Closed User Groups in Travel: Benefits, Examples, and Best Practices to Enable a CUG Strategy
As a travel business, it’s not enough to just offer a variety of travel options to your customers. To truly stand out in the crowded industry, you must provide a unique and personalized experience that keeps your customers coming back for more. That’s where closed user groups come in. By creating exclusive travel experiences for a select group of clients, you can increase customer loyalty, repeat purchase rate, and revenue.
In this blog post, we’ll show you how to implement and take advantage of a closed user group strategy.
What is a closed user group?
Closed user groups (CUGs) in the travel industry refer to a group of individuals or companies that can access exclusive rates and deals on travel products and services. These groups may be made up of employees of a specific company, members of a loyalty program, or other prequalified clients. They are a way for travel vendors to offer discounted airfares, hotels, car rentals, and other perks and benefits to certain clients, while also potentially increasing sales and customer loyalty.
Key players to use CUGs
While there may be many different organizations that use closed user groups as a means of reaching specific target audiences and increasing revenue, the top three players include hotels, aggregators, and clubs.
Hotels use CUGs to offer exclusive, discounted rates to a select group of customers, bypassing traditional rate parity restrictions and building direct relationships with their customers. For example, Marriott Hotels & Resorts have Club Marriott that provides exclusive dining and accommodation benefits to members at over 350 participating Asia Pacific hotels and resorts.
Aggregators leverage CUGs to provide a more personalized and value-driven customer experience, fostering loyalty and encouraging the repeated use of their services. For example, the Resort Inventory Group, which we’ll cover further, aggregates many membership clubs for hotels to distribute their products.
Clubs use CUGs to create exclusive travel experiences for their members, offering unique deals and promotions, and building stronger connections with their customer base. Clubs can be family-driven like The Atlanta Athletic Club or those focusing on luxury travel like Inspirato.
Types of closed user groups
There are several types of closed user groups in the travel industry.
Travel clubs. These are membership-based organizations that offer exclusive deals and discounts on travel-related products and services to their members.
Members of corporate travel programs. Many companies have closed user groups for employees to book travel for business purposes, often at discounted rates.
Group travelers. This type of closed user group is organized for a specific group of people, such as a school class, sports team, or religious group traveling together.
Luxury travelers. Some high-end travel companies offer exclusive and customized travel experiences to a select group of wealthy clients.
Timeshare members. This is when a group of people jointly own or have the right to use a property or properties for regular vacationing.
It is worth noting the criteria that distinguish a closed user group among the various options available.
The membership of a closed user group is not automatic and individuals must meet specific criteria to be eligible for a CUG. Requirements can vary depending on the organization or company implementing the strategy. Some common preconditions to become a member of a CUG include:
- membership in a specific organization or affiliation (e.g., employees of a certain company, members of an airline frequent flyer program);
- subscription (a member must opt-in, have access to the group with a password-protected login, and create a member profile);
- purchase of a certain product or service (e.g., customers who have booked a certain number of trips or have a certain level of spending);
- meeting certain demographic or lifestyle criteria (e.g., retirees, families with young children, members of a sports club, to name a few); and
- meeting certain loyalty or engagement criteria (e.g., customers who have been with the company for a certain amount of time or who frequently interact with the company’s social media or email marketing campaigns).
Some of these points, though, can involve other customer engagement mechanisms such as hotel loyalty programs. So let’s define all the possibly confusing terms.
Closed user groups vs subscription-based services vs loyalty programs
Closed user groups, subscription-based services, and loyalty programs are all types of membership-based services, but with some distinct differences.
Closed user groups are exclusive groups of people who have access to certain products or services that are not available to the general public. They are often organized around a specific theme, such as luxury travel or corporate travel.
Subscription-based services are membership-based services that require customers to pay a regular fee (monthly, yearly, etc.) to access certain products or services. These services often offer exclusive deals and discounts to members.
Loyalty programs are a type of customer retention program that recognizes customers for their repeat business with discounts, rewards, or other incentives. It’s not always exclusive, but the rewards and perks increase with the level of customer engagement.
All of these types of membership-based services have some overlap, but they are not the same. Some travel companies may offer a combination of these options to their customers.
Benefits of CUG distribution for the hospitality sector
Closed user groups are often used by businesses to increase direct bookings and boost their bottom line. So the key advantages of CUG distribution include the following points.
A way for hotels to evade rate parity restrictions. Rate parity agreements are often made between hotels and OTAs to ensure the same pricing and availability across all distribution channels. By selling rooms via closed user groups, hotels can bypass traditional rate parity restrictions and set lower prices.
Higher revenue. CUGs allow hospitality businesses to offer exclusive rates and deals to a group of customers, which can help to increase sales and revenue.
Increased customer loyalty. By offering special perks and benefits to CUG members, hospitality businesses can foster customer loyalty and encourage repeat business.
Improved inventory management. CUGs allow hospitality businesses to better manage their inventory by targeting specific groups of customers and limiting access to certain deals or offers.
Marketing efficiency. By targeting specific groups of customers, hospitality businesses can more effectively market their products and services, which can lead to increased efficiency and a better return on investment (ROI).
Better customer insights. By tracking and analyzing the behavior of CUG members, hospitality businesses can gain valuable insights into customer preferences and spending habits, which can inform future marketing and sales strategies.
Enhanced brand reputation. Offering exclusive rates and deals to a select group of customers can enhance the brand’s reputation, making it seem more exclusive and desirable.
