Hoteliers Add Benefits For Guests W/ Elite Memberships

In the most recent move by major hotel companies to woo elite members of their frequency programs to book repeatedly, Hilton Hotels Corp. last month introduced advance online checkin for travelers who maintain online profiles with the chain. Only gold and diamond members of the Hilton Honors frequency program receive room numbers prior to arrival, however. Other guests simply get a room-type commitment.

Marriott International, Starwood Hotels & Resorts Worldwide and Hyatt Hotels Corp. are among other chains adding benefits to cement the loyalty of the "best of the best" frequent business travelers. Perks range from a welcome gift of wine, fruit or chocolates to room upgrades, often to the concierge floor, and bonus points in the program itself, good for future redemption.

"We're trying to make travel easier and more flexible for all our guests, which means offering them more options," said Rebecca Wyatt, Hilton senior vice president of electronic distribution and customer relationship marketing. "Considering the number of nights gold and diamond Honors members spend with us, confirming their actual room number when they check in online seemed a convenience they would appreciate."

While hotels hold considerable faith in their frequency programs' power to sway these members' booking behavior, a study released in August by the Cornell University School of Hotel Administration cast doubt on the connection between guest satisfaction and loyalty. The study's authors, in fact, recommend that hotel companies reconsider the large financial investment they make in managing frequency programs.

The move to provide extra perks to elite members comes at a time when travel volumes are rising, though competition among hotel companies for the most frequent customers remains fierce. In a sense, offers of extra benefits for diamond or platinum members creates a loyalty program within a loyalty program. The approach mimics the strategy successfully employed by the airline industry since the 1990s. "For any hotel company, its frequency program members amount to an audience of its best customers, elite members even more," said Adam Burke, senior vice president and managing director of Hilton Honors.

While the upgrades offered by the different programs are similar, there are subtle differences. Platinum Starwood Preferred Guest members, for example, can choose between a welcome amenity and a complimentary in-room movie. Travelers with diamond-level Hyatt Gold Passport status can get free upgrades to the club floor or access to the club lounge, if a club floor room is not available.

Gold or platinum Marriott Rewards members can get room upgrades to the club floor at all JW Marriott Hotels, except those in Scottsdale and Cancun, because of the special level of service available in the club lounge. "Yet, any level Marriott Rewards member is able to spend 1,500 points per night for the upgrade," said Ed Fuller, Marriott president and managing director of international lodging. The two JW properties are the only hotels in the Marriott system at which guests can use points to trade up.

Hotel companies do not lightly confer elite status. Diamond-level membership at Hyatt or platinum status at Starwood requires 25 stays or 50 nights at chain hotels in a calendar year. Hilton Honors' diamond status requires 28 qualifying stays or 60 nights. At Marriott, 75 nights earns platinum-level status.

A small percentage of frequency program members qualify for elite status. According to Burke, Hilton Honors had 6.5 million active members as of Sept. 1. Of that total, 9 percent hold gold status, while 2.5 percent are diamond level.

The Cornell study found the connection between guest satisfaction and loyalty to be highly tenuous. "Hotels need to reconsider their loyalty programs," said Judy Siguaw, a Cornell associate professor and co-author of the study. "The data show that a large core of guests routinely is going to switch to competitive properties, regardless of how satisfied they are. Therefore, funds that are expended on loyalty programs could be better applied in other ways."

The survey polled 364 guests at two similar large hotels in the same undisclosed major midwestern city. Both hotels are affiliated with major but different hotel chains. More than one-third of respondents strictly traveled on business, and an additional 20 percent were on a mix of business and leisure.

"Business travelers turned out to be among the least loyal of guests," Siguaw said. "The chief factors that engaged guests' loyalty were the property's design and amenities. Moreover, the quality of the hotel's employees was the factor that caused guests to be most involved in the booking decision and, consequently, more interested in the hotel."

Siguaw and her co-author, Iselin Skogland, said hotels might consider redirecting some of their frequent guest expenditures toward strengthening the human resources function, while also spending more to improve the look of the property and add more and better amenities.