The Power of True Guest Loyalty in Scaling a Global Boutique Hotel Brand with Lennert De Jong, CEO, another star (former citizenM)

In the final episode of our Loyalty Series, we sit down with citizenM’s former CEO and now another star CEO Lennert De Jong to unpack how a boutique hotel brand reinvented loyalty as a product rather than a points program. The result was a paid subscription model, guaranteed room availability, and a bold brand IP sale to Marriott, all of which reshaped citizenM’s growth, distribution strategy, and guest experience without diluting its identity.

Lennert takes us back to the company’s early stance against traditional loyalty models and the forces that pushed a rethink: OTA pressure, the strength of U.S. direct-booking behavior, and the need for scale to protect rate integrity. Out of that emerged mycitizenM+, a simple paid membership that delivers immediate, tangible perks most notably guaranteed rooms when travelers need them most. The psychology mirrors Amazon Prime: when guests pay to join, they default to the brand and return more often. We explore how citizenM measured success through customer lifetime value, switching behavior, and how benefits like coworking access and F&B discounts aligned perfectly with the brand’s living-room-centric design.

We also break down the strategic decision to sell the citizenM brand IP to Marriott, unlocking the demand engine of Bonvoy while allowing citizenM to remain its largest owner-operator. The partnership grants mycitizenM+ members instant Bonvoy Gold, an example of how smart alliances can outperform homegrown loyalty programs. Lennert offers clear advice for smaller hotel groups: skip building your own points-based system and align with a platform that can already move demand at scale.

The conversation then widens into the future of loyalty as a lifestyle platform where rewards expand beyond hotels into concerts, F1 races, and cultural moments and how AI is quietly transforming hotel operations. From bots processing virtual cards to automated OTA message handling, and the coming wave of agentic AI that anticipates guest needs, Lennert outlines a future where automation elevates hospitality rather than replaces it.

For more information about citizenM, please visit https://www.marriott.com/brands/citizenm.  

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Chapters

• 0:03 Opening And Series Context
• 1:24 Guest Intro And Acquisition Headline
• 3:07 Leonard’s Path Into Hospitality
• 4:36 CitizenM’s Concept And Design Philosophy
• 9:41 Rethinking Rooms, Community, And Use Of Space
• 12:59 Why CitizenM Resisted Loyalty
• 17:05 Subscription Over Points: MyCitizenM+
• 21:39 Measuring CLV And Program Impact
• 25:35 Iterating Benefits And Operational Fit
• 29:08 Brand Sale To Marriott And Roles
• 31:21 Coexisting With Bonvoy And Status
• 36:10 Loyalty As Distribution Power
• 40:15 Future Of Loyalty Platforms And Experiences
• 45:00 AI In Operations And Guest Comms
• 49:28 Predictive Loyalty And Agentic AI

Transcript

SPEAKER_00: 0:03

We resisted loyalty for quite some time because we did not believe in the early days, you know, that uh that giving away money for people to come back to your hotel was a sign of strength. We felt it was more like a sign of weakness.

SPEAKER_02: 0:24

Hello everyone, welcome back to the Travel Trends Podcast. I'm your host, Dan Christian, and today we are wrapping up our first ever loyalty series, which has been brought to us in partnership with our friends over at Loyalty Status Co. Now, last week you heard from their CMO, Aaron Murray, who gave us a fantastic overview of the loyalty landscape. And for those of you who are just coming to understand Loyalty Status Co., they are the team that is rewriting the playbook on status program management. They're the global leaders in status commercialization and the creators of the award-winning status match platform. They work with airlines, hotels, and even retailers to turn status into real value. You can find out more information about them at loyaltystatus.com. Or tune in to last week's episode if you haven't listened to Erin already. She was a key reason why I wanted to bring this series to life. And when we talked about the series, we looked at all the topics that we could cover and really decided that aviation and hospitality were the two focus areas. So we kicked it off with a regional airline with KM Malta. And today we have an exceptionally special guest, the CEO of Citizen M, Leonard DeYong, has been running this company for nearly 20 years and turned it into one of the most successful global boutique hotel brands, which was acquired this year by Marriott. And in this episode, we discuss the origin of Citizen M's loyalty program and what the acquisition means for Marriott Bonvoy members. And we get Leonard's invaluable insights on the evolving role of loyalty across hospitality. I actually had the privilege of joining Leonard on a panel at the Focus Right Conference in San Diego this year. That episode will be coming out next week. So make sure you are subscribed on the streaming platform of your choice to be notified when new episodes go live. And also, we have just released all of our AI Summit sessions on our YouTube channel at Travel Trends Podcast. So I definitely encourage you to check those out. But let's continue our focus on this incredibly important topic of loyalty, a subject that I'm very keen to continue because there is so much to discuss in the world of loyalty. And you'll get a great sense of that in our conversation today with Leonard DeYoung. So let's bring him into the conversation. Welcome, Leonard. So great to have you on the Travel Trends podcast. Thanks so much for joining us. Well, thanks for having me. It's great to be here today. For sure. We were really keen to include you in this loyalty series. As many of our listeners, we've talked about airlines, we've talked about loyalty programs, and we really wanted to have hospitality and specifically Citizen M. As I mentioned to you, Leonard, before we sat down to record, I'm a huge fan of Citizen M. I've stayed in your hotels in New York and in Paris. And so I was delighted to meet you to learn more about Citizen M. And obviously, you guys have recently sold this company as the CEO. But let's let's start at the beginning, Leonard. How did you get into this hospitality space to begin with?

SPEAKER_00: 3:11

Well, that's uh quite a long time ago.

SPEAKER_02: 3:13

Let's go right back to the beginning. Let's go over to your beginning.

