Retail partnerships lift travel rut
Retail partnerships lift travel rut
Travel and vacation brands have faced customers' wrath for years over additional service charges tacked onto their bills. However, some travel brands are expanding their retail and e-commerce partnerships to sell consumers perks and products they actually want, and creating additional revenue in the process.
Westin Hotels & Resorts plans to sell items associated with its brand on an Amazon.com storefront starting March 1. Products will include Westin signatures, such as the Heavenly Bed and Heavenly Bath line, as well as newly introduced yoga gear, books and travel products from partners. Westin is the first hotel chain to open such a store on Amazon.com.
"Amazon is a powerhouse," said Brian Povinelli, VP of brand management for North America at Westin. "It has 90 million customers and has become one of the most trusted and innovative retailers out there. This is a great opportunity to reach out to its audience."
Amazon.com recently reported a net income increase of 71% year-over-year for the fourth quarter of 2009. The company also saw net sales jump 28% over the prior year during last year's fourth quarter.
Hotels have sold retail products for years. Westin's beddings and accessories have been available on its e-commerce store and through a partnership with Nordstrom. However, the partnership with Amazon enables the company to take advantage of the e-retailer's significant customer base.
"This is evolutionary, and simply reflects travel sellers' desires to find new sources of revenue," said Henry Harteveldt, VP and principal analyst for airline and travel research at Forrester Research.
Not only will the Westin-Amazon partnership drive revenue through retail, it should also increase hotel bookings from the Web. The Westin-Amazon storefront, www.amazon.com/westin, will be launched with a two-month marketing push to acquire new customers and increase reservations. Business travelers are encouraged to stay at a Westin for two weeknights through May 13 in exchange for a $100 Amazon gift card. Consumers must register at westin.com/balance for the promotion.
"This is an acquisition play," added Povinelli. "We are looking to bring new customers into the hotel and to bring new customers into Starwood's loyalty brand who may be loyal to another hotel chain. So we are giving them an incentive to move over to our properties."
Westin is running banner and print ads to promote the Amazon storefront, as well as the promotion. It is also e-mailing database members and promoting the offer via social media pages.
Consumer e-commerce spending in last year's fourth quarter showed signs of rebounding, despite the stubborn economy. Web shopping accounted for more than $39 billion in Q4 2009, a 3% increase year-over-year, according to ComScore statistics. During the third and second quarters of the year, e-commerce decreased 2% and 1%, respectively.
American Airlines also is partnering with retailers to drive revenue. The airline has had an e-commerce store for years, but it has recently launched a promotion that lets AAdvantage members earn additional miles by shopping at the AAdvantage eShopping mall.
For the first time, AAdvantage members can earn bonus miles by shopping at partners' bricks-and-mortar stores or from their catalogs, a perk that was previously reserved for online shopping. The airline's partners include Sunglass Hut, Jos. A. Bank, Sally Beauty and Golfsmith. Members can also earn three miles per dollar spent at Jos. A. Bank retail stores through March 8.
"Earning AAdvantage miles for non-air activity is all about consumer engagement," said Marcy Letourneau, corporate communications director at American Airlines. "The more engaged AAdvantage members are in the non-air aspects of the AAdvantage program, the more likely they are to fly with American Airlines when they do travel. Plus, earning miles for non-air activity gets AAdvantage members that much closer to their next free award trip."
American recently added a spate of features to its e-commerce site, including coupons, an improved search engine, price comparison tools and an estimated mileage calculator. The site also allows consumers to view their shopping and mileage history, and to set their e-mail marketing preferences.
To promote the offer, American is running ads in its in-flight magazines, AAdvantage e-mails and on its Web site. Letourneau said that retail sales connect American to customers' everyday purchases.
"Partnering with retailers empowers American Airlines to have meaningful interaction with its customers even when they are not flying," she said. "Products like the AAdvantage eShopping mall and the Citi AAdvantage credit card give purpose to AAdvantage members' everyday activities, like shopping for a new pair of jeans at Gap.com."
Letourneau would not say what percentage of American's revenue comes from retail partnerships. However, Harteveldt noted that retail partnerships can earn travel brands various financial benefits.
"Travel sellers that do business through online stores affiliated with their loyalty programs earn revenue when the retailer awards points for the purchase," said Harteveldt. "If the customer redeems points for merchandise, the loyalty program owner reduces the liability on its balance sheet."