Consumer advocate Christopher Elliott provides words for thought on the question of whether a consumer should participate in loyalty buying programs. His May 26 article, “Should you participate in a consumer loyalty program? 7 things to consider“ lists seven things expert advice says you should consider when looking at loyalty programs. I find all of the advice pretty good and worth consideration, and since I am in the business of promoting hotel loyalty programs I feel I should respond to his article.

Like Christopher Elliott, I try to look at the big picture of being a consumer who wants fulfilling leisure time and/or a tolerable business life involving travel on hotels and planes. Without going broke!

Frequent traveler marketing targets the more affluent and all travel consumers are bombarded by the travel and financial industries “dream” advertising. The goal of marketing is to create buyers and there are plenty of us buying our dream vacation.

Christopher Elliott’s main argument is frequent flier and frequent guest programs are better for the company than the consumer. He points out that loyalty programs result in destructive consumer behavior in “a pointless effort to gain coveted elite status.”

Chris asked loyalty program experts for consumer advice before you jump into loyalty programs.

Priority Club 2011 Platinum card.

 

 

Expert advice on what you should know before jumping into the loyalty game

1.       Do the math

2.       Make sure it is the right company for you.

3.       Don’t let it control you.

4.       Make sure the program is listening to you.

5.       Don’t do it if it complicates your life.

6.       Read the privacy policy.

7.       If you are an infrequent customer, just say no.

 

Do the Math. – Loyalty Traveler response.

I have. Hotel loyalty programs work for my business and family travel situation.

Camping, couch-surfing, timeshare rental, or Priceline.com might be better for your situation.

As Loyalty Traveler I have published hundreds of articles over the past three years showing consumer math on a variety of hotel promotions and hotel loyalty program benefits in more than a dozen global hotel loyalty programs. I find plenty of situations where the loyalty math is rather rewarding.

I also have experienced the benefits of no tier, low tier, midtier and high tier in several major hotel loyalty programs to offer some anecdotal evidence as a frequent guest for elite status benefits and value.

Make sure it is the right company for you. – Loyalty Traveler response.

Comparison of different hotel loyalty programs is one of the best features of Loyalty Traveler. There are plenty of experts in Hilton HHonors and Marriott Rewards or any single hotel loyalty program. I try and show how programs stack up against each other in various aspects.

For my travel I find IHG, Hyatt and Starwood work better for me than Hilton or Marriott, but that certainly does not mean that these other two hotel loyalty programs are inferior. A change in travel pattern can result in a change in loyalty preference for the best fit.

Starwood is a great program for me with my proximity to San Francisco where there are numerous properties in the downtown area. Hilton was best for me when I had millions of frequent flyer miles I could transfer into HHonors hotel points. Best Western was the best choice one year when I frequently traveled to small town colleges across the USA. This year I am finding Wyndham, Choice and Best Western work well for my road travels around the western U.S.

Don’t let it control you. – Loyalty Traveler response.

I agree with the argument that loyalty programs can result in destructive consumer behavior in an effort to gain elite status. I had that experience with frequent flier programs. I am a former frequent flier addict.

My epiphany happened when flying over the Andes in June 2007 in Business Class on Air France from Buenos Aires to Santiago. The Delta Airlines roundtrip business class ticket from Buenos Aires to New York JFK cost under $600. The economy class Delta ticket from Washington, D.C. to Buenos Aires to start the Delta business class flight trip cost about $600. The 25,000 United miles I burned to get an economy class award ticket from California to Washington, D.C. probably cost about $600 to earn on some earlier United Airlines mileage run that put me closer to 1K elite status with Mileage Plus (and probably took me to Europe or Asia for a few days).

I was buying tickets to earn elite status to earn double redeemable miles to burn miles on award tickets to fly to the originating airport for a series of flights primarily for the purpose of earning more miles and elite status with a second airline. Buenos Aires just happened to be a great city with an incredibly low fare and the entire trip was built around earning elite status rather than spending time in Buenos Aires. Not that there is anything wrong with earning cheap elite, but ultimately I found myself not flying at all in the great recession year of 2008 and all my frequent flyer elite cards meant nothing as my status went unused and expired.  

On the other hand, buying 1.0 liter bottles of Stella Artois from the Buenos Aires corner market for the equivalent of US $1 is an indelible memory. Oh, and the Presidential Suite at the Sheraton Libertador on a Cash & Points Starwood award stay was pretty cool too.

Elite status is certainly not pointless if you have a plan and the ability to reap the benefits of elite.  My number #1 tip for hotel loyalty programs is earn elite status and anyone who has flown on an airline lately besides Southwest knows there is real economic value in elite status with baggage fee waivers.