SPEAKER_00: 3:16

Your origin story. Well, believe it or not, it actually started with uh with a loyalty program in a five-star hotel in Amsterdam uh as a student. Right to loyalty, okay. I I was selling a subscription program for 500 euros a year to CEOs of Dutch companies, which gave them certain benefits, like five-star hotels in the Netherlands. And you know, that's actually where I met some people, and then you know, I joined a small startup called Synexus in you know 2000 as one of the first employees in Europe and you know led their European expansion uh till 2006 when I got recruited by Citizen M. And yeah, after that, um, you know, uh been part of Citizen M. Uh left Citizen M for two years to actually go to a hospitality tech company called Planet of London, and then came back last year to actually do this uh Marriott deal.

SPEAKER_02: 4:04

Perfect timing. Yeah, I noticed that actually when I was uh checking out your LinkedIn profile and just doing some research and preparing for our conversation, um, that you had a couple of years away, but you'd been there 16 years and then came back for you know really this very important opportunity to uh see Citizen M be acquired. Um tell everyone about that. Uh like fast forward now to what just transpired. Tell everyone about uh this the journey you've been on this year to see Citizen M be acquired and what the reasons were around that because it that also ties back to loyalty.

SPEAKER_00: 4:36

No, absolutely, and it's you know, I th I think from day one uh distribution has been um you know like a big topic for any hotel organization, and we've grown from one hotel at Amsterdam Airport in 2008 to you know now 37 hotels across the globe and in all the you know the big cities of the world. And I've always been kind of jealous of like local hotel operators that have like all of their hotels, like 60 hotels in one country, and then you can do like a TV ad, and you can really market, but you know, distribution becomes such a thing. Um, and especially going to the US, like loyalty has been um like a big topic for us. So um, you know, when Marriott uh you know came around and you know introduced themselves uh as a potential acquisition for our brand, right? So we still own all of our real estate and operation. Um yeah, it was absolutely something that uh yeah that we uh had an intention of exploring.

SPEAKER_02: 5:29

Well, I mean I'm fascinated by this because I want to dive into the loyalty program that you created, and obviously, this is where loyalty is so important to airlines, it's incredibly important to hospitality, the idea that you gain status that you want to maintain based on the number of room nights. Leonard was also sharing with me that uh now that your loyalty program crosses over, you get Marriott Bonvoy Gold, which is at least 25 room nights a year. And people really value the benefits they get from their status, their points, and like so. Let's talk about Citizen M because you built this incredible hospitality brand. Um, tell everyone about Citizen M. For anyone who's not familiar with that brand and hasn't had the privilege of staying in one of your hotels. What was the concept behind Citizen M? And then how did that relate to the type of loyalty program you you implemented there?

SPEAKER_00: 6:14

Yeah, so the concept behind Citizen M really targets a certain traveler. Um, and this is what we you know, this is we started with a like a blank sheet of paper in 2006 when we said, okay, let's let's do this. And the traveler is a frequent traveler, and we looked at the frustrations that these people had. And what we did, we developed a concept around it, and the concept includes like very small bedrooms, but you know, highly designed, full of technology, a seamless check-in experience, really, really cool like living rooms, and but it all ties back together. Like, if you think about a normal hotel, like half of the you know, footprint of the like the ground floor is for a back of house staff. We have like a retail central operating model, so the entire footprint is actually filled with vitra furniture. So it feels like you're walking into this Instagrammable five-star hotel, but then you have a very small bedroom upstairs which is highly functional. Yeah. Um, and that actually gives us, you know, this positioning of affordable luxury.

SPEAKER_02: 7:12

Yeah. Which I think the market was you you met the moment. Uh the market was ready for this, especially with the Millennial Traveler, um, this idea of flash packers that people that you know they'll splurge on a hotel, but they and uh so to me, the idea of like with generator hostels and this movement towards upscale accommodation, targeting a younger but you know affluent traveler, and the idea of community for me is also what stood out. I mean, and um I was telling Leonard that one of the things I loved about the hotel in New York in Times Square was the top rooftop and uh sitting up there and having a glass of wine, and like the idea is obviously people interact with each other at staying at the hotel. So that sense of community, I think, at least from my point of view as a customer, uh, seemed to be an important consideration that you know the types of people that stay at that hotel also then congregate there, they're working in the lounge area. So I mean obviously you tapped into kind of the travel zeitgeist of the moment.

SPEAKER_00: 8:06

Yeah, absolutely. And you know, one of the things that you know, I don't think we intentionally um solved for, but you know, like last night I was staying at our Los Angeles hotel, and you know, nine-hour time difference between Amsterdam and Los Angeles, it wakes you up in the middle of the night. And to have this public space where you can actually go to 24-7, and I was having a flat white at 1.30 in the morning, then I went to the gym and I came back for breakfast at you know four thirty. You know, that is something that's you know that that came as part of the package like there's a small room, but we don't want people to be in the room all the time. It's not like if you're in your house, like in your bedroom. So true. You have like a living room and you you know meet with people and there's like communal tables and you know, this central bar that is constantly open means yeah, there's people watching, you know, World Cup qualifiers tonight in our hotels and public TVs, and you know, there will be a German room and a uh and a and a British room, you know. Yeah.

SPEAKER_02: 8:58

Well, one of the things too that I thought was fascinating about the room experience was that since many travelers don't unpack and a lot of hotels are designed, uh or th the theory is that people get to their hotel, the younger generation are living out of their bags, and so like you the focus is not on having places to store all of your clothes. Because you you basically make the small room incredibly functional.

SPEAKER_00: 9:20

No, absolutely. There's a drawer under the bed, and the biggest secret is you know it fits an open Samsonite. Right? So you can literally put your Samsonite in, open it up, and you know, just close it and it's gone. Right? You don't need to you need you don't need to unpack. Of course, you can hang a few shirts and you know, there's there's that you know type of storage space. But yeah, you're right about that.

