Hotel Loyalty Programs Increase in Popularity August 26, 2008 Originally published on Aug 22, 2008 at Brandweek.com
By Mike Beirne
Airline frequent flier miles aren't what they used to be. Fees and redemption hassles are prompting airline loyalty club members to reevaluate the value of such programs. Now hotel brands, including Wyndham and Hilton, are taking advantage.
By offering more flexibility and a varied prize pool, the hotel chains' offerings are beginning to look better by comparison.
Wyndham Hotels and Resorts is latching on to the desire for flexibility by highlighting a Wyndham Rewards feature that enables members to redeem points for air travel without the blackout dates and restrictions that carriers impose in their own programs. "What we see is that our members are redeeming for airline tickets, more than earning airline currency directly, keeping their options open," said Wendi Mazzucco, Wyndham's senior director-customer engagement. A hotel chain that declined to be identified will announce next month a new feature enabling loyalty club members to redeem points for free air travel.
Hilton Hotels program includes technology that takes customer information about preferences and makes it available to every property and touch point in the system from call centers to its Web booking engine. "The way we're adopting our marketing message has been around putting together an integrated campaign based on preferences and we've been leading a lot lately with messages about earnings and redemptions," said Adam Burke, Hilton's svp-customer loyalty.
"I am not surprised to hear that the hotel cards are gaining popularity," said Jay Sorensen, president of IdeaWorks, a Milwaukee-based marketing consultancy. "The airlines seem inclined to make their frequent flyer programs unattractive of late with all these [redemption] fees."
Meanwhile, Starwood holds auctions for one-of-a-kind experiences and mixers with celebrities. Hilton HHonors participants earned free tickets this summer to LiveNation concerts. InterContinental Hotels Group has a personal shopper where members can use Priority Rewards points to buy from any store merchandise that isn't listed in IHG's online mall, and Marriott offers personalized rewards with its "Redeem for Anything" program.
"Watching the chatter about the [loyalty] programs, it would be hard not to say I didn't sense some dissatisfaction with the changes that are happening with the airline programs," said Ed French, svp-Marriott Rewards and customer relationship management.
Still some of the airlines are not staying in a holding pattern. Delta and Continental airlines are asserting redemption opportunities through an online auction where miles can buy VIP seats to sports and entertainment events and resort stays. United Airlines expanded its online mall.
Co-branded airline cards still are the most popular affinity credit cards and generated more than $4 billion in annual revenue for the top seven legacy airlines, per IdeaWorks. But hotel operators report their affinity credit card business is increasing.
"There are so many miles chasing so few seats that it's almost a necessity for consumers to look for redemption opportunities elsewhere, and it's a necessity for airlines to think about how to rebalance the equation of all the miles feeding onto the earn side with options for the burn side," said Kelly Hlavinka, managing partner of Colloquy, a loyalty marketing consultancy in Milford, Ohio.
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