Marriott Rewards, Hilton Honors, Starwood Preferred Guest and other leading hotel company frequency programs this year began withholding points for stays booked on third-party merchant model Internet sites. This proactive move has been just one aspect in hotels' larger campaigns to drive the rapidly growing number of Web bookings to their own branded sites.
The hotels said they are determined to protect the integrity of their pricing. "When there are specially negotiated rates available at a merchant model site and/or you prepay for a special rate, then you do not earn points. At the same time, we're not necessarily trying to push travelers away from these sites. We're making a determination based on rate," said Ed French, vice president of Marriott Rewards and customer relationship marketing. With 20 million members, Marriott Rewards is the industry's largest program.
Once hotel companies last year implemented rate parity across all online channels
(BTN, March 24, 2003), withholding points from bookings with potentially lower rates was the logical next step. "We quickly realized that once we had a best rate guarantee, there wasn't any reason for loyal consumers to book on a third-party site when the best rates were on our own sites," said Tom Botts, vice president of distribution strategy and operations for Starwood Hotels & Resorts Worldwide.
At the same time hotel companies want to keep bookings from third-party sites, they depend on them as revenue generators. "We value our relationships with our travel intermediaries," said David Kong, senior vice president of marketing and development for Best Western International. But Best Western still only will award Gold Crown Club International points for stays booked at "eligible rates."
Stays booked on such online-originating agency sites as Expedia, Orbitz or Travelocity complicate the points question because different parts of these sites offer merchant rates as well as published rates. "It's all based on rate plan," said Peter Strebel, senior vice president of sales and marketing at Cendant Hotel Group, whose brands include Days Inn, Ramada and Wingate Inns International. "For example, you could be on Travelocity, book a merchant model rate and not get our Trip Rewards points, but you could also book a rack rate on the site and get points." Marriott Rewards follows the same approach. Other programs, however, block points for any booking from the online agency sites.
In addition to withholding points on the base room rate, Starwood wanted to deal with the upgrades to which elite SPG members would be entitled. The opaque Web sites were a particular focus. "Platinum SPG members booking through priceline.com, for example, could still get upgraded to a suite, receive a welcome bottle of wine, etc. That's been eliminated," Botts said. "It didn't seem fair that travelers could get these perks when they didn't even select our hotel, which is how the opaque model works."
Some hotel companies may deny points on the room revenue, but allow points based on other spend. "Incidental charges during a traveler's stay are eligible for points, including restaurant and phone charges," said Amy Weyman, vice president of Hyatt Gold Passport and marketing systems.
Jeff Diskin, president of Hilton Honors, casts the decision to withhold points in terms of service. "We want to ensure our best customers receive the best we have to offer. The best way to do that is to book directly. We maintain their guest preference profile, which we access through their Hilton Honors number. When travelers book through other channels, for example, we can't ensure that we'll be able to track their stay for points and miles or recognize their special status," he said.
Questions remain when exactly in the process travelers are informed they are not receiving their sought-after points. "Travelers are meant to find out when they make the reservation," said Marriott Rewards' French. "In the case of third-party bookings, we have to rely on the third party to disclose the information. At a minimum, we want travelers to be informed as to what our intentions are."
When travelers book on third-party Web sites, they should receive a message alerting them they are forfeiting their points. Yet, such a message rarely appears, according to Cendant's Strebel. "It's left to the hotel to explain it to them," he said.
The scenario hotels most want to avoid is travelers first finding out when they step up to the front desk on checkin. "We fortunately haven't seen a lot of this. On our part, we've done a significant amount of member education," Starwood's Botts said. "It's clearly messaged on our Web site, for example, that the place to earn upgrades and points is our branded sites. Just as we've had to educate people about the best rate guarantee, we've had to educate them about this."
When travelers first learn they are being denied points, they typically express frustration. "Frequency points have become a way of life," Strebel said. We've trained customers that this is an expected amenity today, so they're understandably disappointed when the points are withheld."