SPEAKER_02: 9:39

Yeah, it's so interesting. Okay, so let's talk about the loyalty program. So you obviously this uh incredible concept for the hotels themselves. Did the loyalty program was it introduced at the same time as you launched the brand or what when did the loyalty program come about and what was the um what was the messaging and and the offering for the loyalty program?

SPEAKER_00: 9:58

We resisted um loyalty for quite some time because we did not believe um in the early days, you know, that um that giving away money for people to come back to your hotel was a sign of strength. We felt it was more like a sign of weakness, like oh, you know, we'll we'll take some money away that we would normally invent in, you know, uh put put in the experience and we give it to you to thank you for coming back to Citizen M. You know, we started, I think it was at the uh at the a search of Google. Um, so Google was dominating search, booking.com was dominating Google, and we were dominating booking.com. So we thought about like this cashback, you know, type of program. Maybe I had some people uh over to you know what you typically do, then you ask some wise men from the industry. And back then, Arthur Kosten, the CEO of Booking.com, he was also part of the room. He said, Leonard, if you're willing to give like a 10% cashback to people for staying at your hotel, I actually advise you to spend the 10% on your experience, and you're probably much better off. So I would say the first 10-15 years were about customer experience, but then we saw like distribution platforms you know weaken towards the hotel industry, and it was more difficult to you know to be uh getting the returns that you will be getting on the distribution platforms. And uh we noticed, especially in America, like all the book direct campaigns and you know the American Traveler, they're they're not going to booking.com or Expedia, they're just gonna be on Marriott.com or Hilton.com, right? And that's where they book. So yeah, if you are in Austin, Texas, and Los Angeles, and if you're just waiting on Booking.com to throw you a dime, that's costing you a lot of um uh you know a lot of commission. Yeah, um, you know, that is something that we had to solve for. So, you know, we we were early on in contact with the the chains to see if we could do something else than selling our brands, right? Um selling our brand. And then through COVID, you know, we came up with the idea of our own subscription program, which is not loyalty, it's a transactional thing, right? So you you give us a hundred a year, and we give you back benefits that you don't need to earn, you've paid for them. 50% discount. We heard you know a lot of complaints about availability. We run high occupancy, so people could not stay at a citizen because we're full. Right. So, okay, you know what? If you're part of this subscription program, we'll guarantee you a room. Right? And our revenue management systems were taking that into account. So sometimes, yeah, we would be, you know, holding rooms for those people because we knew they would come on a Tuesday or Wednesday in London. Interesting. And so we thought about what are the perks, you know, that were like us, you know, worth launching, and then we launched a you know paid subscription program called My Citizen Plus in 2022.

SPEAKER_02: 12:39

And so when you launched that, so my citizens My Citizen Plus, this is the part that I'm I'm really intrigued to understand, and I'm sure our listeners are as as well, is that clearly you are looking at your high value spenders, like you're trying to introducing a loyalty program should ideally increase the lifetime customer value. And so you're either you know you're genuinely building loyalty, so people are gonna increase repeat and they're gonna stay with you each time because they're accruing points or they're getting discounts, or as you just described, they're being guaranteed a place to stay. So you're taking away the main pain point. So, how did you set out to measure the success of the program and what did that look like after 12 months or 24 months?

SPEAKER_00: 13:19

Yeah, I think there's a couple of metrics that were important for us. So, first of all, like how many people buy the program. Yeah, we had certain targets in mind. So the first year we wanted to hit 10,000 paid subscribers, and we hit that. Right. Uh, you know, we're right now around 40,000. But then we were also looking at what are the people, like how many of those are new, right? Because for me it's not just about you know, if you're coming to Citizen M every week and I give you a 15% discount if you give if you pay me a hundred bucks, it's like a like a no-brainer. Um, but for me it was about getting people that were thinking about using Citizen M for the first time. How can you lock them in? Right. Um, and we were triggered by other industries. You know, I'll give you one example for loyalty, like a little theme park close to my house. Um, I would absolutely maximum go there maybe once every two years with my kids. Yeah, and I went there, and that's like you know, 50 bucks for the for the four of us in the family to go. And they offered a subscription, like for 120, you could go the entire year free of charge. It's like, ooh, this is interesting. And I instantly forgot I was not gonna come back. It's like if I come here three times, I'm basically taking full advantage of these guys. Yeah, I'm gonna buy the subscription. And that kind of inspired us to do like this hotel subscription because we wanted people, you know, that come to New York for your trip to New York. You see, you know, you're spending a thousand bucks on free nights in New York. Actually, if I pay 100 bucks right now, I'm making my money back already, and then I can keep using it. Yeah. Wow. Yeah.

SPEAKER_02: 14:50

The only thing I think is really interesting. I mean, I think a lot of our listeners are likely familiar with Amazon Prime and the idea that you're gonna pay for a Prime membership, which is gonna give you free shipping. And obviously, Amazon has had incredible success with that program. Like there's obviously a lot of great loyalty success stories. Um Costco's another great example of you know they generate most of their profit from their membership fees, right? And so um and the other example, which is more of an American one, uh Restoration Hardware. You know, you have to become a member from Restoration Hardware to access member prices. There's no thing you're not actually gonna buy anything at Restoration Hardware unless you become a member because for the cost of it, and you know, you're gonna save a thousand dollars off that sofa and it's only you know two hundred dollars to join for the year. The thing I wanted to ask you that I'm really intrigued by is that a lot of hotels they try to get you to opt them in without a cost. So there's no barrier. Like they very intentionally uh try and get you to sign up for free and then just get you on the treadmill of being or um the decision to charge, I and I think this is a a noble one in many ways, but also likely probably key to the success, which is why I wanted to ask you the question. You likely had to weigh that up between we could offer it for free and just let people start earning points, but you decided you're gonna you're gonna charge an an amount for it. When you now look back at the that that seems to be what seemed to me to be a critical decision that made the program successful. How do you look at at that program compared to what else exists in hospitality?

