Rewards: Hotels get the point
Jeri Clausing, Travel Weekly, 5/15/2008 (excerpted)
Forget airline miles and all the headaches and tricks of trying to cash them in for free travel. Hotel points have become the currency of choice for savvy travelers who want to make the most of their travel rewards.
Over the past five years, hotel companies and reward club experts like Randy Petersen, publisher and editor of Inside Flyer, say they have seen marked increases in the number of travelers opting for hotel points over airline miles.
"It is a great time to be a frequent traveler engaged in hotel programs, because they are incredibly robust and easy to use and have tremendous value," said Adam Burke, senior vice president of Hilton's HHonors Program, which claims 22 million members. "If you know how to objectively evaluate what you get from different programs, the world is your oyster."
Indeed, value and ease of redemption are the theme of hotel programs, whose executives have learned from airlines that nothing turns off loyal customers faster than not being able to use their points.
Unlike airlines, hotels generally do not have capacity controls on rooms available for redemption, making it easier to actually use the points.
Guests also tend to get more bang for their hotel points.
"Unlike air fares, which have really been kind of stagnant, hotel rates are just outrageous," Petersen said. "When I have to pay $500 for a Courtyard Marriott in New York ... it may be better to save hotel points against that room as opposed to using them for a $300 airfare."
And while it has become harder and harder over the years to redeem airline miles for seats, hotels are making it easier and easier.
Starwood started the trend in 1999 by offering no blackout dates, although some of its properties are exempt. Marriott followed with a no-blackout-dates program that increases the number of points needed on some popular dates. Hilton most recently upped the ante with what it calls the only true no-blackout-date program.
"Our goal really is to say, 'Hey, no blackout dates means as long as a standard room is available for purchase, you can use your points,'" Burke said. "We want it to be very straightforward."
Apparently, for true road warriors, loyalty programs do drive repeat business. Because unlike airline passengers, whose choice of carriers is often limited by the markets they travel between, hotel customers have real choices.
"Typically when you go to a city, you have the ultimate choice," [Vice President of IHG's loyalty programs Don] Berg said. "On one street corner you might have six choices. That's where the loyalty program makes a big difference. When someone is traveling 40 to 50 nights a year, they are looking to consolidate earnings. They know if they can get to platinum level they can earn 50% more points."
Marriott says its research shows that members will drive 20 miles or 17 minutes out of their way to stay at a Marriott.
Frequent travelers also are willing to pay a little more to stay in a hotel with their program of choice, because it's usually on the company dime. In fact, Berg said, 91% of IHG's members are typically not paying for their rooms.
Buzz marketing
The popularity of such programs and the value of the loyalty they drive are clear in the amount of energy hotel companies are investing in their programs.
"When you look at the marketing, IHG is one of the best top-of-mind marketers," Inside Flyer's Petersen said. "They are always running big promotions. They spend a lot on media. They are always on top of mind offering travelers triple, double miles, whatever. Airlines don't really run big promotions like that.
"Hotels have continued to invest, if you will, in a kind of buzz marketing. That is always keeping the program on top of people's minds out there. That draws a lot of attention."
Petersen said those efforts were evidenced in the results of a recent survey he conducted that showed people think their hotel programs are more valuable now than they were five years ago, while they think their airline programs are less valuable.
But figuring out just which program is the best can take a little work.
Unlike airlines, which have a pretty straightforward point-per-mile earning system and an almost uniform industrywide minimum of 25,000 points per domestic round-trip redemption (Frontier is one exception, giving free tickets for just 15,000 miles), hotel companies' programs are more confusing.
Points earned range from two to 20 per dollar. But the redemption charts are also vastly different, as are the property offerings.
In the end, however, the perceived value of hotel rewards programs appears to be trumping any confusion consumers might be experiencing about any individual brand's policies, suggesting that a continued marketing emphasis on rewards is all but certain.
Recognizing loyalty
Points and dollars aside, as travel becomes increasingly difficult, executives say that for some true road warriors the recognition of loyalty can be as important as points.
From free upgrades to choices of extra points, better amenities or things like free Internet are becoming the norm for elite-level hotel loyalty program members.
"The trend is, people want to be taken care of," said Rene Mizwicki, director of Hyatt's Gold Passport program.
"They want that recognition," Mizwicki said. "They want to know, 'If I have been loyal to you, how are you going to take care of me?'
"Collecting points is expected. Redeeming them is expected. But travelers also want to know what you are going to do above and beyond that to take care of them. Travelers are really savvy now."