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Executive Travel | ON THE MOVE / CAROL SMITH

Frequent-Guest Plans Have Staying Power

August 28, 1996|CAROL SMITH

Miles or points? That's the quandary facing frequent business travelers checking in at the hotel counter.

Unlike airline frequent-flier programs, hotel frequent-stay programs are far from standardized.

Given the choice, about 70% of customers would choose miles over hotel points because it's easier to accumulate them and the rewards are easier to understand, said Randy Petersen, publisher of the Colorado-based InsideFlyer newsletter. "Miles are still king."

But they are not necessarily the best value. "Hotels, in my mind, are the Rodney Dangerfield of frequent-travel programs," Petersen said. "As a value proposition, hotels hold more value than airlines."

For example, hotel points often have more options for redemption than do airline miles. You can cash in points for free rooms, free airline tickets, free car rentals and even merchandise.

Also, a free room stay can be more valuable than a free airline ticket. With a little advance planning, you can usually get an airline ticket almost anywhere in the United States for a few hundred dollars or less. But if you stay several nights, you can easily spend double or triple that on hotel rooms.

The hotel industry in general hasn't been effective in communicating the value of these programs to their frequent guests, said Rick Barlow, president of Frequent Marketing Inc., an Ohio-based company that helps develop frequent-use programs for companies. "Hotels made a mistake along the way by abandoning the value of their own product," he said.

With a few exceptions, most hotel programs offer a choice between frequent-flier miles and hotel points. That automatically subjugates the hotel's marketing efforts to whatever the airlines are doing, Barlow said.

Hotels have missed out on a great marketing opportunity, he said. "Step No. 1 should be to exploit what's been there all along: information."

Frequent-guest programs provide hotels with databases full of information about the habits of their best customers, but hotels typically haven't used that information to communicate with their guests, Barlow said.

Barlow uses himself as an example. As an experiment, he spread his hotel stays--about 50 nights a year--among a number of different hotels last year instead of spending all of them at Sheraton, as he had previously. None of the hotel chains seemed to notice the change in his habits, which means they missed an opportunity to influence his behavior, he said.

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One reason hotels haven't aggressively promoted frequent-stay programs is that many individual properties are owned by franchisees, unlike an airline, which is wholly corporate-owned, Petersen said.

"You always have a problem getting hotel owners to participate," he said. "There's a struggle between what the corporation would like to do and what the franchisee owners want to do."

That could be changing, however. One indicator that hotels are taking a renewed interest in their frequent-guest programs is that several hotels have stepped up their chain-wide marketing efforts through co-branded credit cards.

Sheraton Hotels, for example, recently launched a co-branded credit card with American Express that offers bonus "ClubMiles" for every dollar charged at participating Sheraton properties. The club miles can be redeemed for free stays, rentals or airline miles. Hilton already has a co-branded American Express card, and Marriott has relaunched a Gold Visa card.

One obstacle to making hotel programs as widely used as airline programs is that people appear to be less loyal to hotel companies than they are to car rental companies or airlines, Petersen said. People tend to choose their hotel based on location, price and convenience rather than potential reward.

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Another obstacle is that hotel programs remain more complicated and difficult to understand.

In airline programs, you generally earn one mile for every mile you fly, regardless of the price of the ticket. That's fairly standard among airlines. With hotels, however, the conversion rates vary. Holiday Inn, for example, rewards one point per dollar spent. Hyatt gives five points per dollar, and Marriott gives 10 points. Hilton, Red Lion and Westin all allow "double dipping," awarding both points and miles for each stay.

"In the hotel industry, there is no common currency for people to decide which is a better deal," said Petersen of InsideFlyer. "That's why it's so confusing."

At Hilton, for example, it takes 20,000 points to earn one weekend night. At Hyatt it takes 8,000 points to earn a weekend night. And at Red Lion, you earn one weekend night for every 10 nights you've stayed.

That degree of complexity may explain why a recent survey by the U.S. Travel Data Center showed about 34% of business travelers belonged to an airline frequent-flier program but only 16% belonged to a hotel guest program.

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