships and because I was working as a tour manager, I wasn’t considered a guest, but I wasn’t considered an employee. I was somewhere in the middle. But I had access to both. I had access to what the guests had access to and what the staff had access to. And that situation, the average guest who travels a lot on cruise ships might see it one way but have no idea there’s an other city on that ship that they never see. And it’s mind-boggling once you get into it. So yeah, it’s interesting. You have to appreciate, you have to take advantage of what everybody’s doing or you don’t understand. You have to see it as an owner. It’s imperative. Now you mentioned VIP experiences. What did you mean by that? You mentioned personalization experiences.

Mark Ross-Smith (24:27):

Yeah, I think this is a really interesting space because people with money want things they can’t buy. And we’ll put this in the VIP category. I mean, personally, I’ve had a bunch of these experiences and they make for great stories. That’s the first thing. And then people go tell their friends and they tell their friends and then they go fly. There’s kind of this quasi branding element to it. I’ll give you a couple of stories and we’ll see where this goes. I’ll give you two.

(25:05)
So recently I was flying with a pretty big Middle Eastern airline and hadn’t flown for about 10 years. And I walk into the airport and I’m walking over to the check-in counter and I’m about five, 10 meters away from the ropes in a business class this way, first class. Still a fair way from there. And this lady from the airline comes running up to me and she’s like, “Are you Mr. Ross-Smith?” And I said, “Yes.” She goes, “I’ve been expecting you. Let me take your bags. I come check you in.” She takes me over, she whisked me over to the first class check-in and she says, “It’s so good to have you back again.” I’m already blown away. And this is the first 20 seconds.

(25:52)
And then from there she’s like, “I’ll escort you through the immigration. I’ll take you to the lounge.” And then she drops me at the lounge, she says, “So would you like to be first or last to board the aircraft today?” I said, “Oh, I want to be first. Let’s do it.” And she’s like, “Okay.” Anyway, so boarding’s about to start, she comes and gets me. She’s like, “Boarding’s starting five minutes, let’s go.” And she brings me right through the crowd of 300 other people waiting at the gate. So before families and children and before the priority boarding, there’s me that’s very fit and able to do my own thing. And here I am, let’s get this guy on board. And then on board, I just want to sleep on that flight. And the crew were adamant, they kept trying to feed me and then just, “Mister, can I just get you something?”

(26:51)
And I’m like, “No, no.” To the end of fight, I gave up. I thought just something really light. And they’re like, “How about some fruit?” I said, “Okay.” They come back with this fruit platter, this big plate and they’d written in chocolate, “Welcome back.”

Gerry (27:07):

Wow.

Mark Ross-Smith (27:08):

Exactly. And I thought, wow, this is clearly set up because this is really nice. And then the manager comes over and says, “It’s so good to have you back. You haven’t flown in so long. We really value your loyalty.” Not really loyal, I haven’t flown for 10 years, am I? How do you buy that as a customer? Do you know what I mean? I’ve flown enough to know that this is not normal and realistically for the airline to do all this stuff doesn’t really cost them that much. And I mean they can’t really roll that out for 400 people on every flight, 500 departures a day type deal.

(27:47)
But every so often for maybe the right people, the right occasion, the right moment, it makes sense to roll out the red carpet in a way where they make for great stories and you can’t buy that. Well, I don’t think you can buy it. And so I think that built this emotional connection that I now have. I mean I’m telling this story with you today, right?

Gerry (28:13):

Yeah, exactly.

Mark Ross-Smith (28:15):

Obviously I got off the plane and I called my wife and I say, “Hey, you wouldn’t believe what happened.” And then tell my friend and then I got my LinkedIn, you see a big damn post and many, many likes about that as well. So they actually got a good benefit out of this thing that realistically didn’t cost them that much. And I think these type experiences really resonate with people because in my mind, everyone needs a good airline story or a good hotel story.

(28:43)
They need something good like this to tell their friends something they hold onto for 10 years, which I have, and tell people. I’ll share another example from the other side of this. When I worked at Malaysia Airlines, I was running their loyalty program and the office was at the airport, which is about an hour away from town. And so every day I used to go from the office through the airport to the train and take the train home because it’s the fastest, easiest way to get back here. And walking through the airport, I’ve got my VIP, go anywhere all access type thing. And I’m a bit of an airline geek and I like these money [inaudible 00:29:26] experiences. I’m thinking, how can I start doing stuff like this? This could be fun.

(29:30)
So one week I thought, wouldn’t it be cool if I just gave a gift to some of our top passengers when they’re flying? Filled my time, I’ve got to walk through at the airport anyway, right? And so that’s what I did. I went and bought for a whole week. I went and bought bunches of Godiva chocolates. They’re not cheap. And this is my own money. This is not the company money, this is my money in my own time. This is 8:00 PM kind of thing. And I went round and found a bunch of silver, gold, platinum type members that were random people I didn’t know and I’d just give them this really big golden bag with chocolates. And I’d obviously dressed up stuff and some thank you for flying the airline. Thank you for your loyalty. And I mean this is really a small thing.

