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 The Brancatelli File

joe MAKING SENSE OF HOTEL
FREQUENT-GUEST PROGRAMS


BY JOE BRANCATELLI

April 22, 1999 -- No business traveler is perfect and my particular failure--well, besides being bald and fat--is that I just don't take frequent-guest programs seriously. I never carry my cards, always forget my points and ignore the programs when choosing a hotel.

As your electronic advocate, I feel bad about this sloppy behavior because I'm supposed to be monitoring these programs on your behalf. But after talking to the people who run the plans and checking in with Randy Petersen, the master of the frequency domain, I feel a little better.

Turns out that you folks pay even less attention to frequent-guest plans than I do.

Pointsmeister Petersen passes along some stunning figures. He estimates that there are 57 million net members of North American frequent-flyer programs, but just 18 million frequent-stay players. The average business traveler is a member of 3.2 airline programs, but just 1.1 hotel plans. And the business travelers who participate in frequent-guest programs aren't even in it for the hotel points. Up to 70 percent convert their hotel earnings into frequent-flyer miles.

The folks who run the hotel programs, realists all, admit that their plans are the stepchildren of the frequency game.

"Frequent-flyer plans are more ubiquitous. We just don't get the masses," opines Jeffrey Diskin, president of Hilton HHonors, best known for its Double Dip plan that awards miles as well as points on some room rates. Airline programs "are on top of the food chain," says Hoyt Harper, vice president of marketing programs at Starwood Hotels, which rolled out Starwood Preferred Guest in February. "There's simply a greater level of interest in frequent-flyer programs," explains Ralph Giannola, senior vice president of consumer marketing at Marriott Lodging, which operates Marriott Rewards, the 800-pound gorilla of frequent-guest plans.

But--and, boy, didn't it take forever to get to this week's but--frequent-guest plans are getting another 15 minutes of fame. There's been lots of action lately--the new Starwood plan; Inter-Continental joining Holiday Inn's Priority Club; and even Radisson's new Gold Point Rewards--and the frequent-stay boys are hoping business travelers will give hotel programs a second look.

The problem with giving hotel programs a second look, however, is that hotel plans are so damned complicated compared to frequent-flyer schemes. Airlines, after all, are selling airline seats, which are essentially a commodity. And since they sell a commodity, airline frequency programs are fairly simple and they all look and act alike.

Not so the hotel programs. Take that new Starwood plan, for instance. In the company's portfolio are hotels such as the obscenely overpriced St. Regis in New York, the grand old CIGA hotels in Europe, all the Sheratons, the Caesars casinos and even the economy Four Points. Marriott covers the gamut: from budget Fairfield Inns to extended-stay Residence Inns to a few Ritz-Carltons.

Then there's the issue of how hotel plans reward you for spending money in the hotel restaurant or for all the other little things you buy in a hotel. And, of course, hotel programs must figure out how to allow people to convert program points into frequent-flyer miles because the hotel guys know most business travelers prefer miles.

All this juggling leads to massive confusion. Randy Petersen, bless his heart, made a stab at figuring out the relative merits of the major hotel programs in the March issue of Inside Flyer magazine. He tried to figure out what awards you'd earn when you spent certain amounts each year on lodging. The story, called "The Champ," is a mess.

Determined to avoid Randy's mistake, I came from another direction. I tried to figure how much you would have to spend to earn a particular award: free nights in comparable hotels. My chart, reproduced here, seems logical, but, to be honest, it is also a mess.

While I found a market--Midtown Manhattan--where all the major programs have hotels of comparable quality, there were all sorts of pitfalls. Marriott requires the least spending to earn three or five free nights, but it won't give one- or two-day awards during the week, which restricts your ability use a free stay to reduce the cost of a New York business trip. Hilton awards are pricy, but how do you value the fact that it will also give you frequent-flyer miles on some stays? Starwood rewards are very expensive, but they are unrestricted. Alone among frequent-guest plans, Starwood Preferred Guest awards have no capacity controls or blackout dates. And does any of this even matter since most frequent-guest members are choosing airline miles, not hotel awards?

