[originally posted Feb. 6, 2008 on www.loyaltytraveler.net/wordpress ]
2008 hotel outlook looking brighter with no blackouts at Hilton
Since my article last month railing about the stock market outlook and recession, the R word has been bandied about the hotel trade journals and mainstream media. Budget hotels are all the buzz. New brands like Starwood’s aloft and Hyatt Place look like marketing coups. Upscale hotels are being downplayed in the media while luxury room rates keep rising in price.
My gut feeling is the economic downturn will be widespread and cut into business travel. Research from Cornell School of Hospitality after the 9-11 travel downturn argued for hotels to maintain profitability by not reducing the room rate, but rather by providing added value incentives. The same strategy is applied to the housing market when the cost of a house is not reduced from $350,000 to $320,000, but rather new appliances or such are thrown in to the asking price. I expect hotel loyalty program competition will heat up in 2008 and the loyalty travelers will be recipients of some of the best incentives we have seen in years.
First off the block, Hilton Hotels HHonors loyalty program eliminates blackout dates for hotel reward redemption. This is a substantial loyalty program change for Hilton HHonors. The number one complaint on FlyerTalk over the years against the HHonors program was the inability to get reservations for hotel rooms using points. The no blackout dates change in reward rules will increase the hotel chain’s loyalty marketing competitiveness. And this is a huge benefit for loyalty travelers.
Why is “No Blackouts” such a big change?I invested several years of loyalty with HHonors. In 2000, I completed the LatinPass mileage run for a 1,000,000 mile frequent flyer bonus. From the outset of planning itineraries of Central and South America flights, I intended to transfer my bonus miles into Hilton HHonors. I managed to transfer around 600,000 LatinPass miles into 1,200,000 HHonors points over the course of a few years.
Between 1999 and 2005 I redeemed about 2 million HHonors points for hotel room nights. During those years I usually needed to call the HHonors diamond desk to secure my hotel reservation. Booking single nights was generally an easy reservation process. The reservation problems usually sufaced when trying to redeem an HHonors 6-night GLON VIP reward. I estimate I needed to use the Diamond desk to arrange my reservation directly with the hotel about 80% of the time. These free hotel nights would have been unavailable to me if I did not have diamond elite status with HHonors (diamond status requires 28 stays or 60 nights in a year).
Hilton HHonors was my hotel loyalty choice for several years as I traveled and burned HHonors points as quickly as I could. Concern that redemption inflation would devalue their worth over time proved accurate when 6-night GLON awards increased from 100,000 to 150,000 points.
The HHonors no blackout dates is a wonderful enhancement. All they need to do now is move away from the targeted guest model of loyalty program promotions to lure me back.
The upside I see from a looming recession in business travel will be more loyalty program incentives for the frequent guest. 2008 may bring a continuation of back-to-back lucrative bonus offers such as we are currently experiencing with Starwood and Hyatt’s fast-track elite offers.
Happy Birthday, this February 6 to Bob Marley, who lives on at age 63 in the hearts and minds of so many.
“Don’t you forget no way
Just who you are
and where you stand in the struggle”