(30:20)
It’s pretty cheap to do. Pretty easy to do. But there was one gentleman I’d found he was a gold member and he was in the lounge. I said exactly that, “I’m with the airline, this is for you. Thank you for your loyalty.” And he just broke down, getting really teary and he’s like, “Thank you so much.” What do I do here? Because it’s like there’s no cameras or anything. This is not some YouTube thing we’re creating. This is just me having fun or what I thought was having fun. And so he’s like, “This is a really amazing. This is the first time I’m ever meeting someone from the airline,” not a cabin crew, basically.

(31:01)
And he’s like, “I’m flying to India right now. I’m a doctor. I’m part of the Doctors Without Borders program going there for a month, whatever it was, to do this thing. I’ve been really loyal to your airline for the last X years. Even through the Malaysia Airlines had their year or so of incidents there. I was loyal to the airline through those moments. I knew this is the place for me.” And at that point he’s flying with a purpose. He’s going out to do something pretty good for the world and helping people. And in his mind, he’s been super loyal and he’s been earning the points. He gets the lounge, he gets all this stuff anyway, but he’s never had someone saying thank you for your loyalty. A real person. I mean chocolate’s a bit of a sweetener. Sweetener, get it?

Gerry (31:53):

Nice.

Mark Ross-Smith (31:54):

So at that moment I thought, oh, this is really special. And that’s now hopefully a story that he goes and shares with people about how the airline actually cared about his loyalty, cared about him that day.

(32:08)
And there was a bunch of other stories that same week when I was getting out of traveling just like that. And a bunch of these people went on to be very loyal to the airline. They keep flying the airline because they got something they just couldn’t buy. They got that special moment. They got that real recognition what we’ll call real loyalty, not the business of loyalty in the transactional side. This is the highly emotional, highly charged side that really-

Gerry (32:35):

This is genuine.

Mark Ross-Smith (32:37):

Exactly. It’s embedded into your subconscious. It’s like a feeling of love kind of thing for the brand. It’s like I’m really connected with this brand now and next time they go to book another ticket, guess which airline they’re going to fly.

Gerry (32:53):

Yeah, exactly. And that wasn’t expensive. Well, maybe a little bit out of your pocket, but in general, no, I like that. Hotels could easily do that. Smaller properties could easily do that. Now I’ve seen that you have made a lot of predictions in the past and you’ve been fairly accurate. Now the last couple years have been really messed up. Do you have any predictions for the future in the airline loyalty?

Mark Ross-Smith (33:23):

You’re putting me on the spot now. So you can actually read the prediction I’ve made for the last few years online and you can rate me on them. It was all very public. There was one last year… Three months ago now, there was one that didn’t come true that I really wish did. So I thought a loyalty program would start an airline as in the other way just because of the economics and how it all works.

Gerry (33:46):

The other way around.

Mark Ross-Smith (33:47):

Yeah, I thought we took the other way around. There is someone from a very big airline that told me that it almost happened. It was very close to happening. So close. So that was the big one that I was hoping would transpire that didn’t quite, but it’ll happen one day. Anyway, I think there’s two themes in the coming year or so. One is obviously we’re in ’23 now. There’s something coming in the next two to three months, which I’m calling the status cliff, which is airlines and hotels have extended elite status for free for the last two or three years. They never had status because they couldn’t travel, they couldn’t stay fly enough to keep that status. So they’ve been giving for free. Those free extensions are ending and people, they’re going to be downgraded soon just because they’re not at that level they used to be in 2019.

(34:46)
So globally there’s somewhere between eight and 10 million people that are going to be downgraded in loyalty status across airline and hotels combined. And so part of my prediction here is I think there’s going to be some winners and losers in this game. And what that means is I think there is a ridiculously huge opportunities. I mean I think hotels, especially smaller brands here to acquire customers. And when I say acquire, I mean go out and offer a lifeline to these 10 million people that are about to lose status with their airline hotel. Because when they lose status, if you’ve got a gold card in that airline hotel and takes away from you, even though it’s your fault for that [inaudible 00:35:31], in your mind you’re like, “Well screw then, I’m just going to go to somewhere else.” We did a survey, we put on statuscliff.com, we can check it out now, it’s still there.

(35:44)
We asked people if your airline hotel downgrades you, what will you do? Will you keep flying? Will you fly less? What will you do? 86% of people said that they would move some or all of their future business, that’s a key, future business to a different brand if they’re downgraded. And these are people that are due to be downgraded anyway because they’re not at the level they used to be. But the key is future business. So these are people that are already trained. They know how the loyalty program works, they know how the airline stuff works, they know how it all operates and they used to be a great customer and I’m sure they will again one day.

(36:26)
So I think there’s opportunity to give a lifeline to these people specifically because if you can win their hearts today, you’re going to get their business tomorrow. Whereas the big brands are, I mean they have to downgrade them, but they’re saying, “We don’t want you now, but we want you in the future.” But how do they get them back in the future when this other brand over here has already given them a lifeline? So I think there’s a pretty big opportunity there for especially low cost airlines and brands with smaller footprint. Something is a bit out of the norm. I think there’s a big opportunity there. I think obviously going to 2024, I think we’re going to see other things like ancillary and loyalty teams merging.