SPEAKER_00: 16:16

For us it was a fundamental cornerstone. So I'm not judging any of the other loyalty programs because you know we are part of you know the Marriott Bonvoy program now, and we sold our brand to Marriott mainly to, you know, of course, you know, expand, you know, the the real estate and have other owners also be able to franchise citizen them, uh, but also to solve some of the distribution uh issues by becoming part of Bonvoy. Yeah. So I get the loyalty play, you know, with the big chains, but if you don't have the scale of the big chains, then you gotta come up with something else. And there was a a core psychological thing that happens with restoration hardware with Amazon Prime. If they would have offered Prime free of charge. And uh if you remember how Prime started, it was free shipping. Yes. Right? So you pay you 29 or whatever it was in the beginning or 79 bucks, yeah, you get free shipping. What they wanted to do is lock you in.

SPEAKER_02: 17:12

Absolutely.

SPEAKER_00: 17:13

Um and if it would have been a zero-based subscription, you wouldn't have been locked in because you didn't pay them. So for us, like anything that you get for free has little to no value. If you've paid something for it, you know, you're gonna try to take as maximum advantage as possible. It's like the psychological effect of this transaction, and it's something that we you know evaluated. And we're not Netflix that you can use every day, we're not Amazon that you can use every day. We understand it. So what we what we did, we developed a base offer and then you start expanding from it, just like Amazon. It started with free shipping, and now you get free like TV content.

SPEAKER_02: 17:53

Exactly. Yeah, that's so true. And that's why I it's a you said it's a cornerstone. It was a fundamental decision that ultimately led to the success of the program. And the other part I wanted to understand when you look at the measurement of consumer spend. So after someone has now paid their hundred dollars, because you the perfect example you just shared, obviously, was Amazon. Like you know, you hooked people with free shipping, but the reality is now they just defaulted to buying everything on Amazon because they got free shipping. So there's like there's nothing you wouldn't otherwise buy because you've got prime. So it became your just default to how did that work in your world? Because as you said, you're not like a Netflix and people so in terms of room nights, obviously that's a measure of success for hospitality. Did you see that those people who are members like you know your high value clients maybe were doing 10 nights a year, and now all of a sudden if you join the program, you were seeing them doing 20 nights a year? Tell us a little bit about those metrics, if you wouldn't mind.

SPEAKER_00: 18:48

Yeah, so without going into the details, because then I would be you know making them up. Um you know, what we measured was customer lifetime value.

SPEAKER_02: 18:55

Yes.

SPEAKER_00: 18:56

And for us, you know, it was not lifetime, it's I think on a like on a two-year basis, on a chain level, like how much you know revenue uh would you know did we expect? And what we started to do, we started putting people in segments, right? So we had a the segment called champions, right? So those were the people in the highest segment from recency, frequency, monetary perspective. Uh and we started tracking, you know, what's happening with the segment, but it's also what's happening with the average customer lifetime value of those people after they become a member. Yeah, and we've seen significant, uh significant improvements, and not because they're paying more, um because that's of course dictated by you know the price of the room and you know the locations they choose, um, but by staying more. Right. Right. So we've seen increases in room nights. I cannot give you the exact number, but we've seen significant increases in uh the customer lifetime value of the group that became a member.

SPEAKER_02: 19:49

And did the program evolve from the you know the the benefits that a member would accrue? Did you can uh need to continually re-evaluate the program year after year to try and figure out what else other or even getting feedback too, Leonard, from members to say, like actually, these are like some like the perfect example you've already shared was the idea that you actually will be guaranteed a room in the hotel. So I guess my question is, and I'm I'm keen to ask this, just for our global audience, especially um hotel eers and people in hospitality or anyone just looking to create an a loyalty program, how much of it is getting it right at the at the word go, and how much needs to be evolved as the program goes on? So, how much customization or iterations needed to happen to continue to optimize the program?

SPEAKER_00: 20:35

Well, the customization was by design because we knew you're not gonna get it right uh straight away. So there's some perks maybe that people don't need. Uh some of them, you know, they don't hurt, like a free lay checkout. Um so we had to operationalize that. If if I think you're gonna stay in your room till four o'clock or six o'clock in the afternoon and you're gone already at nine, yeah, I would like to know you're gonna use it or not, right? So yeah, so we had to adapt a bit. Uh and there's things that we introduced, uh there's things we plan to introduce. There's actually things we plan to introduce, like private benefits, uh, you know, over the next year or so. But then of course, you know, with the merriad acquisition that uh that changed. But we we pivoted quite a bit, um, you know, listened to feedback, introduced like food and beverage discounts, you know, free co-working out of our spaces. Um, and that's also helped us grow to you know the forty-five thousand uh subscribers that we have today.

SPEAKER_01: 21:28

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SPEAKER_02: 23:28

Clearly, you built such a strong brand with Citizen M and had the loyalty and affinity, but I know you also have gone through a rebrand to another star. So tell us a little bit about that journey. Is that directly connected to the Marriott acquisition or are you already on the process of rebranding? Tell us a bit about that.

SPEAKER_00: 23:42

It's not a rebranding, but if you know you think about we had a property company, an operations company, and a brand. Right? We are still the property company, we are still the operations company, but we've sold our brand, right? So the intellectual property of Citizen M is now with Marriott. Right. And it would be strange for me operating 36 of them to be still the CEO of Citizen M. So at some point, you know, just like you know, the famous triangle and hospitality, you have a whole set of owners, you have a set of operators, and we are now an owner-operator. And you know, we've before we were Citizen M, we were a company called One Star Is Born as a project name. Right. And this is actually a reference to the legacy. We wanted to redefine like star classification by starting Citizen M. Uh, and now we have an ambition to become another star. And you know, we we want to become a star when it comes to you know joint ownership and operation and being the best role model operator of the hotel industry. That people look at this company and say, you know what, there's no other company that's as efficient and as good in operating Citizen M's as another star.

