Customer Loyalty Programs

What frequent travelers really think about your programs

5 Aug, 2010 By: Paul J. Heney Hotel and Motel Management

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“If you want loyalty, buy a dog,” said South African professional speaker Michael Jackson, who travels extensively and logs about 120 nights per year for business and another dozen for personal stays. “There isn’t a hotel group I feel strongly enough about in a world of competitive products, rates and special offers.”

But old sayings aside, plenty of frequent travelers do feel a sense of loyalty to particular brands, in large part due to the perks they earn from rewards programs.

Mike Borzumate, practice area manager, Xonitek Consulting Group, focuses his efforts on InterContinental Hotels and Resorts’ Priority Club—and said that loyalty programs are very important when selecting individual properties.

“Because we use a fixed per diem rate for travel, I have considerable latitude on which hotel to select,” he said. “Most destinations have several properties with excellent reviews; the loyalty program—and promotions, in particular—are the tie-breakers.”

“Hotel programs are underrated—they offer some of the best flexibility out of any type of loyalty programs,” said Patrick Sojka, CEO and founder of FrequentFlyerBonuses.com. “You earn points that can be used for free nights, frequent flyer miles, merchandise, lifestyle experiences, you name it.”

And with great rewards comes great loyalty.

One Philadelphia-based construction company project manager noted how he once drove an hour away so he could get in one more stay at a Starwood property.

“That allowed me to book a night in Rome at the St. Regis. I ended up paying $40 more than a hotel [that was located] five minutes away from my work,” he said.

With about 300 nights on the road each year, he has a wallet full of loyalty cards to show for it—he belongs to eight major hotel loyalty programs and admits that it’s all about the rewards.

“I have elite status in every chain except Wyndham, which does not offer it,” he said. “My focus is to maintain gold in all of the chains for bonus points … and basic benefits—and the highest elite level in Starwood and Hyatt because it allows me to receive upgrades at the nicer hotels [for] award nights. If it was not for the awards, I would probably just stay at a furnished condo month to month.”

In talking with loyalists who ranged from occasional travelers to road warriors, most seemed to fit into one category—they belong to multiple programs, but focus their stays on one or a few brands.

Joe Pulizzi, founder of Junta42 and the Content Marketing Institute, said he ranks his preferred programs like this: Marriott, then Hyatt, then Hilton.

“I mostly gauge hotel on location, cost, quality. If it's been a long trip, quality over cost,” he said.

Pulizzi says he can be swayed by a loyalty program, but only if it’s within a $25 cost difference.

“If it’s within 10-20 percent I'll go with a Marriott chain—if not, cheapest,” Pulizzi said.

Borzumate explained that while he can’t budge much on the price point, he is more flexible on how far he will travel to find a hotel in his loyalty program.
“I have to stay within my hotel rate limit. However, distance is negotiable. As long as the distance does not affect the quality of my work with a client, I will consider it,” Borzumate said.

Nina McCollum, events specialist, Thompson Hine LLP, only spends a fraction of the time in hotels that the so-called road-warriors do, but she orients her stays around one of her three loyalty programs—Marriott Rewards.

“I have the [affinity credit] card and a lot of points,” she said. “I've gotten tons of points from meetings I've booked there, and supplemented with charge points over the years.”
 

Playing the game
For many travelers, racking up points becomes a game, while others simply pursue recognition or perks for their devotion to a brand.

“I mainly see hotel loyalty programs as useful marketing tools that mutually benefit the hotel chains, the individual hotels and the customers,” said one California-based international development consultant. “I use my points for overseas vacations so that my wife and I can stay in wonderful places we otherwise would not be able to afford.”

“[Programs are] a deserved perk since we give business to the hotel chain,” said a banking consultant who travels extensively in Central Europe.
Patrick, a director with an IT Consulting firm in Austin, went even further.

“Loyalty is a game. Any road warrior has to play it so they can max their points,” he said. “If you’re not maxing your points, you’re just doing nothing but traveling. That might be fine for some, but for those of us with spouses, kids, pets or just a fondness for our own beds—no salary really makes up for that headache. So collecting points and perks helps to soften that blow. So you must play the game or you’re losing some opportunity to offset the headache.”

McCollum, who earns some of her points through booking meetings, thinks that loyalty is a sport worth playing.

“I think they are a game and a competition between the chains.  I stay active in accumulating because I have the Marriott Rewards visa, and because eventually, we need hotel stays for various things,” she said.

Loyalty programs are a popular topic on the Internet, including sites like FlyerTalk.com, where dozens of forums cover about every airline and hotel program that exists. Users trade ideas for maximizing points, discuss likes and dislikes about particular programs and even organize meetups for point-addicted road warriors. And Sojka’s website covers bonus mile and point offers for more than 120 travel reward programs.

