Gabriel Leigh covers hotel loyalty programs in DestinAsian magazine, explaining the lengths hotel programs will go to in order to win business from frequent guests.
I’m quoted extensively in the piece, pointing out especially that hotel programs are lucrative, with points allowing members to redeem for truly aspirational properties they might not otherwise be able to afford. I note my own award stays at the Conrad Koh Samui (last month) and Park Hyatt Maldives (upcoming).
At the same time the programs are lucrative for the chains themselves, since repeat customers are actually less costly to market to than new ones and elite customers can drive substantial revenue to a chain’s bottom line. I note that Hyatt Gold Passport and Intercontinental’s Ambassador program offer the most rewarding top tier elite levels.
The article highlights free night awards for certain number of stays (eg Starwood resort nights, Hyatt’s Faster Free Nights, Marriott MegaBonus) as one way chains can incentive travelers to choose an incremental stay at their properties over a competitor.
Though these promotions are less common than in 2009 when the hotel business was in the doldrums, hotel chains are still ramping up elite benefits to compete for lucrative elite business. And I argue there’s a real future in personal service for and relationships with the very best customers, an approach that Starwood has taken with its Ambassador program and Hyatt with its Private Line associates. Neither program has quite delivered the goods yet, but it’s indication that the chains see value in interacting with and meeting the needs of top guests one-on-one.
Still, general members are big business, too:
According to Euromonitor International, the numbers are impressive. Members of InterContinental’s Priority Club—the largest loyalty program in the world—generated 35 percent of the group’s US$6.6 billion revenue in 2010. At Marriott in the same year, 50 percent of all rooms were booked by Rewards program members. Starwood Preferred Guests represented a similar portion of bookings, but revenue on those stays amounted to more than 50 percent of the group’s total, indicating that the program’s members spend more than other guests. Starwood also reported that promotions targeted at program members earned over US$1 billion in 2010.
The programs are hardly a one-way proposition, they’re a driver of “heads in beds” as Hyatt’s Jeff Zidell is wont to say. They’ve historically gotten less attention than airline programs, but most consumers spend more time in a hotel room than on a plane and the treatment they receive in a resort can often be much better than that even of a first class cabin.
Gary,
I do think hotel programs are under-valued. Aspirational airline trips take gobs of points (and therefore generally time) to accrue. Taking two people using J or F awards overseas will take north of 200,000 points (all the way up to 360,000 points for two NA – India F awards on AA). That’s a lot of points, no matter how you shake it.
On the flip side, you can get some very decent hotel redemptions for 2800 points and $45/night. (Specifically referring to SPG Cat 3 cash and points awards here.) And, since a hotel room just about always accommodates two people, you don’t have to “pay twice” to take your wife.
Last year, the wife and I planned a trip to Thailand, Kuala Lumpur, and Bali, using C&P awards. We stayed at the Plaza Athenee BKK, Le Meridien Chiang Mai, Sheraton Krabi, Le Meridien Kuala Lumpur, and Laguna Resort Bali. Although we stayed at some other places along the way, the SPG properties represented 20 nights of our stay. We would have used just under 50,000 points and about $1000 (including taxes and service charge) for the cash component. You can do that with two SPG AmEx credit card sign up bonuses if you catch them when they are at 30k.
I say “would have used” because we got a good cash rate for a club room at the PA, and a cheap enough rate with breakfast at the Laguna where it made more sense to pay cash. But I did initially book C&P rates at those rooms 🙂
Our plane tickets, booked through AS on CX J, cost 200,000 points for two.
The article implies that IC RA benefits have improved recently. They’ve been the same for the entire 7 years of my participation…
I’m afraid that I don’t see the value in hotel programs at all. I just booked a trip around the world with stops in Australia and Asia (and a couple mini-stopovers in Europe) for 65000 CO miles. (And if I’d transferred the points from Amex to AC instead I could have done the same thing in J.) By contrast, 65000 SPG points would get me less than a week at most of their hotels, which seems much less valuable to me. And SPG points are a lot harder to get generally. (65000 Amex points would net me under 22000.) The value provided by most other hotel programs does not seem much better (except perhaps if you happen to want to stay at a Pointbreaks property).
I mostly stay in $20 hostels when I travel. A bed is a bed.
@Anon256 Amex points don’t transfer well to hotels. And my point isn’t about using points for stays, it’s really about the benefits of the loyalty programs. If you don’t want better than a hostel then you won’t really value the programs. But to me the perks of the better rooms, lounges, etc are quite valuable.