SPEAKER_02: 24:48

Got it. Okay, that's helpful context. And then when Marriott acquired Citizen M, and now obviously you're operating as the um as another star, the Citizen M program became Marriott Bonvoy, is that correct?

SPEAKER_00: 25:00

No, it's still my Citizen M Plus.

SPEAKER_02: 25:02

It still operates on its own as well as and we operate it. Oh fascinating. Okay, that's one where I wanted to understand. Because that that's what I wanted to know was how important the loyalty program still remains even as a result of the acquisition.

SPEAKER_00: 25:16

Well, I think you know, what we um in our conversations with Marriott, and there was those were really conversations, uh, there were not like the big guys uh you know swallowing up uh the small guys. Um it became clear that you know the the founder of the SPG program, David Fluck, who is now the head of Bonvoy at Marriott, yeah, was really interested in learning, you know, through My Citizen and Plus what what like a paid subscription program does if you start attaching Marriott to it. So you know, we're we're not sure where it's going to go, but for the next year or so we're going to um you know keep operating it and jointly look at this. So, what can we learn? You know, now as a My Citizen Plus subscriber, you get free Bonvoy gold.

SPEAKER_02: 25:54

Right.

SPEAKER_00: 25:54

So I think about it for 179 bucks a year, you can straight away get to the gold status. It's a great deal. Yeah, it's like if I think about it, like I'm very loyal to my KLM Fly and Blue program, it's part of Sky Team. Yeah, like I would choose a different route that takes longer to stay with these guys. But if United would call me and say, you know what? I'll do a status match, yeah. You know, I'll get you onto that senator program, whatever it's called, you know, just have the Lufthansa, but the highest tier, I might actually consider it. Yeah. But why not give me the paid option?

SPEAKER_02: 26:29

Yeah.

SPEAKER_00: 26:30

You know, I've I've been like on the Easy Tet Plus program for you know when I was traveling out of Amsterdam for quite some time.

SPEAKER_02: 26:35

Yeah.

SPEAKER_00: 26:35

It's like, oh, you pay a couple of hundred bucks a year and you get all these benefits. Uh, you know. Yeah. I would pay, you know, for a lot of these loyalty programs, whether it's in in the car, uh, the car rental sector or the airline sector or the hotel sector, to to get to that higher level instead of earning it. And and to some extent, Marriott and and the other chains already have a way of doing it by the brand of credit cards.

SPEAKER_01: 26:59

Yeah.

SPEAKER_00: 26:59

And it also gets you to a certain status. So we're in it as a partnership to learn.

SPEAKER_02: 27:04

Really interesting. I think that's one of the examples I can share with our listeners is since I'm uh over the course of this series, I've talked about being super elite with Air Canada, and one of the benefits is that I get to gift my wife her 50k status, so she gets all the benefits of the airport. But uh I also get um Marriott Bonvoy Gold as well. Like so I've got an offer to be and I wouldn't otherwise be staying at a Marriott, but all of a sudden that has now influenced my decision making because now I have gold status. I would not have achieved that on my own, but the fact that I've been now gifted that converts my loyalty over because I'm very loyal to Air Canada. Now I feel a sense of connection to Marriott. So I and I I love the status match. Obviously, uh Loyalty Status Co. is a sponsor of this series, and I just but I genuinely love the status match concept. And obviously, the hospitality sector is aside from airlines. I mean, what would you say? I mean, is it airlines, uh, hospitality and maybe car rental, like in terms of importance for loyalty programs within the travel sector? Because I'm assuming that the hospitality sector, like the loyalty programs, and this is more of a question for you, of course, is uh how important do you see loyalty programs in the success of hospitality companies?

SPEAKER_00: 28:18

Yeah, I would say they go hand in hand to whether the airline programs are more powerful than the hotel loyalty programs, you know. I don't know. I mean, from from my European perspective, in Europe we always always laugh a little bit at Americans like with all their points and cashbacks and uh you know these type of things. The only the only loyalty programs you really really understand in uh Europe are the airlines. Right. Uh because they're so dominant and that's something that you can can clearly see. Yeah, but yeah, I I don't know like what is you know how many members uh I can imagine, you know. I know Merritt has like 250 million.

SPEAKER_02: 28:52

Right, exactly.

SPEAKER_00: 28:53

How it compares to you know United or American Airlines, uh yeah, I wouldn't be able to tell you. You probably need to ask an airline guy about it.

SPEAKER_02: 29:00

For sure. No, I and I'll I'll I'll uh I'll put some stats in for our listeners when we summarize this series because I think we this is the first time we've focused on loyalty in our six seasons, and I think there's like there could be a travel trends loyalty series unto itself to continue to explore this topic. Because literally, as far as I'm concerned, we've scratched the surface with the three interviews, and obviously I'm thrilled that you're part of this, but I think that we could dive more into just hospitality. So tell us about it.