While loyalty programs are a benefit to the traveler, they also can be a detriment to companies when traveling employees disregard their fiduciary responsibility by selecting hotels that are significantly more expensive to maximize points.

“I think that business travelers have to be more prudent to avoid abuses before companies tighten their policies,” said one business traveler.

A true reflection?
But how do loyalty programs reflect on the individual hotel brands? Do travelers simply see the programs as extensions of the chains?

“It shows that [the brands] know what customer relationship management and retaining customer loyalty is all about,” said the banking consultant.
Patrick, who spends more than 170 nights in hotels each year, said that business travelers have to feel like they are at home while on the road—and the marketing, room amenities and loyalty program perks are foundations for that.

“I think consistently across the board, hotels and their staffs are very good about trying to get a customer to return to their family. They do that through loyalty programs and they are visibly better about being more supportive to the most loyal members. So that reflects well and makes the brand go a bit above the norm. And hotels know how important a dedicated/returning customer is to their viability … so they have to be friendly and welcoming,” he said.

Our California international development consultant said the operation of the loyalty program is key.

“Yes, [they reflect well on the brand] when they are well-run, which is the case with Starwood and to some extent Hilton. Hyatt also seems to have a very good program that reflects well on the company, though the relatively limited number of Hyatt properties makes it tougher for me to accumulate stays and points at its properties in my travels,” he said.
Jackson doesn’t buy any of it.

“Smart consumers see right through [loyalty programs],” he said. “I feel the same way about airline loyalty programs, too.”

Others had mixed feelings, depending on the specific hotel company. And not surprisingly, it came back to the critical differentiator in our industry—service.

“Some do, some don’t [reflect well]. Marriott’s does. Starwood’s does not,” said Paul N. Tauger, a lawyer who lives in California and is on the road for 20 nights for business and 25 nights for leisure each year. “Customer service is the key. I’ve always been treated well by Marriott Rewards, not at all well by Starwood’s [rewards programs]. All other things being equal—and, with respect to these two programs, they’re not—is it any surprise that I prefer the program that treats me courteously?”
 

See also:
Brands: Programs target return guests
Operators: Loyalty benefits trump costs
Loyalty programs for independent hotels
Use psychology to focus your frequent guest program

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Frequent Travelers Speak Out

Most valuable perks
“Rollover points, concierge lounge, free Internet, bonus points and points promotions.”

“Anything that can moderate the rigors of business travel is a great benefit. For example, complimentary room upgrades, express check-in or out, and guaranteed room availability are useful perks that make life so much easier. Points or miles are a close second.”

“Concierge level is really nice, with the breakfast on the floor and the private/bigger rooms.”

“Free stays with NO blackout dates are most valuable, as well as little to no advance notice. It’s a complete pain when you have to call and get a certificate mailed to you to present. Half the time when I’ve done that, they never even ASK for the certificate so what’s the point? I like it when you can book them online and just get a confirmation email that you can print and show, if asked.”

“Ease of redemption, multiple and valuable redemption options, elite status recognition.”

“When I ask, I am regularly upgraded to a suite at full service properties. This is not a published benefit of the program, but it does serve well to endear me to particular properties on the chance that I am back in that locale again.”

“The ability to accrue max points and accrue them often is what a good loyalty program brings.  You grind your butt off 50 weeks a year for those two weeks of ‘free vacations’ in Hawaii or the Caribbean with the family. Points are the primary value. I got to Maui twice a year for a week with my wife and it’s free. That is my most valuable perk.”
 

Least valuable perks
“Please don't assume that ‘one perk fits all.’ I don't care about exercise rooms, room upgrades, snacks, gifts or being greeted by name. I do care very much about devaluation of points, lack of availability of award stays and anything else that interferes with my ability to cash in and use my points.”
 
“Guaranteed room type, free phone/fax.”

“Late check out, priority check in.”

“Least valuable are when they have places you can ‘shop’ online with your points—you can’t actually BUY things with your points, you just get discounts. I would find it really valuable if a loyalty program worked like my bank’s rewards system does—you spend money using the card or staying at properties and rack up points, and then, whenever you feel like it, you can literally cash in points to get gifts, 100 percent paid for.”

“Personally, I do not find complimentary breakfast very valuable. Those charges would be reimbursed by my employer anyway. I also rarely need late check-out and, when I do, I can usually secure it without relying on the loyalty program.”

“Free snacks or ‘loyalty’ gift, free breakfast.”

