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The Loyalty Paradox
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The Loyalty Paradox

How a change of direction in its data journey helped Wyndham Hotels & Resorts strengthen trust with and preserve value for its most loyal customers

Illustrations by MICHAL BEDNARKSI

S uppose you’re a member of a hotel brand loyalty program. You’ve been dutifully staying at the company’s properties, collecting reward points, and saving them for a stay at a beachfront resort. You’re getting close to your goal—so close that you can almost smell the ocean air. You check into a conference hotel for a business meeting, give the front desk your loyalty number, then hurry to your room to check your online account. Meanwhile, your customer data magically zips across the internet and updates in seconds, allowing you to see that you’ve finally hit your target point total for that longed-for tropical getaway.

Except magic isn’t real. And the underlying data architecture supporting hotel loyalty programs can be pretty messy.

Your data? It has to hopscotch through a series of computer systems that sometimes have trouble talking to each other. Those seconds? They can last for hours, even days. Along the way, errors happen, requiring actual people to notice, investigate, and make things right. If you’re lucky, your update will be painless, and you’ll be feeling sand between your toes in no time. But if you’re not? You might find yourself on the phone with customer service to find out where, exactly, your points are.

This was the type of challenge facing Wyndham Hotels & Resorts, one of the world’s largest hotel and hospitality chains. The company’s top-rated loyalty program has long been a key to its success, attracting more than 85 million members and helping Wyndham grow to more than 9,000 hotels across 22 brands spanning 90 countries.

Behind the scenes, however, Wyndham’s loyalty program had a problem. Its size and popularity produced a massive amount of data, and the company’s various back-end processing systems felt the strain. As a result, hotel owners and Wyndham’s corporate offices struggled to correctly account for bookings and revenue, while hotel guests didn’t always enjoy timely point accruals.

This undermined trust in Wyndham’s brand, undercutting the business benefits of having a loyalty program in the first place.

Loyalty Matters

For customers, loyalty program membership is akin to being a regular at a neighborhood café or restaurant: The more you patronize the place, the more you’re rewarded with perks such as free lattes and dessert on the house. In turn, providing those benefits helps businesses beget regulars who feel appreciated and are more likely to repeat purchases and recommend that business to others.

This effect is especially important for hotel chains. A PwC study before the coronavirus pandemic found that perceived reward-point value was the top reason business and leisure travelers alike picked particular hotel loyalty programs—even ranking ahead of price.

Derek Barbara, Wyndham’s senior director of data services, says that his company’s loyalty program acts as a kind of booking glue between brands ranging from Super 8 to Wyndham Grand. “People may be staying at an economy brand hotel, building up those points, and then [they’re] going to be able to stay at a higher, more luxurious brand hotel, too,” he says. “So you’re bringing those folks across tiers within the environment.”

The program is also one of the major draws for the franchisees who own and operate more than 95 percent of Wyndham’s hotels. “It’s really what they’re paying for,” Barbara says. “Besides the [Wyndham] logo, it’s that loyalty membership—knowing that when [guests] have a rewards card, they’re more likely going to stay at their hotel than anyone else’s.”

Paradoxically, loyalty programs also can create backlash. A recent study of retail consumers found that loyalty members who experienced certain shopping problems were significantly more at risk of being disloyal to a brand than non-loyalty members who experienced the same issues—a trend researchers dubbed the “boomerang effect.”

“It’s just a slow process”

Wyndham’s data issues were threatening to have a boomerang effect. In theory, loyalty program members should have been able to make reservations or check into hotels, provide their account numbers, and quickly have their reward points calculated and added to their accounts. But in practice, that process was sometimes too slow, creating anxiety for guests.

“It could take 72 hours or even a week to see the points on your balance statement or your app,” says Ali Abidi, a principal within PwC’s Cloud & Digital platform who worked with Wyndham to simplify and modernize the chain’s loyalty platform. “Customers would call into the contact center and say, ‘Hey, I stayed here and I haven’t seen my points yet.’ And the [contact center’s response would be], ‘Okay, it’s coming. It’s just a slow process.’ Those are unnecessary, redundant calls.”

