Hotels Add Unique Twists To Loyalty Mix
<B>Hotels Add Unique Twists To Loyalty Mix</B>
By Bruce Serlen
As the large multi-brand hotel chains continued to upgrade their frequent guest programs this fall, such smaller deluxe and upscale hotel chains as Fairmont Hotels & Resorts and Omni Hotels faced a common dilemma: how to compete effectively. Their solution was to bypass the elaborate and expensive points and miles-based programs that are in place at such major chains as Hilton, Marriott, Bass and Starwood (BTN, May 1). Instead, they opted in favor of offering frequent guests more personalized service and attention.
On the individual property level as well, such deluxe hotels as the Four Seasons Chicago have initiated their own frequent guest programs that rely on perks to keep these travelers happy and continuing to book. Other not-quite-as-upscale hotel brands, meanwhile, have responded to the same "David and Goliath" situation in their own way. Adam's Mark Hotels & Resorts, for example, has chosen to streamline its rewards offering, cutting down on high administrative costs in the process, by appealing directly to travelers with offers of cash rebates, depending on the amount of money spent at the properties.
For travel managers, frequency programs have proven to be a mixed blessing. On the one hand, getting travelers to participate in the frequency programs of the chains that are part of the company's hotel program is a way of improving compliance. Travelers want to accrue the points and/or enjoy the perks and, therefore, are more motivated to book those chains. By contrast, if travelers' allegiances are to chains not in the hotel program because they're already members of competing frequency programs, they're less likely to book the desired properties.
For the chains, looking after frequent business guests is crucial because this pool of travelers is responsible for a large share of room nights. In addition, a frequent guest at one hotel in a chain is more likely--if properly encouraged--to stay at other hotels in the same chain when traveling to other cities.
When Fairmont relaunched its President's Club program last month, it intentionally focused on perks, not points.
"Our frequent business travelers tell us that what they really value is individual attention, so we've designed the new program to provide that," said Chris Cahill, president and COO. "Travelers at the deluxe hotel level most want to be recognized for who they are and for what they've accomplished. The possibility of earning a free hotel night, in this context, isn't that important. These are people, after all, who travel all the time and are authorized by their companies to stay at the very best hotels."
Time, on the other hand, is what is most crucial to them. "Their most precious commodity may well be time," Cahill said. "Accordingly, we've tried to create a program that gives them more time back. Frequent guests, for example, seem to be saying 'make it easier for me to book.' " Because these travelers' companies already have included Fairmont in their hotel programs and have negotiated rates in place, "it's to everyone's advantage to make it easier for them to book," Cahill said.
President's Club benefits range from expedited checkin and checkout at a restricted members' area, room preference and complimentary local calls. As part of the latter benefit, service charges are waived for credit card, collect and/or toll-free calls. Members also receive free use of onsite health clubs and access to business centers. Gold- and platinum-level members--the most frequent travelers and, therefore, the most desirable from a marketing perspective--receive suite upgrades. Plus, they have access to special toll-free numbers for reservations and information.
Cahill said administering elaborate points and miles programs isn't necessarily productive from a hotel's point of view, and it is costly. "By sidestepping it completely, we also avoid all the negative feedback that's an inevitable part of managing many of these programs--over redemption issues such as blackout dates, for example," he said. "The irony is that a program that's intended to build customer loyalty often alienates travelers when they feel they're not being treated fairly regarding trading in their points and other matters."
The business travel community also is aware of how intensely these programs compete with one another for the upper hand. "They're best suited to hotel companies with chains at different price points, so members can earn stays at a level of property that they might not otherwise have the opportunity to experience," Cahill said.
Similarly, Omni's Select Guest program emphasizes personalized service as opposed to awards of points and miles and with the same rationale. For any program like this to be fully successful today, however, there had to be an underlying guest relationship management system in place that could accurately track frequent guests' likes and dislikes across the entire chain. In Omni's case, this means nearly 40 properties in key U.S. cities. In Fairmont's case, it means 36 properties in many of the same gateway cities.
At Omni, this data warehousing platform was introduced at four of its properties this summer and will be extended to all 40 by year-end. "It's not enough to just recognize guests for their special preferences," said Peter Strebel, Omni vice president of marketing. "Business travelers expect the same level of service and recognition at all of our properties and we want to meet this expectation."
Omni's data warehousing capability was designed and is maintained by Pegasus Solutions. "The system collects large amounts of customer data that we can use to differentiate the needs of our Select Guest members, whether they're checking in to Dallas, Denver or New York," Strebel said. "The better we know who these individuals are, the better we can serve them and the better chance we'll have of capturing their business in other cities."
The tool works this way: Data on customer preferences are fed from each hotel's PMS to Pegasus, where it is incorporated into the data warehouse. Each hotel in the chain then can analyze hotel-specific data or chainwide data to identify individual tastes or requests.
In addition to express checkin, late checkout, preferred availability and suite upgrades, Select Guest members receive complimentary in-room delivery of morning coffee and newspaper, a checkin amenity, such as fresh fruit or chocolates, and check cashing privileges.
At an individual deluxe property, such as the Four Seasons Chicago, it made sense to develop its own frequency program because of the changing picture of that particular market. "Other deluxe properties have come online here in the past few months and others are in development," said Lisa Bailey, director of marketing. "We wanted our frequent guests to know we appreciated their loyalty in the past and looked forward to their continued patronage."
Members in the Seasons' Select program are given luggage tags identifying them as members to the staff. Members also have their own guest services coordinator, who personally helps smooth their stay at the hotel. Membership benefits include curbside checkin, limo upgrades, priority luggage service and restaurant seating, express room service delivery, personalized stationery and fitness evaluations in the hotel's health club. Seasons' Select members also are given complimentary access to the hotel's boardroom. The Four Seasons Chicago sits atop six stories of high-end retail, so the hotel provides members with their own personal shoppers.
<B>Cash Rebates</B>
While frequent guests at Adam's Mark hotels may not be used to--nor expect--this level of service, they still want to be acknowledged. So the chain this summer launched Gold Mark Rewards, which gives members a cash rebate based on the amount they spend in any of its 22 properties on a quarterly basis. The goal for Adam's Mark was to simplify the whole guest rewards concept and, in the process, steer clear of the heavy commitment of time and resources needed to administer the more traditional points and miles alternative.
"We had a more conventional program in place earlier but were looking to replace it with a more straightforward approach, one that appealed to frequent guests directly," said Fred Kummer, executive vice president. Few rewards have more direct appeal than money in your pocket. "We've given Gold Mark members the value of the points they've earned, rather than merely the points themselves," Kummer said. "It's simple to participate," he added, "and easy for members to track their status and redeem their rewards."
Members earn rebates based on total spend. "Stays at the hotels count, as do expenditures in the hotel restaurants and other facilities," Kummer said. Rebates increase 3 percent when members reach the $1,000 level quarterly to 4 percent at the $5,000 level to 5 percent for $10,000 or more in total spending.
According to Kummer, the conversion rate for traditional frequency programs is only about 50 percent because half the recipients don't get around to redeeming their awards or they attempt to and are unsuccessful because of restrictions built into those systems. Gold Mark members automatically receive their awards on a quarterly basis.
Regarding potential tax liabilities, Kummer said participants who received cash payments were covered under the same tax rules that apply to members of frequency programs who receive free hotel nights or airline miles. He believed travel managers also would allow Gold Mark members to keep the cash rebates they received for their patronage in the same way they were permitted to retain the traditional points and miles.