SPEAKER_00: 29:27

But I'll tell you one thing, Dan, on this because you know, better the the total numbers that might be less relevant, but what the numbers mean to you. I mean, we've only been live on you know, married by some hotels for a couple of weeks, but the amount of people that has never ever considered citizen M before and are staying at our hotels. Right. I was triggered actually, and I'll give you this little anecdote when we were opening Seattle just before COVID hit, uh, was in a Moxie in Seattle. Yeah, because our hotel wasn't open yet, and I was sitting at the bar and you know, with my laptop open, working on stuff, and a typical you know, American Seen you know a couple of people next to you ask, What do you do? You don't look like from here. I said, Well, I'm from Europe, work for a hotel company. And they said, What kind of hotel company? He said, It's called Citizen M. You wouldn't know it, you're staying in a moxie. And they said, Well, we're interested. So, I was working on a presentation for the Amazon travel manager. I said, Well, I could do my presentation for you and show you some, you know, some pictures of how it looks and the concept and the problems we solved. And I ended up doing a keynote for like 25 people in the bar in a moxie. And they all loved it, and they were so complimenting, and I really felt it, like you know, really genuinely said we would love to stay there. Yeah, and then a question came, is it part of Bonvoy? Right. No, it's not. So, well, that's too bad. You know, we're not gonna stay there, bummer. We'll stay still stay at the moxie. And I think that tells you about the power of the loyalty program. If you are willing to give up on something that you say, wow, this is fantastic, it really looks cool, and you know, stay at the hotel that's maybe less cool, it's still cool, but less cool, then yeah, the loyalty program is working.

SPEAKER_02: 31:00

Yeah, that's fascinating. That's a really I um that that answers it because it's like that if if in in the all the evidence points towards this is a great concept that you should take a part of, but the hard no is it's not part of the Marriott Bonvoy because that is like that's the gateway. And if you're yeah, so now that you are part of it, and I know you can't speak on behalf of Marriott Bonvoy, but obviously you're starting to see the benefits of the integration. What do you think is the future of uh hospitality and and loyalty? Like uh going forward, like um you know, obviously you've pioneered a concept with the hotel brand, had enormous success, and are now on this next phase of your journey um with these businesses being integrated. So coming to understand what you know about Mar Mario Bonvoy, what you've already built, and again, um I know the journey is just you know getting started, but what do you think in the next two to three years looks like? Do you think loyalty programs are only gonna can increase in importance? Do you think they'll maintain their level of importance? What what what is what is your view for this category in the space?

SPEAKER_00: 32:02

I think in this industry there's always people that are saying, you know, things are gonna die, like including loyalty programs and GDS systems. I've been part of this industry now for 25 years and they've only become more important and the GDSs are still there. So I think if I can you know from a little bit from the inside, can see what um you know what what for example Merritt is working on to become this platform. And it's it's a platform for people that if you commit to it, you know, there's all kinds of experiences, and whether it's safari camps in Africa to like JW experiences, and there's some really, really cool experiences that are part of it. And now they're you know like Beyonce tours and Formula One tickets, and yeah, if you want to be someone in the program, you gotta you know, you gotta consume, right? You gotta stay at the Marriott's and you know get your points and you know do the credit card. And I can only imagine that becomes you know more and more important.

SPEAKER_02: 32:54

Yeah. No, that's okay. Yeah, and that's that's you pointed out a couple of interesting things there, which is like the ex how these loyalty programs are expanding beyond what they're originally intended to do by almost getting into the world of credit card loyalty programs where you can redeem for experiences. And that you know, you so it it it extends beyond just being able to stay at the hotels. Now all of a sudden you want to be part of that network, and they're gonna continue to offer new benefits to you.

SPEAKER_00: 33:22

So it's a new role of the branch, you know. If you think about it, and uh this is this is not just anymore about you know, let us tell you what's up to put in the bathroom, but they've become and a good operator, right? So they know about hotels, they care about hotels deeply. That's like uh, you know, if you think about uh the legacy of Marriott, that's in their roots, yeah. Um but then at the same time, yeah, they're a big platform, um, you know, where supply meets demand.

SPEAKER_02: 33:46

Yeah. Well, given that likely uh a lot of our listeners are and I always try and channel them to think about what questions they'd want to ask. And one of the things that I um I would think is on people's minds, especially the people that are listening to this that are in the hotel space or trying to figure out loyalty programs, because you obviously our conversation started with the fact that you were um I want to say late to the game, but you you hadn't made a commitment to loyalty programs, you were still, and then eventually you decided to, and now it's been a key part of the success and the ongoing evolution of the business. For the someone who's starting out and trying and asking themselves, do we need a loyalty program? Because I've seen this in large travel companies where the loyalty program is we offer great service and we offer a past passenger discount, and that's why people come back. And we don't want to go down the path of creating points and miles because it's complicated, then you have liability on your balance sheet, and like so there is a lot of complexity to that. Um, but my view is also loyalty doesn't have to be that complicated either. So I would love, if you wouldn't mind, Leonard, sharing a few bits of advice from the journey you've been on for someone out there listening to this that is trying to decide do we need a loyalty program and what the first steps might be in evaluating how they might go about building one.

SPEAKER_00: 34:57

I think in today, and I'll come back to the distribution world, in today's distribution world, it's not about starting a loyalty program. Forget about that. Like if you're a small hotel company, you're never going to get to the skill, but join one. Right. Right? Because it's it's literally, if you think about the decision that people take, and I we see this every day. Like when we opened our Times Square property in 2014, I remember sending an email to the CEO of Booking.com, Gideon Tunce, who's you know become really good friends over time. So we did it again, right? So the first after you know, after the first week being on booking.com, we were the number one on booking.com in Manhattan, and our first month was at you know 95% occupancy at a price point over$300. Wow. Those were the times where you could debate, like, ooh, do I really need a loyalty program? But those days are gone. You cannot just open a hotel in New York and be the number one on booking.com without paying them a shitload of extra commission and you know get that ADR and that occupancy out. It doesn't work like that anymore. So in today's world, and we literally see this, you can choose and think about this. If you travel in Europe, sit on the easy jet flight versus sit on a KLM flight or a Lufthansa flight and look around you. You know, in KLM, people are happy to pay double the price of the EasyJet flight. Well, it gets you from A to B, right? And it might get you, you know, one free cup of coffee, a water, and some cookie. But that's about it. Right? Uh why do people pay double? That's because you know they're part of the program, they're happy to participate, and that's what you see. If you want to get higher ADRs, if you want to get more profitability, you gotta you gotta be available for those people that really, really care about their loyalty program.