Wyndham’s franchisees also faced delays and errors in loyalty program processing, which meant billing and accounting inconsistencies. Finance and accounting teams at the chain’s corporate office were tasked with addressing issues—month after month, often by hand—in order to balance the books and provide reliable information to auditors.

These data snarls and discrepancies were partly due to scale. Wyndham processes roughly 800,000 reservations a day as well 9,000 nightly “stay” files—that is, the record of guests’ stay at a hotel after they check out. All of that data helps determine how many points a loyalty member receives, what sort of rates and rewards they are eligible for, how franchisees bill for those guests, and ultimately how Wyndham calculates and creates its corporate financial statements.

Ideally, that information would move quickly and smoothly across Wyndham’s entire data landscape, which includes the legacy computer systems of brands such as Ramada and Registry Collection Hotels as well as separate Wyndham systems for reservations (used when guests go online to book a hotel stay) and property management (used when guests check in to a hotel). Instead, bottlenecks were abundant. Nasir Mahmood, application and emerging technology director at PwC, describes the company’s data dilemma as akin to driving a high-performance sports car “with a learner’s permit.”

Getting up to speed

To get its loyalty program up to speed, Wyndham needed a data revamp. The company already had worked with PwC to reimagine its overall data processing architecture, moving to a cloud-based system with Amazon Web Services.

Before that overhaul, a single piece of data within Wyndham’s system would travel an average of nine steps from its point of creation to the company’s central database, a journey that could take up to two and a half days to complete. Today, the same trip takes an average of four steps and as little as five minutes—which has enabled Wyndham to cut the total amount of time it spends on managing its computing environment by an estimated 40 percent.

For Wyndham’s loyalty program, PwC again helped Wyndham transition to the AWS cloud, creating a customized solution that better processes huge amounts of data while connecting the dots between hotel reservations, rewards enrollment, corporate financial reporting, and everything in between.

The key to the effort was building a “rules engine” for the new platform—essentially, a built-in set of instructions governing where loyalty data goes and how it is used, including when point accruals should register and other adjustments should be made.

“What Wyndham was doing was a lot of manual workarounds,” Abidi says. “If there was an error, they had to hope that someone caught it and then told someone else about it. By putting a rules engine in place, we automated a lot of that.

For Wyndham, the results have been transformative. Guest stays that used to take two or three days to process are now completed within a day of a hotel stay. Billing cycles that took up to 48 hours to close now take seven hours or less. Missed and adjusted guest stays—in other words, stays in which a loyalty member wasn’t properly recognized or accounted for in billing—have dropped 50 percent. Error handling time has fallen 99 percent.

With its new system, Wyndham can now access and analyze customer loyalty data in ways it never could before—and do so in real time. For franchisees, says John Rolston, a PwC principal who specializes in travel and retail loyalty, that means an enhanced understanding of “the value of a Wyndham Rewards member staying at my property, and thus knowing how much I should continue to invest in my property to continue to draw these members to stay.”

“Prior to our project, the data around members was locked up,” Rolston says. “We unlocked it and gave [Wyndham] the power to use it to uncover and tell its story.”

As for Wyndham’s customers? Again, the numbers tell the story. Loyalty program members now see their points accrue and post within a day of a hotel stay, down from 72 hours or more. Customer service call volume for missing stays has been reduced. All of this matters: PwC research has found that consumers consider speed, convenience, and seamless interactions with always-working technology to be essential elements of a positive customer experience—which in turn influences their hotel purchasing decisions. “There’s no more arguing,” Barbara says. “Your stay is getting processed, you’re getting loyalty points, and it’s happening quickly.”

Less anxiety. More satisfaction. Wyndham’s revamped loyalty platform isn’t quite magic, but moving to the cloud has produced tangible improvements for franchisees and members alike—especially when it comes to saving and spending those precious reward points. And that comes at an opportune time for the hotel chain, as the coronavirus pandemic has upended traveler routines and arguably “left customer loyalty up for grabs” like never before. “Everyone’s looking for the best value, the best bang for their buck,” Barbara says. “It’s one of those word-of-mouth things: ‘Hey, listen, I got my Wyndham loyalty card, and I’m getting a boat load of points, and it’s happening literally right after checkout.’ It’s one of those things that’s in the bank.”