Head of Hilton Honors Tells TPG Why He Thinks Experiences Are the New Sweet Spots

The Hilton Honors Experiences platform has just scored itself a new record — its most expensive auction ever has now closed at a whopping 2.9 million Honors points. This new total bests the previous record by almost 850,000 points and falls squarely into the "unaffordable" category for most loyalists.

So what did this massive outlay points get the winner? A chance to "Make the Maldives Your Playground," an experience which included a four-night stay in the Sunset Water Villa at the Conrad Maldives in addition to a full day in which to hang out and play in The Muraka, billed as the world's first underwater residence.

Whether or not this represents a great value or poor value depends on your perspective. On the one hand, 2.9 million Hilton Honors points could get you 30 free nights in a standard room at the Conrad Maldives — and since these book into a 1,600-square-foot beach villa, you'd be hard-pressed to call these "basic" accommodations. However, the Sunset Water Villa is quite unique, set on a private section of the resort's lagoon with a private boardwalk, a circular bed that turns 270 degress and a private infinity pool. Covering 4,865 square feet, the villa typically goes for $5,000+ per night, making this a solid redemption on paper (at least).

In light of Hilton's newest achievement, we sat down with Jonathan Nouri, Vice President and Global Head of Hilton Honors, to discuss the Experiences program and its future within the company, and we got an inside peek at the data that drives its strategy.

For those unfamiliar with Hilton's Experiences site, it acts as a curated collection of events, activities and tours you can book using your Honors points. Similar to Marriott's Moments, the platform seeks to offer once-in-a-lifetime experiences for its members across the globe.

Originally envisioned as a way for big earners to redeem their points for unique experiences other than hotel rooms — and ones that weren't available using cash — the platform has grown to include partnerships with professional sports teams and concert venues alike in order to provide a variety of experiences to all members, not just those with a million (or more) points to blow.

One such example is Hilton's "Lawn Days" events, a series of concerts from big names around the country. Two tickets to a Lawn Days show will set you back just 10,000 Honors points, the equivalent of $60 and well within the reach of most.

When asked for his favorite experience, Jonathan laughed, admitted to being a concert snob, and said that his (very) recent trip to see Nelly and TLC perform for just 5,000 points "was so much fun."

These types of offerings highlight Hilton's efforts to evolve its Experiences brand into something more — and it's working. The platform itself has experienced some incredible growth, as it's seen a massive 152% increase in bidders and 37% rise in visits to the site over the last year based on data shared with TPG. In the first half of 2019, that equates to more than 1.2 million visitors who combined have placed 5,440 unique bids and spent just over 120 million Hilton Honors points across all experiences. The main reason for this, Jonathan says, is because of these lower-priced packages, which are vastly more accessible than, say, a VIP Grammys experience (450,000 points) or the above, high-priced visit to the Muraka.

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Though for those worried about increased visibility affecting prices, fear not. Although "buzzy," Jonathan states that these bucket-list experiences — not just once-in-a-lifetime but in a single location in the world — are wholly unique and available to a small and distinct set of members with hundreds of thousands (or millions) of points. As one-offs, they shouldn't impact the overall number of points that travelers will need to redeem for most offers.

Still, these high-end packages are major drivers for the platform and gain a lot of attention due to their unique nature and "wow" factor. And these events are, quite literally, nearly priceless. Speaking about the Maldives package, Jonathan admitted that, though it might be possible to break down the cost of an experience that includes a privately-prepared dinner under the sea and a day cruise where the chef cooks a fresh-caught seafood meal, figuring out how to charge guests for the opportunity would be a monumental effort.

In regards to the points cost of these type of activities, Hilton doesn't use any internal benchmarks for how they're expected to sell. Essentially, the program's starting bid for the auctions acts as a reserve and represents the minimum amount it'll accept; there's no attempt to match the estimated dollar cost of the package to the points ultimately required. The key balance for Hilton, of course, is finding the right mix of luxury and affordability in order to meet the needs of members and grow even further.

This appears to be the game plan, as Jonathan discusses scaling the Experiences platform to reach more members than ever. When asked what this would look like, he references the highly-rated Gin Experience at the Conrad Singapore, which allows guests to create their own Gin and Tonic masterpieces and features over 20 different gins to choose from — all for just $25 (or $15 during happy hour). Giving members the opportunity to prebook this using points (or to pay cash to earn points) is a win in Hilton's book.

The goal, he says, is to offer unique, relevant experiences to guests, no matter where they're staying. In the future, an integrated platform could offer guests a curated selection of events based on where they're booking, with the ability to either redeem points or pay cash (and earn points on their spend). Ideally, these events would be unique to Hilton, using either exclusive partnerships or the program's own hotels to act as hosts, and they could even be available during check-out, allowing guests to customize their stay with a variety of options for additional point earning or redemption.

In fact, growing hotel offerings seems to be a focus, as indicated by the increasing number of packages available on the site, such as the forthcoming Fitz and the Tantrums concert at the newly opened Conrad Washington, DC. This makes sense, as keeping events on property furthers Hilton's control, making sure that quality standards are met and all dollars spent return to Hilton. And Jonathan even expressed a goal of more local integration, creating experiences for members not staying in hotels to use points to enjoy events on properties, even when not a paying guest.

This, in addition to a casual allusion to new partnerships, spells good news for Honors members. Hilton has had a good year, seeing a 20% year-over-year increase in members and similarly positive increases in engagement. This focus on the Experiences platform is yet another indicator of how Hilton is reshaping its loyalty program — offering timely and relevant ways for guests to redeem their hard-won rewards. While the challenge will be to strike that balance between exclusivity and scalability, the end result will hopefully be a better experience for all members.