But when you find yourself burning systemwide upgrades on a no-stay $1,000 mileage run to Asia or Australia primarily to earn the miles for elite status to earn more systemwide upgrades, then you might be overdoing it if you can’t find time to hang out for a few days in your foreign ticket destination.

The Quiet Man anecdote or I left my heart in County Donegal

My wife and I spent two summers in Irish B&Bs (B&Bs were US$50 to $60 vs. $100-$175 average hotel rate in 97/98). We noticed the prevalent travel pattern of Americans was to drive in at 9 to 10pm, have breakfast in the first hour of the morning and drive away again by 9am. Kelley and I didn’t rent a car and averaged 3 nights at a dozen or more B&Bs. There was a definite hypermobility travel pattern Americans exhibited that other nationalities did not show as a group.

Make sure the program is listening to you. – Loyalty Traveler response.

I don’t really get the Mark Johnson Loyalty 360 statement “I think consumers want and need to have programs that encourage participation and create engagement that leads to loyalty.”

That is marketing speak to me.  I think a hotel loyalty program is listening to me when I get a response to my questions about the rules of the program or the hotel program shows a proactive attitude for program changes disclosure.

Big negatives for me with hotel loyalty programs are:

• HHonors erasing account balances for account inactivity after 12 months. Most programs have terms stating account points will be deleted if there is no account activity after 12 or 18 months, but Hilton HHonors seems to be the main program that actually deletes points from member’s accounts. I think it is more like 24 months of inactivity before points are actually deleted.
• Changes to reward night cost without giving members full disclosure of pending changes with an opportunity to redeem points at the lower level before reward increases occur. Marriott Rewards, Hilton HHonors, and Club Carlson all have made changes to their reward charts in the past two years without publishing  a complete list of hotels changing hotel category level before the reward levels for free nights increased.  

Hyatt Gold Passport introduced a new high category reward level last year with category 6 hotel rewards at 22,000 points, but also published all hotel reward category changes and gave members specific dates for making and adjusting hotel reservations under the most advantageous category cost.

 

Don’t do it if it complicates your life. – Loyalty Traveler response 

Another Loyalty Traveler personal anecdote.

Work: I did mileage runs for 9 years. Several of those years were while working as a public school teacher. Flying weekends to Europe to earn 12,500 elite status miles and 25,000 redeemable frequent flyer miles takes a toll, even in business or first class. Flying mileage runs between Thanksgiving and Christmas during the most hectic time of the school calendar affected my work in the classroom. Ask any teacher if they kick back for the weekends in early December.  I never even considered a late-August, early-September trip when teaching school.   

Relationships. I am married. Kelley did not particularly like my flying off to Singapore for three to seven days or spending the weekend in Paris or Amsterdam. She liked the business class upgrades and First Class award flights. I have great memories like walking inside Notre Dame cathedral and the fireworks in Singapore, but these are not shared memories; which we have thousands of in our years together. 

Loyalty program addiction can complicate your life. 

The beauty of hotel loyalty programs is you can have a shared experience in a hotel room with someone else for no additional cost. The airline seats for your flight to Australia will cost twice as much for the same shared experience.

 

Read the privacy policy. – Loyalty Traveler response. 

Does anyone have electronic privacy in America?  

My primary complaint is the way companies use Facebook and Twitter to access anyone you know. All those Facebook sweepstakes provide hotel companies with files of marketing data. It is not that I am friendless in real life, well damn near, but I don’t accept my actual friends on Facebook because I don’t want every loyalty company to have that much personal information about me and my friends. I didn’t mind the days when I gave up my personal identity to anyone offering me a good deal, but these days you have to give up your entire social network to marketers.

San Francisco Loveolution Parade

 

If you’re an infrequent customer, just say no. – Loyalty Traveler response. 

My general advice is don’t bother with trying to earn elite status in a hotel loyalty program if you are staying less than 20 hotel nights in a year.  Go for the best hotel loyalty promotions like free night offers and use Priceline, vacation packages, auction sites and any deal you can find.

The loyalty elite game is truly the most beneficial for frequent travelers who can leverage good value deals with reasonable hotel rates and airline fares and who stay frequently enough to reap good value rewards. 

My parents are on a Priority Club high after just redeeming a free night earned last fall. They asked me about Priority Club’s current promotion and I told them to look at Marriott (2 stays for 1 free night at category 1 to category 4 hotel), Best Western (3 stays for 1 free night) and Starwood stays (3 stays for 1 free night).  

