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Hotels compete for loyal guests

A free night's stay is within reach. But you might be better off hoarding points.

By Karen Datko Mar 17, 2010 12:52PM

This Deal of the Day comes from Kelli B. Grant at partner site SmartMoney.

 

With room occupancy at historic lows, hotels are looking for the kind of customer who doesn’t sleep around.

 

Hotel occupancy levels plunged to 55% during the recession and are expected to continue hovering there this year, reports PKF Consulting, a hospitality research firm that tracks pricing trends. “It’s still very much a buyer’s market, and brands are fighting for guests,” says Robert Mandelbaum, director of research for PKF. Room rates, which dropped 8.8% in 2009, are projected to fall an additional 1% to an average $96.17. Some properties are trying to find ways to entice guests without harming the bottom line.

 

Enter loyalty programs. These perks traditionally have been used to encourage consumers to choose one chain over others. Now, fierce competition for those frequent -- and so, revenue-generating -- travelers is raising the bar, says Michelle Chang, an equity analyst covering the lodging industry for Morningstar. Shortly after Hilton upped its redemption requirements in January, making a free night about 20% more expensive, Best Western and InterContinental Hotels initiated programs to lure away disgruntled guests. (See details below.) “It’s not surprising to see them jump on that opportunity,” says Chang. Some chains are also dangling more points-earning opportunities and reward sales.

Before you switch loyalties, though, crunch the numbers on rewards to make sure you’re getting the best deal, says Bjorn Hanson, a clinical associate professor at New York University’s Tisch Center for Hospitality, Tourism and Sports Management. Redeem old-program points before they expire, or consider using a swap site like Points.com to change over your balance for a small fee.

 

Don’t be quick to jump on redemption deals, either. Travelers redeeming for free rooms now are unlikely to displace paying guests, so it’s also in hotels’ best interest to entice you to part with your points while regular room rates are still low, Hanson says. Even if you’re using fewer points, you’re getting less value for them. Check travel-deal sites, flash sales and hotel sites first to see if you can find a good sale.

 

Here’s a sample of deals some major chains are offering:

 

Best Western. Provide proof of your elite status in another chain’s loyalty program and Best Western offers equivalent status in its program -- though it doesn’t transfer or match points. Regular members, for example, earn 10 points per dollar spent on room rates; Platinum members -- those who stay at least 15 nights annually -- get a 15% bonus as well.

Carlson Hotels. In February, the hotel group, whose brands include Regent, Radisson and Country Inn & Suites, cut redemption requirements by up to 50% for many of its properties. For example, top-tier Category 6 hotels cost 60,000 points per free night instead of 90,000. (Members earn 15 to 20 points per dollar spent, depending on the hotel brand.) Carlson also eliminated the program’s FlexPoints feature, which charged a 50% points premium for redeeming rewards during peak travel times.

 

Hilton. Citing a need to bring its program in line with the competition, Hilton in January raised its redemption requirements. It was the first time in six years the company had done so, and it’s too early to measure the impact on the bottom line. However, Hilton is now running “Point Stretcher” deals on select dates through June 30. The offer cuts point requirements at the 550 participating hotels by 40%. If you pick the right night, a one-night stay at the Conrad Miami will cost 24,000 points instead of 40,000 points.

 

InterContinental Hotels. The hotel group, whose brands include Holiday Inn and Crowne Plaza, is offering “bonus speed” points to travelers through April 30. Travelers earn an extra 1,000 points or 200 miles for each night’s stay through that date, up to 20,000 points or 4,000 miles total. Regularly, you’ll earn five to 10 points per dollar spent, depending on the hotel brand.

 

Marriott. Marriott, too, increased redemption requirements at 300 properties by changing their reward category. However, it cut required points at 350 others. For example, the Fairfield Inn in Tucson, Ariz., dropped from a Category 3 to a Category 2, lowering the points required from 15,000 to 10,000 per night. The hotel group offers “Point Saver” deals that cut requirements by up to 33% through the end of the year at participating hotels. Starting May 7, Marriott will also offer free in-room Internet access to its Gold and Platinum elite members (i.e., those who stay 50 nights or more annually).

 

Starwood. Starwood is pilot-testing a new loyalty program that targets loyal customers at its and other hotel chains’ brands. “For competitive reasons, we have deliberately kept this initiative ‘under the radar’ and divulged very few details, even internally,” says Mark Vondrasek, senior vice president for distribution, loyalty and partnership marketing. He says several thousand travelers were invited to participate based on factors such as their potential profitability as guests and their ability to influence other people’s travel.

 

While details of the pilot are still under wraps, members of the hotel group’s regular loyalty program can earn bonus points for stays through April 15. A one- or two-night stay earns you double points, a three-night stay earns triple points and a stay of four nights or more, quadruple points. Regularly, members earn two points per dollar spent.

 

Related reading at SmartMoney:

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