(37:13)
And I think that would be because airline hotel, same in this regard that I think we’re going to start seeing more holistic revenue management and that is what’s the lifetime value of this customer and how do we increase that? And that may not be trying to get a thousand bucks a night out of them when they stay. It might be charging just a flat rate for every single person every night and the revenue manager is gone and then trying to make monies other ways. So trying to upsell things or improve sort of an a la carte type experience. I think we’re going to see more of that sort a choose your own adventure, choose the level of service you want, but not nickel and diming people more like how do you add value to your stay? So I think we’ll see more of that.

Gerry (38:08):

Okay. I hope. I’d love to see it go that way. Tell me a little bit more about your business. I’m curious to find out exactly what it is you do.

Mark Ross-Smith (38:19):

So we run StatusMatch.com is our main brand. So we work with major hotel and airline brands to help them bring them new high value customers. So we talked about earlier about high value customers. These are people with silver, gold, platinum, diamond, this kind of status. These people spend more, they spend more frequently. They spend what we’ll call the right type of money. So they’re booking generally closer into where they’re going to stay or fly. They’re generally in a premium room or they’re in business or first class. They’re just your best customers for not all, but most brands. They’re really good customers. And these people are not driven by price, they’re driven by status, they’re driven by the gold card. The gold card is out front dictating where they’re going to go next.

(39:09)
And so we sit between the brand and the customer in this and we go out to the market and, “Hey, you’re a gold member with this airline. We’ll give you gold stars with this other airline that we work with and here it is, we’ll give you gold stars. Now shift some business to them.” And what this means for the brand or the airline in this case is the airline’s getting a new customer that they more than likely would never, ever get a cent from without giving out that what’s called a status match. They’re matching the status level from one airline to another.

(39:50)
So effectively it drives incremental revenue from the right type of audience that these airlines and hotels want to acquire. So the idea of status matching is not new. It’s been around about 35 years. We’ve just built a system around it. We’ve automated, made it super easy to onboard new customers. We work with a heap of big brand airlines. Some of our bigger clients we work with are like Emirates, Lufthansa, these kind of guys. And for our partners we’ve made more than $700 million in customer value in the last two years or so. So it’s a very effective, very powerful tool to drive customer acquisition. It’s also the cheapest, most brands we work with, there’s no cost to work with us. So super cheap obviously being free. In fact there’s revenue share a lot of the time as well where we actually work. A lot of case, we actually pay the brand to work with us. Get paid to get new customers. How does that work? Wow.

Gerry (40:52):

That’s nice.

Mark Ross-Smith (40:55):

Hence we are pretty popular in that regard, but it works out really well. We’ve flipped the business model where it works really well for the traveler, really well for the brand and obviously we sit in the middle of all that and make it work. So we’re seeing a lot of interest from travelers wanting to explore and try new brands as well. Especially as people start to really get on the road and try travel again. They’re like, “Well, I’m used to trying my airline over here. I know how they work. It’s expensive to fly right now, so I’m open to options. I want to try this other one over here, but I don’t want to lose the perks that I had at my other airline. I want the priority, I want the free bags, I want the lounge access, I want the free seat selection. I’m used to that so I don’t want to start at the bottom. So how do I fast track my ways straight up to golden?” That’s where we come in.

Gerry (41:48):

Okay. And that’s StatusMatch.com?

Mark Ross-Smith (41:51):

Yep.

Gerry (41:52):

Nice. Okay. Is there anything I might have missed asking you that would be of interest to our listeners?

Mark Ross-Smith (42:01):

No, I think I covered a lot today. I think it’s been a pretty good conversation. I think ultimately loyalty programs should be… They’re designed to do one thing and that that’s make more money and drive incremental business for the brand. Basically it’s got to make more money than it cost to operate. You get that right. The rest looks after itself. And what that loyalty program looks like, it might be some sort of retention program might be that selling points to banks like airlines and some hotels too, it might be about revenue protection. It might just stop customers going somewhere else. It might be like a fee-based membership program like an IHG Ambassador Club or Accor plus, something like that. Ultimately, all this loyalty stuff all boils down to one single thing and that is really just focusing on the customer, focus on the guests because that’s who it’s designed for and they’re the people that keep the industry afloat. They’re the people that pay our bills. So focusing on them and their needs, what they want, I think isn’t really what we should all be aspiring to achieve here.

Gerry (43:14):

Oh, excellent. This has been great and lots of food for thought. Mark, I want to thank you for being so generous with your time. I know probably went over a little bit. Where can people find more about your work and follow you?

Mark Ross-Smith (43:32):

Yeah, sure. Add me to LinkedIn, Mark Ross-Smith. I’m pretty active on there. I add everyone. So I’m there. You can check out traveldatadaily.com or if you are interested in a status match, check out StatusMatch.com.

Gerry (43:43):

Oh, Mark, thanks a lot. This has been excellent. Really appreciate the time.

Mark Ross-Smith (43:48):

Thanks, Gerry. It’s been great to chat.

Gerry (43:49):

All right. Take care.