SPEAKER_01: 36:43

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SPEAKER_02: 39:01

And now, back to the show. Given the importance of hospitality and loyalty, what do you see customers are uh what appeals to the most? What are some of the things that are moving the needle out outside of like so if they join a loyalty program to you to your exact point? That's a like a a really um uh a really fascinating viewpoint, which is like don't create your own, participate in another one. What so if they're now participating in one, clearly there's additional benefits for their members now to to redeem other things. What what what are some of the things that drive that behavior? You mentioned experiences. Is it is it more travel options? Um, or are there other things that seem to incentivize people to remain loyal? What are yeah, what what are the some of the rewards that people that you see like that they take the most value in or where are their interests expanding to?

SPEAKER_00: 39:51

I think people need to know that they're taken care of uh wherever they travel. And so this is especially, I mean, depending on where you are in the world, this might be more or less relevant. But Americans that are going, you know, to European cities, they rely on something they recognize, and if it's endorsed by Bonvoy, they'll be happy to stay at it. You know, this is why McDonald's expanded, right? It's an American that goes to Paris and wants to eat something he knows, right? So that core principle is still there, even though you could argue like oh, with the reviews and everything, um, you know, the full transparency on social media, you don't you no longer need this brand endorsement. But I I do see a lot of people that are just knowing like the commitments that Marriott makes. When I speak with Marriott, but it's the same about the other brands, yeah. Yeah, they're pretty they're pretty solid. Yeah, you know, if you think about the level of checks like on health and safety and IT security and and the compliance that we had to to go through. Yeah, like you don't know if you're gonna go to some you know uh 80-room hotel in the center of Paris if they have proper smoke detectors, and when was the last time they were checked if your laptop is gonna be hacked if you join the Wi-Fi? Yeah, and so there's I know there's a lot of criticism on you know the big brands, like oh, you have 30 brands, like how serious are you taking brands? But that's just providing optionality, like you know, if you like Citizen M, well you can now stay at Citizen M. If you like a JW type of white glove experience, it's there too. If you want to go on Safari in Africa and get uh you know the the treatment. Uh we have it too.

SPEAKER_02: 41:27

So yeah. Well, you brought up a really important point that we should definitely cover, which is technology and AI. And Leonard and I had the privilege to be on a panel together, so it was fantastic uh to meet you in person and obviously see you on stage and join in that discussion. I know you had some some strong views about technology and uh the like the airport experience and also how AI will change things. And clearly you know a lot about your guests, and Marriott knows that much more about their guests. Um when you think about how technology can be an an an enabler, and especially AI, what are you seeing as some of the initial use cases as it relates to hospitality, loyalty? Uh are you seeing examples or have you guys been utilizing AI in some way to help improve your programs or the guest experience? I'd love to get your take on that.

SPEAKER_00: 42:15

Yeah, absolutely. I think we've been um you know, we've been wondering on the distribution topic, which is happening uh, you know, beyond your control, like how are people going to use AI? So that's sparked that discussion for a moment. But we've had you know two uh you know AI types that have been uh really successful for us. One is on the on the back office, like automating uh automating tasks. So why have humans do uh what the computer can do? And we already done that before AI with robotic program automation. If you think about a central operating model, like every day we gotta charge a couple of thousand virtual credit cards, and there's still people at the front desk to do the manually. At Citizen NBA bots going around and they charge all these credit cards at night and they they give you the exceptions, and you know, you don't longer need people to do that. So we've been automating everything that can be automated, we've been doing that since our inception. But we've also been putting AI in on the consumer-facing end. And so at the moment, you know, if you put in a comment or a question through booking.com or Expedia, like almost a hundred percent of those comments are answered by AI.

SPEAKER_01: 43:20

Right.

SPEAKER_00: 43:21

There's not a human being that does it anymore. Yeah. So give you an idea, like a typical hotel you walk in, said, Can I see the reservations office? And there's you know, three or four people for a 200-bedroom hotel that are you know doing, you know, picking up the telephone if you call the hotel. Yeah. We have 22 staff for 37 hotels that do 24-7, all incident management for all hotels, plus all you know, customer facing, B2B handling, right? So that's incredible. Yeah, it's it's uh it's like superpowers.

SPEAKER_02: 43:47

Yeah, yeah, yeah. So obviously massive cost reduction and like m major efficiency gains.

SPEAKER_00: 43:52

And mass, you know, customer satisfaction. Yeah. Right? Because what's the chance you think, you know, if you ask something on booking.com or Expedia that the hotel will get back to you. Yeah. It might be a 50-50. And if you get back in five minutes, yeah. You know, that's you know, makes you happy. Yeah. Uh if you if you send us a WhatsApp, can can I get my invoice? You know, there's there's a bot answering it and you get it.

SPEAKER_02: 44:15

Have there any use cases you've seen yet where AI is actually being leveraged to improve loyalty? Like you looking at that propensity of consumer booking or behavior, because obviously I'm sure there has to be applications of that with using some of these large language models to look at all that data and try and make recommendations. Have you been seeing that yet? Is that something or you think that's that's to come?

SPEAKER_00: 44:38

I think that's to come, honestly. Yeah. You know, we've done quite, of course, you know, some research and we have a big data warehouse, and you know, we try to become predictive of, you know, when people are churning, they're not coming back. But I would say the scale of operation with 36 hotels, and you know, sometimes you will call someone, say, you know, we miss you, you know, we're a champion. Where did you go? So yeah, I was a consultant, that's why I was staying at your hotel every week, and now I'm no longer a consultant, so I don't need the hotel anymore. I still love you guys, and I would always stay at a citizen, but I'm not there anymore.

