U.S. Markets closed

OpenTable Encourages Diners to Travel With Its New Loyalty Play

Deanna Ting
OpenTable Encourages Diners to Travel With Its New Loyalty Play

Beginning today, U.S.-based members of OpenTable’s loyalty program can redeem their OpenTable Dining Points for discounted hotel stays on sister company, travel metasearch site Kayak.

For example, an OpenTable user can redeem 2,000 OpenTable Dining Points for a $40 discount on hotel bookings made on opentable.kayak.com. Diners must have at least 2,000 points to enjoy discounted savings, and they also have the option to continue to use those points toward a $10 Amazon gift card, or anywhere from $10 to $25 off a restaurant reservation. While Kayak is primarily a metasearch site, the actual hotel bookings are powered by a sister brand, called Rocketmiles.

The idea for this loyalty connection resulted from the fact that OpenTable and Kayak now share the same executive leadership team, following the October departure of former OpenTable CEO Christa Quarles and subsequent appointment of Kayak CEO Steve Hafner as the restaurant reservations platform’s new leader.

“Now that Kayak and OpenTable are part of the same family and we report to the same executive team, we decided to take a look at the program and tried to find a way to provide incremental value to OpenTable users,” Kayak CEO Steve Hafner told Skift. “Our diners love to travel and our travelers love to eat. It’s getting diners to travel more.”

OpenTable’s Parent Company Is Making Loyalty a Priority

This loyalty connection between Kayak and OpenTable hints at a future where not just OpenTable and Kayak — but all of Booking Holdings’ six brands — are presented to consumers as a comprehensive, consolidated platform offering them a variety of experiences, from dining and hotel stays to flights and tours.

When asked if this is part of a move toward a single, unified loyalty program for Booking Holdings, Hafner said, “I think that makes a hell of a lot of sense, and it’s something we’re looking at.”

The Kayak-OpenTable tie-in is just the start, followed by the need to establish common account profiles and log-ins for all of Booking’s brands. Helping restaurants better know their customers is another motivating factor in this move to beef up OpenTable’s loyalty program — something Booking’s other brands haven’t quite explored previously.

“We’ve got six different brands in the portfolio, and OpenTable is the only one with a really viable loyalty program,” Hafner explained. OpenTable would not disclose how many loyalty members it has, but the company says it seats more than 27 million diners per month via online reservations across more than 48,000 restaurants.

“Agoda has a little bit of a loyalty program, but with this, we’re dipping our toes in the water and expanding that [loyalty] program to other brands,” Hafner continued. “Kayak has never had a loyalty program, but it’s something we think we could work on with OpenTable, and that we could expand. Someday in the future, you can earn OpenTable points for making reservations on Kayak.”

Booking Holdings’ brands, which include Booking.com, have traditionally done little in the loyalty space, although Booking.com has been testing travel discounts with its Genius program.

As for the cost of supplementing these hotel discounts and powering loyalty, Hafner said the math works in both consumers’ and Kayak’s favor.

“We make a lot more money on a hotel reservation than we do from seating someone at a restaurant, and we pass that incremental profit back on to the consumer,” he explained. “So, it’s a win-win for users of OpenTable and Kayak, and for our own P&L [profit-and-loss statement]. If a consumer redeems 2,000 points for a hotel stay, instead of writing Amazon a check for $10, we generally make more than $40 per hotel reservation, so it’s still accretive to our P&L.”

More Ahead for OpenTable in 2019

OpenTable stands apart for the robustness of its loyalty program in comparison to its sister brands. However, it has also struggled more financially, too, since Booking Holdings, then known as The Priceline Group, acquired it in July 2014 for $2.6 billion.

In September 2016, The Priceline Group took a $940.7 million write-down on OpenTable.

OpenTable also faces increased competition from newer restaurant reservations platforms, including Tock and Resy, which recently acquired competitor, Reserve. In April 2018, Airbnb-backed Resy announced it was piloting its own loyalty program, called Resy Select. As with OpenTable’s relationship with Kayak/Booking Holdings, Resy could also potentially benefit from its connections to Airbnb.

In October, after assuming the top leadership role at OpenTable, Hafner told Skift he wanted to transition restaurants from OpenTable’s older in-restaurant hardware to the company’s new cloud-based GuestCenter product, as well as delving into point-of-sale integration to give restaurants more information about OpenTable diners.

“We want to tempt people away from using the phone or walking into the restaurant,” Hafner said. “It’s better for restaurants to know in advance how full they will be and who is dining with them. Not only do we put diners into restaurants, but we can also ascertain the value of those diners and provide better hospitality.”

He added, “I don’t know what Resy is planning with their loyalty program, but anything we can do to help users go online to book their restaurant reservations is great for the industry, and great for the restaurants, too.”

Restaurants that currently use OpenTable to handle their reservations can also expect some changes to OpenTable’s pricing structure, which a number have expressed displeasure with over the years. At the moment, OpenTable charges restaurants $1 per seated diner delivered by its platform, in addition to a monthly fee.

“We’ve been testing [a new pricing structure] in a handful of markets for some time,” Hafner said. “By the end of Q1 we can share exact details.”

Hafner said diners can also expect OpenTable to expand its global reach beyond the 20 countries where it currently offers online restaurant reservations.

Subscribe to Skift newsletters covering the business of travel, restaurants, and wellness.