Loyalty & Rewards

Capital One, Hotel Tonight And The Beauty Of Simple Rewards

Starting today and running through the end of 2017, travel-loving Capital One customers with either the Capital One Venture Card or the VentureOne Card will have a new perk to play with. By booking their hotel stays through Hotel Tonight, they will get another 10 percent shaved off the cost of their stay — on top of all the points/miles-related benefits that accrue to Venture Card holders.

Hotel Tonight is a travel app for those who aren’t so planning-minded when it comes to travel. Basically, it is a last-minute deal site. Hotels have rooms they want to fill, and customers often want to wait to the last minute to pick a place. According to CEO Sam Shank, two groups of people favor the mobile travel app in particular. Young, tech-savvy professionals with some income to burn looking for a spontaneous weekend away and business travelers willing to play it a bit fast and loose with their lodging with the hope of snagging some seriously upscale accommodations within the scope of their reimbursement budget.

Discounts are a part of that model. Shank told us that, on average, users save about 17 percent, with a guarantee it is the lowest rate for those hotels. But discounts aren’t the whole of the model, since even Shank noted that there are other ways to save when booking online. Hotel Tonight is instead looking to create a certain experience, for a certain type of enthusiastic and adventurous traveler.

“This isn’t about looking for the cheapest hotel. There are a lot of places racing to win that prize. This is the combination of great value, great price and a great experience for our customers who are staying at the place they want to stay,” Shank noted in an interview with PYMNTS. “This is for customers who want to get to the trip. They don’t have to reserve a lot of mental energy for booking and worrying about it.”

And that, Shank noted, made Capital One a natural fit, as Hotel Tonight was looking to make its first big, national loyalty and rewards play for consumers. This is a first-of-its-kind partnership for the travel startup.

The sentiment was mutual, concurred Capital One Managing Vice President Manan Mahadevia, on the loyalty pair-up.

“One of things about this partnership that really appealed to us was the natural fit between our customer bases. These are people who love to travel, who are spontaneous and who are, at base, curious explorers,” Mahadevia noted. “But they want it to be in a simple, convenient way, and this is about bringing those two experiences together.”

Simplicity was really the name of the game, especially since the target audience for this are Hotel Tonight customers who like to book hotel rooms the day they plan to stay in them and Capital One customers who prefer to take all of their card perks in the form of bonus miles with no blackout dates.

Complexity is a conversion killer in all contexts, both Mahadevia and Shank noted, since the direction of commerce and rewards in general has been towards simplicity. But in the context of this in particular, it is particularly damaging because a labor-intensive rewards program runs contrary to the value proposition of both products.

“The customer experience had to be drop-dead simple,” Shank noted of the design process for the Venture rewards program for Hotel Tonight. “What you see is what you get. You put in the code, you unlock the saving and you see them right there.”

Mahadevia noted that Hotel Tonight’s initial pitch to consumers has been “three taps and a swipe,” and the essential challenge to was to add as little complexity to that process as possible. So, what they have is “a code,” able to be entered at checkout as many times as it is used between now and Jan. 2017.

Simple, Shank noted, isn’t easy.

“It was something where we did a fair amount of product work to pull this off, to make sure the points go on in a way to make it seamless. The irony of simple experiences is they take a lot of hard work behind the scenes.”

But hard work that both firms think will be worth it, because simplicity is the order of the day, both for the customer base they serve now and the base of customers they hope to serve.

Which means offering rewards, like a net 27 percent discount, on average, for the bookings, is good. But making it seamless enough that customers can use it, hopefully often, without much thinking about it? That’s better.

Travel is supposed to be rewarding, and spending a lot of time obsessing over points is far from that.


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