Better forecasting. CUGs can help businesses predict demand, which allows them to better plan and forecast future sales, helping mitigate risks and manage resources effectively.
Also, the member rates offered through closed user group programs address one of the challenges faced by loyalty schemes: Many consumers prefer to receive rewards immediately rather than having to wait for a long time to reap the benefits of the loyalty program.
How businesses use the CUG strategy
Closed user groups have become a popular strategy for businesses looking to offer exclusive discounts and promotions to select customers. Some of the most well-known companies that have successfully implemented closed user group strategies include travel booking websites like HotelPlanner as well as airlines and hotels that offer loyalty programs. Let’s take a closer look at some of the most prominent examples of CUG implementation.
HotelPlanner: AI-based platform that focuses on CUGs
Established in 2002, HotelPlanner is a global provider of individual, group, and corporate travel bookings. It focuses on the high growth and high margin CUG segment, which includes corporate travelers, wedding groups, reunions, sports event attendees, and loyalty program members who are offered exclusive, unpublished discount rates on blocks of rooms by hotels.
HotelPlanner CUG services page
The company uses a proprietary technology platform powered by machine learning. Unlike other aggregators of promotional rates such as wholesalers, HotelPlanner owns the customer relationship and manages the entire booking process, from start to finish. The company does that through its web presence and partnerships.
HotelPlanner has partnerships with over 50,000 individual hotels and hotel chains, major online travel agencies (OTAs), online wedding providers, corporations, sports franchises, universities, tourism boards, and government agencies. In effect, HotelPlanner has vertically integrated the closed user group booking process, offering both a customer-facing website through HotelPlanner.com and the necessary back-end infrastructure to process bookings. HotelPlanner’s technology platform claims to increase revenue and reduce costs.
Inspirato: Luxury travel offers for members only
Inspirato is a luxury vacation rental company that runs an exclusive travel club for its clients. It offers access to a collection of high-end, professionally managed vacation homes and experiences in popular destinations around the world to its members. Inspirato provides a range of travel-related services, including booking and concierge assistance, and aims to offer an elevated experience to its members through its exclusive collection of properties and activities.
The company has formed alliances with some of the most renowned hotel and resort brands as well as five-star vacation rental properties globally, including Montage, Aman, Rosewood, and others.
Inspirato offers a wide choice of hotels for club members
The service is available for members only. The membership can be approached through two subscription plans: The Inspirato Club and Inspirato Pass, with the latter being the more expensive and rewarding option at $2,550/month.
Also, the company provides services for businesses offering luxury travel options for those who want to reward and retain their most valuable employees, partners, and customers.
Tripscout: Implementing CUG strategy on Instagram
Tripscout is a travel inspiration, planning, and booking platform. It has emerged as the largest travel company on Instagram that has over 30 million followers across its network of travel brands.
Tripscout’s innovative @Hotel booking platform on Instagram
The company recently announced the launch of the first OTA for Instagram on their @Hotel brand and the completion of a $10 million Series A investment. Tripscout’s new @Hotel booking platform offers discounted rates negotiated with thousands of hotels around the world.
Travelers can access these exclusive offers by sending a direct message (DM) with the word “hotel” to the @Hotel Instagram account and receive private rates in the range of 30-75 percent below the best prices publicly available on hotel websites and OTAs. The closed user group nature of these discounts combined with its industry-leading organic audience size enables Tripscout to offer significant hotel deals.
Resort Inventory Group: Service to help hotels build CUG distribution channels
Founded in 2007, Resort Inventory Group is a membership-based booking platform for hotels and resorts to attract more clients. The platform partners with private membership clubs to help hotels distribute products through the closed user group channel. Resort Inventory Group boasts a vast and global network of suppliers, granting it access to over 8.3 million active travelers through these private membership clubs and programs. This, in turn, leads to an increase in bookings and higher revenue per available room (RevPAR) for its partner hotels and resorts.
Resort Inventory Group shows an increase in bookings for their partner hotels and a growth in the number of rooms booked, reaching over a million since they started.
The company represents 200+ resorts at the moment, and it claims that participating properties have received 1.15 million incremental rooms booked and higher occupancy rates.
Best practices to create and run successful CUGs
Closed user groups can be a point of interest for many businesses but they hold the greatest importance for hotels and clubs. So, if you belong to any of the categories and want to take advantage of the closed user groups, here are some best practices for creating and administrating this strategy.
Clearly define the target audience. Identify the specific group of individuals or companies that will be eligible to participate in the CUG.
Develop your value proposition. Communicate the benefits and perks that members of the CUG will receive, such as discounted rates, exclusive access to deals, or other special offers.
Create a simple enrollment process. Make it easy for individuals or companies to join the CUG by creating a simple and straightforward enrollment process.
Communicate regularly with CUG members. Keep CUG members informed about new deals, special offers, and other program updates through regular communication, such as email newsletters or social media posts.
Track and measure success. Regularly track and measure the success of the CUG by monitoring enrollment, usage, and member satisfaction, making adjustments as necessary.
Offer exclusive benefits. Offer exclusive benefits that are not available to non-CUG members, such as complimentary upgrades, priority access, special events or experiences.
Foster a sense of community. Encourage CUG members to interact and engage with one another through social media groups or in-person events.
Continuously evaluate and improve. Continuously evaluate and improve the CUG program to ensure it remains relevant and valuable to members.
Ultimately, it’s important to listen to the members of your CUGs and take their feedback into account when making changes to the program. By creating a valuable and personalized experience for your CUG members, you will foster loyalty and long-term engagement.