For my parents I will probably figure out how to get them 8 paid nights for $700 and 3 free nights. Their trips usually work out for nicer hotels at better value when I plan their hotel stays. 

The logic of paying $100 per night for two hotel nights at Marriott brand hotels and getting a free night for a future stay at a $200 per night Marriott hotel does not resonate for some travelers when looking at the alternative of two $60 hotel nights. 

Points, miles and free nights only have value at the moment they are redeemed and used.  Spending $120 now instead of $200 is probably the better choice if you are not sure you can use a free hotel night or whether you will get back that $80 premium to earn the free night with Marriott. 

It shocks me to think how many free hotel nights and airline miles I earned that went unused over the past 25 years. 

Conclusion 

Christopher Elliott concludes he is not too keen on loyalty programs. He thinks the intent is to turn you into a compulsive shopper.

I confess. Hotel loyalty programs have turned me into a compulsive hotel rate shopper, but it is not blind loyalty. I have approached this purchase point through experience and considerable analysis.

 My true addiction is travel and I have compulsively traveled and shopped travel since I was a teenager.

1977 phone call -

“Mom, I am in Arizona and I am going to Florida. No, I am not hitchhiking. I bought a $50 Greyhound ticket. Yes, all the way from California to Florida and I will call Aunt Betty in Tampa.”

I have couch-surfed with family and friends, I have camped for weeks at a time and I have tried B&Bs, timeshare and house rentals.

Hotels give me freedom to travel and get a self-contained room in a comfortable establishment with well-defined quality standards for different market segments from the economy brands to the luxury brands.

I like the comfort and privacy of hotels among the various accommodation options I have experienced. 

I am keen on hotel loyalty programs. With hundreds of hotel nights over the past decade, I think hotel loyalty programs have made me the most comfortable traveler I’ve been in 51 years of travel. And the price fits my budget.

Hotel News Now published a story on “10 hotel booking trends” from a presentation at the inaugural Hotel Data Conference by Brian Ferguson, Expedia VP of Lodging Demand and Analysis. Hotel News Now is the newsletter publication of Smith Travel Research, a leader in hotel rate data and research for the hotel industry.

The consumer trend of the past year has been a swing in hotel bookings made through online third-party hotel reservation sites like Expedia, Travelocity, and Orbitz. The viewpoint of Expedia, expressed by Ferguson, is the increased volume in bookings does not directly increase profits for third party online travel agencies due to the lower revenue generated as a portion of lower room rates across all hotel market segments.

What I want to share is the “10 Booking Trends” discussed by Expedia’s Lodging Demand and Analysis VP. I am just a hotel consumer who tries to figure out how to get great value from hotel rates. Reading what the industry experts have to say helps me focus my Loyalty Traveler work on a targeted audience who will benefit from my reporting on hotel rate trends as a frequent guest.

1.       Expedia VP Ferguson: Exchange rates are shifting travel patterns.

Hotel rates in UK have dropped primarily due to the better exchange rate for Americans. Combine the exchange rate with promotions and the UK is a bargain.

Loyalty Traveler: I totally agree, but the window appears to be closing on the exchange rate issue. Winter 2009 offered some of the best deals in years for UK and Europe due to the combination of a much better exchange rate for the US Dollar and hotel loyalty program promotions. The dollar has been losing ground as the stock market goes up. Anyone thinking Wall Street inflation?

2 nights for the price of 1 has been an ongoing deal for the past couple of years to entice travelers to the major chain hotels in Europe and Asia.

2.       Expedia VP Ferguson: Consumers are looking for a deal. Bookings made with promotions are increasing as a share of total hotel reservations.

Loyalty Traveler: I’ll take some credit for this one. I take the time to analyze hotel promotions for readers. Loyalty Traveler rarely books a room without a promotion offer. “Hotel value for the frequent guest” is the Loyalty Traveler motto. 10,000+ unique visitors a month are reading Loyalty Traveler to learn more about hotel loyalty program promotions.

3.       Expedia VP Ferguson: Promotions matter more than ever.

 

Loyalty Traveler: I get a chuckle out of all the news articles showing how to get better value from your spending in all segments of consumer purchases from groceries to hair cuts to travel.

I had an oil change yesterday for 25% off. The coupon took two minutes to locate on the internet. All the other people at Jiffy Lube paid full price.

Friends have commented I am a cheap ass when I pull out a 2-for-1 dining coupon. I rarely eat out for more than half-price.

 

I frequently stay in hotels for less than half-price. Promotions matter if you want more money for life’s other necessities and pleasures.