So what can I say about frequent-stay plans? Well, like airline programs, there really is no "best" hotel plan. It depends on a zillion factors. Here are just a couple of things to think about:

PERSONAL PREFERENCE If you already prefer one hotel chain over another, forget the intricacies of the frequent-guest plans. Join the program of the hotel chain you already prefer and consider all your earnings and rewards gravy.

UBIQUITY Hotels haven't gone the "partner" route pioneered by frequent-flyer plans, which stitch many airlines into worldwide networks. Generally speaking, you can only earn points at the brands owned, operated or franchised by the sponsoring hotel chain. That means one hotel program probably won't cover all your lodging spending. So examine your travel planning carefully. If you need a lot of hotels around the world, Marriott Rewards and Priority Club have the most properties. If your travel is limited, or geographically concentrated, check which program meets most of your needs.

CONCENTRATION Hotels don't have partners, but they have ganged their own brands together. Starwood Preferred Guest, for example, is all about convincing you that its hastily purchased network of hotels--Sheraton, Westin, Four Points, Caesars, Luxury Collection and the nascent W brand--should be your primary lodging choices. Marriott Rewards covers all Marriott brands as well as some properties managed under Marriott's Renaissance and Ritz-Carlton names. Inter-Continental finds itself in Priority Club because Bass recently purchased the chain to augment its Holiday Inn and Crowne Plaza brands. Hilton HHonors is honored at all hotels with the Hilton pedigree, regardless of which of the two Hilton companies owns the particular property. To maximize your earnings possibilities, make sure you use as many of the brands in a particular program as possible.

UNRESTRICTED REWARDS To gain attention for its new program and its almost-as-new corporate identity, Starwood Preferred Guest made all its rewards unrestricted. But one of two things will soon happen: Starwood will introduce a series of restricted rewards because frequent guests won't like the high cost of the unrestricted awards. Or, Starwood's unrestricted rewards will prove so popular that the other programs will be forced to respond with their own line of unrestricted awards.

THE MILEAGE ANGLE If your goal is to pile up frequent-flyer miles, do an analysis of which program gets you the most miles in the airline program you prefer. If you tend to pay corporate rates or higher, remember that Hilton HHonors will give you both HHonors points and frequent-flyer miles for the same stay.

CYA Although it's smart to concentrate hotel stays and spending in one program, you'd be a fool not to join several plans. Hotel programs, even at the basic level, include an array of "recognition" benefits such as speedy check-in and expedited checkout. Being a member of a hotel's frequent-guest plan is valuable even if you never win an award.

POINTS & DOLLARS: THE COST OF WINNING FREE HOTEL NIGHTS IN NEW YORK

PROGRAM
$=Points+

HOTEL

ROOM RATE*

POINTS REQUIRED**
3 Nights

POINTS REQUIRED**
5 Nights

SPEND REQUIRED***
3 Nights

SPEND REQUIRED***
5 Nights

STARWOOD

Sheraton New York

$277

30,000

40,000

$15,000

$20,000

$1=2 points

Sheraton Manhattan

$259

30,000

40,000

$15,000

$20,000

             

HILTON

Hilton New York

$305

100,000

160,000

$10,000

$16,000

$1=10 points

Waldorf=Astoria

$325

100,000

160,000

$10,000

$16,000

             

PRIORITY

Crowne Plaza

$270

75,000

125,000

$7,500

$12,500

$1=10 points

Inter-Continental

$319

150,000

250,000

$15,000

$25,000

             

HYATT

Grand Hyatt

$269

45,000

70,000

$9,000

$14,000

$1=5 points

           
             

MARRIOTT

Marriott East Side

$269

50,000

75,000

$5,000

$7,500

$1=10 points

Marriott Marquis

$305

75,000

100,000

$7,500

$10,000

 

Renaissance New York

$260

75,000

100,000

$7,500

$10,000

KEY: + Number of points rewarded in for each dollar spent. * Lowest rate quoted on the Web for queen-bedded room for two adults on the night of May 25, 1999. ** Amount of points required to earn awards for stays beginning May 25, 1999. *** Amount of dollars you are required to spend to earn the requisite points needed to claim the award.


This column originally appeared at biztravel.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.