Originally Posted by
FFlash
Just curious about the speculation on whether IHG takes under radar those accounts which are not profitable to them. What is actually a profitable account?
I can see some people (who stay A LOT, whether Royal Ambassadors or other) posting here many many BRGs and sweet upgrades + club access and this and that, which makes me think. How profitable are these heavy-users for IHG in the end then? Savvy people know how to get the most out of the least money spent.
I assume a rookie who "don't know/care how to play the game" pays rack rate 150€ stays, say, 15 times a year with no upgrades no nothing - compare to a travel hacker who stays, say 50, but with numerous BRGs and double-upgrades, free minibars, club etc. + other requests and tricks. Those stays must be costly to IHG?
Originally Posted by
adampenrith
I think many regular heavy hitters are very profitable for the Hotel Chain.
For instance on our last stay in MEL our welcome gift was 2 glasses of very good red wine in the wine bar, we went and had them, they were yummy, we ordered some snacks as well, and seconds on the wine. We would have most likely had the food and drinks from somewhere else - so that was $60 spend the hotel got that it would not have got otherwise.
Lots of business travellers, come in late at night, sleep, maybe eat breakfast, check out - and never use all the Club facilities and extras they get given.
Trust me - no business would be offering the extras if it was not profitable.
I think only IHG, and insiders (institutional investors, hotel consultants and the like) really have an idea of what is profitable or not. Keep in mind IHG has a lot of franchisees, so they aren't actually paying for the rooms and such. And hotels regularly sell rooms to IHG at very low rates (like reward nights at low occupancy).
I think points only cost IHG a lot when they are redeemed not owned by them where the BAR is high and the occupancy is >90%. When the occupancy is <90% I think the rooms are almost free or very,very cheap for IHG.
In regards to per night profits, LoyaltyLobby has a post about how fat hotel margins are (
http://loyaltylobby.com/2013/05/02/h...hotel-margins/) and Expedia's margins were 25%. My guess IHG's margins are a little better than that.
And we have no idea how much chase pays IHG for hotel signups. That $49 free night might not actually cost IHG much, if most people redeem at low occupancy hotels.
But anyway, the point is that it's pretty hard for us to know whether we are actually profitable or not. Sure, there are some example of those who seem to be clearly unprofitable, but I think many who think they are unprofitable might actually be profitable for IHG. And then again, there are some industries where the top 10% of customers make 90% of the revenue stream. But you can't attract those top 10% of customers unless you have break-even or slightly unprofitable customers that make all your properties sustainable. A complex system to be sure. Which I think makes it all the more important to protest against draconian policies like this...