SPEAKER_02: 45:05

Yeah, yeah.

SPEAKER_00: 45:06

Um, so I I think you know, when it comes to AI, probably agentic AI. If I look right now at uh you know, especially with Bonvoy, Merritt is quite a powerful CRM where you know you can look up anyone that's gonna stay at your hotel and you can see their history, you can see their complaints and some of the issues they had, you know, the typical behavior, the service they require. But that requires someone to look at it, right? So I'm already thinking about the use case. Okay, what do I need to know about then?

unknown: 45:34

Yeah.

SPEAKER_00: 45:35

If you're gonna stay at my hotel, beyond the obvious that you're a titanium elite or you know, gold. I just found out on on Marriott. But yeah, maybe the you know, the returning item is that you like two extra non-featter pillows in the room. AI can pick that up from your profile, can put it into our system and make that an action. Please can somebody put two extra non-feather pillows in the room.

SPEAKER_02: 45:55

Yeah, yeah, that's fascinating. Well, I'm keen, I'm I'm obviously very bullish on AI, but I'm um I'm kind of trying to strike the balance between what can be automated and where technology serves a um a human benefit and where the human connection is still important. So um I'd love to finish off. I want to make sure that people know where they can, you know, obviously connect with you, um, learn more about what's ahead for Citizen M and also another star. Um, but just if you wouldn't mind sharing uh what the plans are for you guys in the next uh year or two as this, you know, the the next stage of of this of the company now, because obviously you're on the next stage of the journey. What does that look like in the next year or two? And then obviously most importantly, I'm keen to make sure that people can reach out and connect with you after this.

SPEAKER_00: 46:42

No, absolutely. Feel free to connect with me on um on LinkedIn. You know, sales pitchers might be um you know sometimes ignored. I always see them, but uh it's quite busy on that. But no, if you want to have a conversation, always feel free to connect uh with me on LinkedIn. What is next for us is the um, you know, the next year or so is just the the consumption of our marriage with Marriott. Uh it's a big transition for us, it's a big change. Uh we need to get used to these loyalty systems, you know, new technology, um, and really maximize that, right? So for us, you know, we're going to maximize the impact that Marriott's going to make for us. Yeah. For the assets that we own. Um, and then we'll we'll take it from there. We'll, you know, we'll see how that looks like in a year from now. And for sure we'll be there for Marriott uh when they're expanding Citizen M. They have huge plans, they want to, you know, get to you know over a hundred citizen M's uh over the next couple of uh a full of years. So there might need some help on that.

SPEAKER_02: 47:36

Yeah, no doubt. I'm just thrilled to hear that the Citizen M journey continues. That's the part that I was I guess slightly concerned about when I read the news and then when I was you know keen to uh to meet you, have you on the podcast because as we started, I'm a huge fan of the brand, so I I love that that story continues and hopefully it just strengthens the loyalty program, the the hotels continue to expand. I will definitely redeem my uh Marriott Bonvoy Gold now and see how that applies when I make my next Citizen M booking. Um but it's a real pleasure to meet you, Leonard. I've just you know thoroughly enjoyed getting to know you, and I'm really excited to see how things evolve for you in the next uh couple of years. And anyone who has not stated a Citizen M, take the opportunity because it is um uh it's like on a there's you have to experience it to understand it, and you will be absolutely delighted with the experience. So that's my kind of big takeaway. So thank you.

SPEAKER_00: 48:40

You know, Merriott did not acquire the Citizen M brand, and it was the largest single brand purchase they've ever done to destroy it. Right. Right? They saw you know the equity that we build up, and you know, they're gonna be great guardians. You know, we have we are still the largest owner operator of these Citizen M's hotels, and you know, we'll we'll be around, but Merriott's gonna do a great job of it.

SPEAKER_02: 49:00

Well, sounds like a very bright future for you and the company. So yeah, wish you continued success and look forward to keeping in touch. Thanks, Dan. Thanks so much for joining us on this first ever loyalty series on the Travel Trends Podcast. Thanks again to the team over at Loyalty Status Quo for sponsoring this series. Special thanks to Aaron Murray and Mark Ross Smith for their support and also their involvement in creating this series. I love the fact that we had aviation hospitality and the chance to speak to Aaron. And today, of course, we finished it off with the CEO of Citizen M, Leonard DeYoung. And he clearly knows his stuff when it comes to hospitality and especially the world of loyalty. It was really interesting for me to hear about the origins of their program, especially given their reluctance initially to implement a loyalty program. And then when I had the chance to ask him about those hoteliers out there that are considering implementing a loyalty program today, I thought it was fascinating to hear his answer, which is don't create your own partner with another. And so this is a topic I'm definitely keen to continue to focus more on. So feel free to send us your feedback. You can send me an email, Dan at traveltrendspodcast.com, or comment wherever you're seeing this being posted. And we continue season six next week with Captains of Industry. We're gonna have Travis Pittman, the CEO of Tor Radar, joining us before we kick off two more series, one on sustainability, and then our final series on season six is gonna be on aviation. So actually a good tie-in from our loyalty series. And we're just in the final stages now of planning out our content for season seven, which will start in February of 2026. If you have suggestions for topics or speakers, feel free to reach out to us. If you're looking to partner with us in 2026, now's the time to let us know. So feel free to get more information at Traveltrendspodcast.com. And don't forget we do post clips and highlights from all of these conversations on our social channels, which you can find on LinkedIn, Instagram, and YouTube. And we do send out a monthly summary of all of our episodes, which will include this loyalty series. And you can register for that at Traveltrendspodcast.com. Thanks again for joining us, and until next week. Safe travels.