“The bottom tiers of a loyalty program are pretty worthless. Until you make a ‘top tier’—every program and its features are just a tease to make a traveler try to commit. But they don’t get enough perks to even notice a difference.”

Most admired program?
“Hyatt Gold Passport has made a lot of strides in the last year and has had some great promotions.”

“Marriott, because they do a good job of recognizing the value of your business by providing additional attention to my travel needs.”

“Priority club—because of the ease in earning points, multiple redemption options, easy to maintain elite status and proper and responsive customer care center.”

“The quality of customer service I receive from the Marriott Rewards Platinum customer service line [is great]. I have not once had an agent who was not knowledgeable. … Not a lot of companies provide that level of service these days.”

“I can not think of a single fault with Hyatt’s Gold Passport. To me Hyatt is unmatched. The customer service is amazing, the points and awards post within 24 hours like clockwork, the promotions are generous, and the properties are always clean, trendy and comfortable. The upgrades are plentiful, the perks are unmatched, and they always recognize and thank me for being an elite member.”

“What I most value is a program that has lots of great overseas properties, which is why my favorite program is Starwood—it has a great variety of wonderful properties across the globe. I also highly value being able to sometime use my points not just for regular rooms, but for upgrades to suites—the Starwood program sometimes offers that option, and it sometimes does not require too many points above and beyond a regular room. … I also value its cash plus points option, by which a combination of the two makes staying at some properties on vacation a great deal, since neither the cash nor the points required are excessive.”

“One feature I do like a lot about the Hilton program is that it includes free breakfasts for Gold and Diamond members, for both paid and reward stays. Another is that American Airlines frequent flyers such as myself can convert our AA miles into Hilton points at a good exchange rate (with one mile yielding two points).”

Biggest failures?
“Maybe sometimes they make it too easy to retain elite status. Others have failed miserably like Accor’s A-club, which has little or no elite benefits and very poor points redemption options.”

“Hilton faltered with the major increase in redemption rates earlier this year.”

“I've been burned a number of times by ‘Starwood hotels,’ that ‘don't participate in the program,’ i.e. no points, no rewards.”

“[Marriott’s] lounges simply are not cutting it. I can deal with them being closed on weekends, but more and more, when they are open, the offerings are charitably described as meager. While this clearly does vary from property to property, on the whole, I think we've seen a significant decline.”

“Priority club and Wyndham are the most faltered. Both of these programs do not post points in a timely manner, I have had to email and call to get points awarded, the customer service has a lot to be desired at Priority. I dislike Wyndham because they do not have elite levels. Also Best Western elite status has very little value because upgrades are non-existent to my knowledge at this chain.”

“Though I understand the ongoing inflation in the amounts of points charged for a given award stay, some of the increases seem excessive. Hilton undertook a major increase across the board earlier this year, for example. Hilton more specifically fails in not having a system whereby members can cash in points for suites and not only regular rooms.”

“[Marriott’s] Closing down lounges at weekends. Why doesn’t Marriott Rewards do free breakfast seven days/week for gold/platinum? Why are resorts exempt from providing the most valuable gold/platinum benefits?”

“Best Western Rewards is weak in guaranteed benefits and the individual properties are not held to a high standard of enforcement of the few benefits offered. More often than in most other chains, I have to carefully research particular properties to find those that understand loyalty and can be expected to follow through on the program’s promises.”

“One thing that Marriott Rewards could do to get me to spend more nights in their properties is to just open the lounges in full-service properties back up on weekends—and I don’t mean just have them open with a fridge of cold water, but just like they do on weekdays.”

Miscellaneous
“Please take care of your elite customers and you can be sure that they will return to give you more business. A happy client is more valuable than 100 prospective clients.”

“Why, in the name of all that is good and decent, can’t I get a decent [Marriott] breakfast without paying retail pricing for it? While I in no way feel my elite status makes me special or better than anyone else, it does show that I have gone out of my way to give revenue to the brand. Do I really have to buy the eggs too? While I realize that food and beverage is a huge revenue and profit generator for most properties, breakfast (real breakfast, either in the restaurant or via room service) is simply not that expensive of a meal to make or serve. I would even settle for it being a top tier elite benefit only, as silver is given away.”

“I believe that Marriott is uncompetitive on the bonus promotions it offers, electing to simply have something rather than offering much real value. They also tend to stay well behind the industry curve, offering benefits and amenities only after competitive pressures are applied.”

“I'd like to see Marriott go worldwide with free Internet for elites. Hyatt did it for elites in April 2009. Starwood did it for top tier earlier this year. Marriott followed, but only for the U.S. and Canada. With Internet costing upwards of 30 euros in Europe, it really is a determinant on where I stay.”