It’s been a little more than a year since Stash Hotel Rewards was launched with the aim of helping independent hotels attract frequent travelers. And, what started with 64 independent hotels on May 20, 2010, has ballooned to 147 hotels today, establishing a new avenue for independent hotels to market themselves to the all-important business traveler set.
Jeff Low, founder and CEO of Stash, says that it is an entirely new type of hotel rewards program. Low, who created Expedia’s Thank You program, the first rewards program offered by an online travel agency, says that business travelers today want to earn reward points. “Mostly because they want to take their families to Disneyland or their spouses to Napa,” he says. “They want to pay them back in some way for all of the time they spend on the road.”
But therein lies the catch-22 for independent hoteliers. While independents want to attract business travelers, to ask them to stay at their hotels often meant asking them to give up their points. That’s why Low created Stash—to fill the void left by the absence of an independent hotel rewards program. He says the program benefits both hotels and travelers.
“Without a rewards program, independent hotels struggle to attract the segment of frequent business travelers who represent nearly 50 percent of all room night demand in the U.S.,” Low says. “For frequent travelers, Stash ends the forced trade-off decision between either earning points for a hotel stay or experiencing a more interesting, independent hotel. Stash lets them do both.”
Low, who is a self-admitted frequent traveler, says that there are many wonderful hotels that are independents. “The problem is they don’t offer points, so as a frequent traveler, these hotel don’t even go onto my radar. That’s what we set out to solve,” he says.
Low created Stash with colleagues from Expedia, along with people from Zillow, Amazon, and Microsoft. Their idea was to create a points-based currency for independent hotels so that guests of those hotels could earn points to be redeemed at other Stash hotels around the U.S. and the Caribbean. Low says, “We said, ‘How can this not have been done before?’
“When we started we asked everyone that,” he continues. “Part if it was the technology. Everyone’s on a different system, meaning that it’s very hard to get data to pass between these systems. That’s one of the things we solved.”
But the bigger problem, Low says, was that many independents looked upon each other as competitors. “Luckily, there was a set of visionary hoteliers who said, ‘Sure, they compete with me, but having a common currency isn’t going to make them compete more. It’s going to make both of us more competitive to the brands.’ Because of that we were able to group together and they told their peers and so on.”
The initial launch included several notable hotels and hotel groups, including Denihan Hospitality Group, Coastal Hotel Group, The Lenox, and Hotel Valley Ho, among them. Since that beginning, the company has grown 125 percent in the last year.
“We have many hotels coming to us now,” Low says.
Low says that many of the hotels are in key areas where business travelers stay, such as New York City, Seattle, and San Francisco. “It’s partially by where independent hotels are and areas that are relevant to where our customer segment will be,” he says. “Now, we know we have to have a hotel in Boise and Amarillo as well, so we are going there. But, we did focus on making sure that there was lots of choice in those key business areas.”
Stash recently added its first hotel in the Caribbean in St. John. It also has a number of partner hotels in popular tourist destinations such as Orlando, which offers key redemption properties for members. “These are the places you’re dreaming of when you’re in that business mode and doing all of those meetings,” Low says.
Low says the partner hotels have been seeing more frequent travelers since the launch. Another segment, which Low admits the company knew less about in the beginning, has been Stash’s impact on attracting meetings. “One of our partners shared a strategy with us of using the Stash points as part of the negotiation with meeting planners,” Low says. “That’s really an area where independents weren’t able to compete often prior to having points.”
The result, Low says, is that the independent hotels in the system are able to fill more rooms at higher rates. John Moser, chief marketing officer of Denihan Hospitality Group, says that his company has seen a 10 percent higher rate among Stash members than its average guest.
“Because you now have the business traveler who is less price sensitive, they’re willing to go to a place with a higher rate in exchange for points,” Low says. “The hotels can book rooms sooner and do less discounting.”
Members can redeem the points for stays at other Stash hotels. Low says the company has been approached by airlines, merchandise suppliers, and credit cards to offer points. Stash is focused on creating its value by sticking to what it does best for now. “We really admire companies that do one thing really well,” he says. “We believe we have a unique opportunity to offer values in the hotels because the partner hotels are loading their inventory for redemption and their able to yield manage it. None of the other programs do that. They use fixed pricing. We use dynamic pricing.”
Low says that Stash has an opportunity to gain more hotels and density in the United States before it branches outside of the Americas. “What travelers do not want to happen is to go somewhere in the U.S. and not be able to gain points, so we’re concentrating on gaining critical mass here before branching out.”
And, as more independent hotels become part of the system, they’re becoming more competitive in attracting valuable guests.