Int'l Hoteliers Beef Up Loyalty Competition

Hotel companies overseas have stepped up their promotions of frequent guest programs to compete more effectively with the U.S. giants' extensive loyalty marketing efforts.

"There may not have been the same tradition among travelers in Europe or South America of collecting points and miles as there was in the United States, but the gap is quickly closing," said Ronald Roy, vice president of business travel and distribution of the Americas division of Sol Melia Hotels and Resorts. Spain-based Sol Melia's Mas program offers points plus preferential reservations, late checkout and other service upgrades. "Frequent travelers especially have learned how quickly the points can accumulate and that they can redeem them without much effort on their part, usually for a much deserved family vacation."

Sol Melia, with 323 hotels worldwide, presently has no properties in the United States. As such, Roy said there is more emphasis on such programs as Mas, which means "more" in Spanish, to build visibility for the brand among U.S. travel managers and business travelers. "For their part, travel buyers want to know we have a comprehensive program, so travelers won't be able to use the points issue as a rationale for staying outside of policy," he said.

In fact, frequency programs historically have been a double-edge sword for buyers. They can be a means of improving compliance, if travelers are members of the preferred hotel vendor's program. Yet, the programs also can be an obstacle to compliance, if travelers are seeking ways to stay at nonpreferred hotels because they want to collect their points.

What no one in the industry questions is the scale of the U.S. multi-brand companies' programs. Both Marriott International's Rewards and Hilton Hotels Corp.'s Honors programs have surpassed the 15 million-member mark. Starwood Hotels & Resorts Worldwide has somewhat fewer members in its Starwood Preferred Guest program, but SPG is the basis of its corporate identity advertising since none of its brands bear the Starwood name. Yet, international hotel companies often have the advantage of market concentration.

"With Taj's 60 hotels in the region," said Jodi Dell Leblanc, director of sales and marketing for the Americas for India-based Taj Hotels, Resorts & Palaces, "we have extensive coverage that allows U.S.-based travelers redemption options they don't have otherwise. We're seeing a lot of extended stay travel right now as U.S. companies establish local subsidiaries in the area. Travelers collecting points in our Innercircle program often tack on a short vacation before returning home, redeeming the points at another Taj property, which include resorts and cultural retreats." Like the U.S.-based giants, Taj recently began offering luggage, crystal and other luxury merchandise as alternatives to free night stays.

For hotels at the local property level, participating in a global frequency program has become highly advantageous. "For the 64 Swiss hotels that choose to belong to Best Western International, for example, it's a benefit they'd never be able to offer their guests otherwise," said Peter Michel, president of the membership association's Switzerland organization. "They are independently owned, and the Gold Crown Club International program is a way they distinguish themselves from other hotels in the local market." The decision to join the membership association and hence participate in GCCI and other marketing programs is not made solely with U.S.-based travelers in mind. "If that ever was the case, it's not the case now," Michel said. "Most of the bookings are from travelers within Switzerland or from elsewhere in Europe. These travelers very much know the value of collecting their points the same way they do collecting their airline miles. European travelers are as interested in redeeming for hotel nights at Best Westerns in Florida, New York and California as U.S. travelers are in getting free nights in Paris, Geneva or Zurich."

Yet, adoption of points-based frequency programs by international hotel companies is far from unanimous. Typically, the cost of developing and administering a program is cited as the deterrent. U.K.-based Thistle Hotels, for example, awards guests miles in one of four airline programs, including American Airlines and British Airways, but not points toward stays at one of its 55 hotels.

Other hotel companies believe their guests are more interested in higher levels of personal service during their stays than in acquiring points for complimentary additional stays. At Hong Kong-based Shangri-La Hotels & Resorts, the Golden Circle loyalty program provides suite upgrades for a $25 fee, private checkin and checkout and free continental breakfast among other benefits. Airline miles also are awarded. Unlike points, which can be accumulated over the long term, Golden Circle membership requires a minimum of 10 stays per year.