Newsstand - Hotel loyalty programs seen having minimal impact

Sorry for not posting the first paragraph and then the link, but I've gotten this off of a newswire, so I have no link. Very interesting article though. -WHS

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FEATURE-Hotel loyalty programs seen having minimal impact

By Doug Young
LOS ANGELES, Sept 6 (Reuters) - Travelers swear by them,
and often even alter their plans to earn more miles on their
frequent flier plans.
But when it comes to customer loyalty for hotels, the same
people are far less loyal to the hotels they frequent, placing
more importance on factors like services and -- above all else
-- location, according to analysts and frequent travelers.
A new consumer survey organization by J.D. Power and
Associates found that only about 30 percent of travelers showed
"strong loyalty" to a hotel chain when they travel.
Among those surveyed, 36 percent of people said they were
likely to stay at the same hotel more than once, 33 percent
said they were likely to recommend a hotel they liked, and 24
percent said they were likely to stay at the same hotel chain.
The overall loyalty figure of about 30 percent is roughly
equivalent to the proportion of customers who cited loyalty
programs in their decision to stay at various brands operated
by Hilton Hotels Corp. <HLT.N>, a spokesman said.
Analysts said the degree of loyalty for hotels is
surprisingly low -- especially given the emphasis operators
have placed on such programs in recent years. Hotels, however,
countered that the loyalty numbers show their programs are
driving a growing volume of repeat business.
The number is particularly low compared with the degree of
loyalty for airline frequent flier programs, said Chase
Burritt, national partner of hospitality advisory services at
Ernst & Young.
Comparable statistics for the airline industry were not
available from J.D. Power, but a recent survey by Inside Flyer
magazine found 91 percent of people said they they would not
remain loyal to their airline without frequent flier programs.

LOCATION VS BRAND
"Hotel customers are still driven by location more than
they are strictly by brand," Burritt said. "They're more
interested in being located close to their plants, or in the
right block within a big city."
Burritt cited himself as an example of a frequent traveler
whose brand loyalty is not a major factor when he chooses his
hotels.
"That would compare to my airline travel, which is strictly
American (Airlines)," he said. "I would move my dates, my
times, would even take a second leg (on a flight) to take
American. That's not because American is such a great airline,
but because of the (frequent flier) points."
But Hilton spokesman Marc Grossman said the 30 percent of
travelers who go out of their way to use certain hotel brands
due to loyalty programs is, in fact, a large number.
He pointed out that Hilton's own percentage of customers
who make their choice based on loyalty programs has risen to 30
percent from 25 percent over the last 18 months.
He added that many of the major hotel operators, including
Hilton, Marriott International Inc. <MAR.N> and Starwood Hotels
& Resorts Worldwide Inc. <HOT.N>, are made up of various brands
assembled through acquisitions over the last few years, meaning
they still need time to build their loyalty programs.
"These programs are huge," Grossman said. "They're there to
build brand loyalty. If you want to be a big and viable
competitor in the hotel business today, you've got to have one
of these."


REUTERS
Rtr 14:05 09-06-01

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by whstevens:
Hilton spokesman Marc Grossman said the 30 percent of travelers who go out of their way to use certain hotel brands due to loyalty programs is, in fact, a large number.
</font>

I would agree that 30% is nothing to sneeze at. Also, I'm wondering whether these loyal 30% constitute a higher percentage if the amount of business they generate for their brand of choice is calculated in $$$.

I'm part of that group that's extremely loyal to "my" airline but far less so to hotels. I've always wondered why.

Now I know I'm not alone. I still wonder why, since exact location - the only factor cited in this article - is seldom a major factor in my decisions. (The only location criterion for the hotel where I'm writing this was "London, not too far from a tube station".) Cost matters, but it varies with airlines too and I remain generally loyal there.

Maybe someone wants to do a Ph.D. thesis on this?

The reason hotel loyalty programs are ineffective is that they too inconsistent with respect to actually coming up with their promised perks and too stingy with their points. Take the case of Starwood, to which I personally am much too loyal. In my experience, Starwood's promised platinum perks are offered by desk clerks on only about one third of all check-ins. On another third, the platinum perks, or at least some of them, can be obtained by rigorous argument and exhibition of the rule book. Sometimes the intervention of a manager is necessary. The rest of the time, it's no go. If you're looking for a vacation, you'll have free air tickets for the whole family long before you accumulate enough points for a decent stay. And even then it's always in the lowest possible category room. To repeat the point: hotel programs are failing because they do not give rewards quickly enough!

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by prefplat:
The reason hotel loyalty programs are ineffective is ....</font>

I hope that you will take the time to write to the hotel chains' customer service desks, including information about just how many data points you have to base your 1/3, 1/3, 1/3 numbers on. That gives your claims much greater credibility. (For Hilton, you might make sure that a copy goes to Adam Burke, who's demonstrated himself to be a helpful advocate for FlyerTalkers with problems with the Hilton HHonors program.)

As I reflect on this ... another part may be the value of the awards. I generally use my miles for (a) giving flights to others and (b) upgrades.

(a) A free flight is perceived as worth a great deal by the recipient. A free night's stay at a hotel is perceived as worth less. (Not worthless, but worth less.)

(b) The difference in comfort between an economy seat and a business- or first-class seat is great. The price difference is likewise great. The difference in comfort between a standard room in a business hotel and an upgraded room is much smaller, as is the price difference.

Also, I can earn these with comparatively few flights, relative to how many nights I have to stay at a hotel to earn anything.

Maybe this means they should come up with better and/or easier to earn awards? Sure, it would cost, but if they really want our loyalty, that's (part of) how the airlines do it.

I agree 100% with Efrem's comments. Starwood points are very hard to earn, in comparison with AAdvantage miles, and also provide far less in the way of rewards. If the hotels want loyalty, they will have to at least match the perceived level of the airline programs.