Why Starwood is Willing to Pay You to Book Through Their Mobile App

Lucky is confused by Starwood’s desire to offer bonus points for mobile bookings.

[A]m I the only one that doesn’t really get the trend lately for mobile site booking bonuses? I understand the concept of wanting to familiarize people with their mobile site, but at the same time I can’t help but feel like no one wins if we just have to go through the hassle of making a normal booking by smart phone when we’re sitting in front of a computer.

Hotel chains offer incentives– at various times carrots but also sticks — to get you to book directly with them rather than through travel agency sites.

They’ve in the past offered online booking bonuses. Some chains won’t honor elite benefit benefits at all if you book through a third party website. And most chains won’t offer credit towards elite status for those bookings at all.

That’s because third party bookings are expensive for hotel chains, running from 15% to in the high 20’s for major chains and even 40% for independent hotels.

So there’s a real cost savings if they can get you to book through their own channels.

But mobile and web are both cost-saving and for the most part in equal proportions, so why does Starwood want to bonus mobile?

Because there’s a good chance the future of travel bookings may be in mobile. Hotels and rental cars especially are increasingly being booked last minute. Mobile penetration is huge across most worldwide markets. On the order of one in seven travelers are already booking at least some of their trips through mobile. But it remains a relatively young though growing space, where it’s still possible to gain an advantage. First to market/early adopters may have a substantial advantage.

Starwood is doing what they can to get people to download the app and familiarize themselves with it.

The bonus gets the app on your phone so that when you do move to mobile for your bookings (not everyone but many will) they’ll be well-positioned to get the booking — both for their chain vs. a competitor, and through their site vs. an OTA with higher commissions.

That’s the bet, anyway. So offering a modest incremental marketing spend that isn’t tied directly to downloading the app but is much more targeted — at actual paying guests of their chain — is almost certainly a good investment on a risk-adjusted net present value basis.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. You missed the access to your information they get via an app or FB like and even bettet FB App … I haven’t looked, but would not be surprised to see access to things like contacts or location as part of the data they collect.

  2. I think it’s just a nudge to get the app installed. Once it’s installed your more likely to use it and become engaged. An engaged customer is worth more than a disengaged one.

  3. Partially to get you to install the app – increasing the propensity for future bookings, partially because they spent money on building the app and probably have to justify it. If they can attribute new sales to the app (even with a bit of a discount, which probably pulls from some obscure marketing bucket and isnt actually counted against the ‘app development’ financials), they can show it was a worthwhile investment.

    Mobile apps can do a lot more than a website in terms of recommending locations nearby, etc. So once a given chain’s app is on my phone, I may be more likely to use the app to find a convenient hotel.

  4. I can understand apps that improve the Mobile experience on a device with a small screen. Using a web page on an iphone can be a trying experience.

    I get annoyed with sites I visit via a browser on an ipad that constantly try to get me to download their app since the app usually is less efficient/useful than their web site.

    As others mention I think the key is to get access to a lot of your information but I know they can do that via a browser as well. There are stories showing how much tracking information gets gathered by Google and Facebook even when you aren’t logged into their sites.

  5. 500 points is all well and good, but the app doesn’t seem to show all of the same (read: as low as) available rates that spg.com does. At least in the example I was looking at, a Sheraton Club Level Room in Philadelphia in June books at ~$189 before tax at spg.com, but I couldn’t find that room/rate with the app; there the same room seemed to be $300+. Anyone else seen this type of thing?

  6. At least the Starwood app is willing to remember me. The HHonors app forces me to reenter my user id and password (which I don’t remember so I use LastPass on the PC and have to launch separately on the PC).

    However, I just tried this on the app, made sure my corporate rate was entered, and thought it just wasn’t showing availability, but I had somehow lost the Rate Preference “SET Number” preference, and so it was showing me standard rates that were $100 more.

    That alone, meaning that people might overpay, could be a good reason to get people to use the app. On the web you can just leave the boxes checked that show you cheapest AND SET Number AND cash & points (up to 3). On the app, you only get one and they default to cheapest standard rate.

    They really should fix this…

  7. Last minute missed flight bookings and other existential events…….you nailed it……..

  8. Talking of Apps I regularly see Starwood hotels on Hotel Tonight, the Westin Market Street was $109 on Sunday 31 March, pity they can’t give us some of that sort of functionality.

  9. mobile phone = captive audience, as in, you almost always have your phone with you

    I also agree that with the app, it gives them better tracking (location services) of consumer spending habits. Facebook KNOWS this.

  10. -> Thomas … I experienced the same situation. The app doesn’t always show the lowest rate or special promo rates which can be accessed on the main site very easily.

    500 points is not worth me possibly paying a higher rate.

  11. @Thomas, I haven’t tried but wouldn’t surprise me. In addition to all the reasons Gary discussed, mobile booking is probably another use for price discrimination.

  12. > I get annoyed with sites I visit via a browser on an ipad that constantly try to get me to download their app since the app usually is less efficient/useful than their web site.

    Couldn’t agree more, and when you overlay the privacy issues of having an app installed and most likely running in the background, it’s a no brainer to always use the web browser. However, I know I’m in the minority; most people are either uninformed and/or don’t care about their privacy and battery life and blindly download apps.

  13. The more customers who download and/or book through their mobile app, the more Starwood could charge advertisers for mobile ad space in the future.

  14. Keep in mind that booking via the app prevents SPG from paying all of these cash back and travel aggregator sites like Kayak. Also for those of you having issues finding the lowest price with SET codes, you need to choose “view by room” after you search.

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