Hotels Say It Pays to Reward Frequent Stayers

Sheraton has one. So do Hyatt and Omni hotels. Stouffers hotels has one. And so does Holiday Inns. Inter-Continental hotels boasts two. Two what?

Frequent-stay incentive programs.

Taking their cues from the airlines that started the idea, a growing number of hotels are jumping to play the frequent-stay game.

In 1983, when the hotel programs began, they were poor imitations of the airline frequent-flyer programs. Some hotels offered small gifts or free weekend stays. Others just offered complimentary cocktails and free morning newspapers.

Not anymore. The frequent-stay program bandwagon is rolling, and just about every major hotel is rushing to jump on board.

It’s gotten to the point where one has to look hard to find a hotel that doesn’t offer one.

It’s Tough Comparing

Short of tracking the awards and benefits each program offers with your personal computer, it’s becoming increasingly difficult to comparison-shop the better hotel deals effectively.

And there are some pretty good deals. Marriott’s “Honored Guest” program offers frequent guests everything from free hotel rooms to free airline tickets and free cruises.

Holiday Inns’ new “Priority Club” offers guest awards ranging from free limousines to camping and hiking adventures on the Rio Grande, flying lessons or merchandise ranging from London Fog coats to a Jacuzzi.

Inter-Continental hotels awards frequent stayers with cruises on the QE2, first-class flights to Kenya and stays in Sydney, Australia.

Last, but not least, Hilton has announced that it will be giving away $1 million a day in travel gifts to frequent guests, January through April.

Customer Loyalty

Why are the hotels doing all this? With occupancy levels low, they are desperately trying to attract customer loyalty. And it seems to be working.

One example is the Inter-Continental Hotel in Houston. A few years ago, when it opened, Houston was experiencing its worst economic slump in years. Hotel occupancy was at an all-time low and some had closed their doors.

It was not a great time to be debuting a 518-room hotel. To promote the opening, Inter-Continental teamed with Pan American Airlines (its former parent company) in an unusual and expensive promotion to try to get people into the new 23-story Houston hotel.

The hotel announced it would “reward” travelers who spent five nights there between March 1 and Sept. 15, 1984--whether consecutive or not--with a free round-trip ticket to Europe on Pan Am. The ticket would be a confirmed coach ticket good on any Pan Am flight between Oct. 1, 1984, and June 1, 1985.

The program was available to the first 3,000 guests to request a “Houston Plus” membership card when registering at the hotel.

The only requirement: The traveler must pay at least the published, per-night rate of $110 for a single or $130 for a double room.

Special Connection

For those folks who didn’t live in Houston and wanted to use their tickets from their hometowns, Pan Am also provided a special $59 one-way connecting fare to any of its gateway cities.

The traveler with a special Pan Am ticket could also add an extra city in Europe for only $50, or even upgrade to a full first-class ticket for $400. Quite simply, this hotel promotion was nothing short of a great deal.

To be sure, the Inter-Continental promotion became one of the more expensive hotel giveaways ever. ICH, for example, went out and bought 3,000 tickets from Pan American.

Inter-Continental executives figured that if the new hotel could get and then sustain an average of 40% repeat guests from this promotion, it would have been a success.

It was such a success that the company then launched an even bigger promotion, called “USA PLUS,” which offered a free round-trip Pan Am or American Airlines air ticket to Europe, or to one of more than 70 U.S. cities, to any guest staying seven nights (not necessarily consecutively) at any combination of seven participating Inter-Continental hotels in the United States.

The offer was valid at the chain’s properties in San Francisco, Houston, San Antonio, New Orleans, San Diego, Maui and New York. Ten thousand “USA PLUS” cards were available to program participants, who had to pay at least the full moderate room rate.

Dollar by Dollar

The program was another success--also an expensive one. Now, Inter-Continental has introduced a new program. It’s no longer based on the number of nights a guest stays at an Inter-Continental hotel, but how much one spends while there. Guests earn one point for each dollar spent at the hotel for room, food and beverage, laundry, valet and telephone charges.

And Inter-Continental’s Houston property has gone a step further, with the first travel incentive program that directly rewards corporations. Individual corporate employees staying at the hotel continue to earn mileage awards from Pan Am and American airlines while their company earns “Corporate Edge” credits.

But the new Inter-Continental program doesn’t give goodies away quite so freely. For example, under the old program, a seven-night stay at the Inter-Continental Hotel in New Orleans would have cost you about $850, for which you would have earned a free Pan Am airline ticket to Europe.

Under the new program, to earn a free Pan Am economy ticket to Europe, guests have to spend a minimum of $9,000. For $11,000 more, guests can earn a cruise for two on the QE2.

Still a Few Holdouts

There remain a few holdouts in the hotel perks wars. Privately owned hotels such as the Edgewater in Madison, Wis., or the Alexis in Seattle have managed to steer clear of the promotions. Other upscale hotels refuse to get involved because they feel it might tarnish their image of exclusivity.

“We don’t believe in them,” says James Nassikas, president of the Stanford Court Hotel in San Francisco. “We think it could downgrade our reputation. In addition, these programs are very expensive to promote and operate. People forget that there’s no such thing as a free room, airline ticket or rental car. We could offer our own program, but that would mean raising our room rates.”

Nassikas also comments on what he calls the dubious “guest loyalty” factor of such programs.

“In the short term,” he says, “frequent stay programs seem to work because people are responding to your promotion. But you can’t keep those offers going forever. Often, when you stop the offers, the guests stop coming. “We prefer to do without the programs and hope that our guests’ incentives for returning to stay with us rest on our reputation for service and style, and not because they’re trying for a set of dishes or that trip to Bermuda.”