 

4.       Expedia VP Ferguson: Promotions are getting more creative. It used to be about cutting rates and now hotels add free nights and value-added incentives.

 

Loyalty Traveler: Promotions are more creative and take more time to analyze for this Loyalty Traveler. I’m looking for the deal whether it is a bargain rate now (free parking, free breakfast) or will result in a bargain hotel rate in the future (free hotel night).

 

5.       Expedia VP Ferguson: Customers who book online are trading up. Four and five star hotels are getting more affordable.

Loyalty Traveler: I have stayed in some of San Francisco’s finest hotels this year and only once paid over $125. And I received a $500 per night suite for that stay. 2009 is a leisure traveler’s hotel dream.

6.       Expedia VP Ferguson: There are massive swings in online market share.

Loyalty Traveler: No real comment to make here. I haven’t tried the phone call reservation this year. I’ve read articles on Hotel Chatter and Budget Travel about people getting a much better deal through the phone. I’ve been an online customer for 10 years and my experience has rarely been to find a better deal over the phone. I do recall my mother getting good phone rates when my mom and the hotel reservationist could not locate the online promotion I was telling her to book.

7.       Expedia VP Ferguson: Booking compression. People are waiting closer to stay date to book.

Loyalty Traveler: I reported in several posts that my rate analysis of San Francisco hotels revealed the lowest rates typically are found between 7 and 14 days before the stay date. Smart shoppers wait (or at least go with a rate allowing cancellation in case a better rate appears).

8.       Expedia VP Ferguson: Leisure rates went down first and are going down more.

Loyalty Traveler: My hotel rate focus is geared for the leisure traveler. I don’t stay in San Francisco on paid rates when a convention is in town and the hotels go up to $300+ per night. The same hotel room is around $100 per night, a 50% decrease from average leisure rates a year ago, during weeks when business travel is light. And getting an upgrade is much easier when there are not corporate executives buying up the suites.

9.       Expedia VP Ferguson: Increased use of rate fences in packages.

Loyalty Traveler: I am not a marketing person and I need to study this concept since I have been seeing it more frequently lately. Basically it seems the concept is to hide the room rate in a package of bundled services such as airfare, rental car, or hotel amenities like champagne and spa treatments.

I generally find these to be a poor value for a hotel when the components are broken down. Packages are convenient and there are some great deals if you need the car or the airfare. I think this is generally a better strategy for reducing high-cost airfare rather than getting a better value on a hotel room.

10.   Expedia VP Ferguson: Opaque channels are growing faster than non-opaque channels.

Loyalty Traveler: Opaque channels are hotel reservation sites like Priceline and Hotwire where you get a really low rate for an unspecified hotel. Opaque channels are the way to go when hotels are priced at high nightly rates. I opt for Priceline when the alternative is a $200+ night room.

My basic loyalty traveler argument is over the course of the year when traveling and staying 20 to 50 nights in hotels, the hotel loyalty program strategy can be used as effectively as Priceline to pay for rooms when they are relatively low priced and redeem points for high priced rooms.

I have saved a couple thousand dollars in past years using Priceline for trips when the chain hotels were high priced.

2009 has seen incredible promotions from hotel loyalty programs. My Starwood Hotels stays in May averaged less than $60 per room night at upscale hotels, frequently in suites, while allowing me to book $500 per night rooms with the free nights I earned.

Try doing that with Priceline.

 

 

The hotel industry is abuzz this week with survey results indicating travel loyalty program participation is declining in 2009.  Results of a new Colloquy survey showed only 48% of respondents would be “disappointed” if their travel loyalty program was discontinued.

Obviously, these are travelers who do not use their frequent flyer program or hotel frequent guest programs effectively, or perhaps they just are not frequent travelers. 

Three population segments stand out in their use of travel loyalty programs:

1)      Affluent heads of households with incomes of $125,000 or greater

2)      Young adults of 18 to 25

3)      Core women 25 to 49 with incomes $50,000 to $125,000

These are three economic sectors of the population. Why would affluent persons, relatively poor young people, and core women have travel loyalty programs in common?

I think the affluent know savings comes from buying in bulk and they can afford to do it. The Costco style of travel is my plan too. I spend more on travel than I should budget from our household income, but I do that because I know there is a much higher return on my investment in hotel stays by maintaining high elite frequent guest status with one or two hotel loyalty programs.  (I am far from affluent by the $125,000 definition. I am more of a core woman demographic in man’s clothing.)

I get upgraded frequently to hotel rooms I otherwise could not afford given the frequency of my travel.

Young people and core women have the need to get good value out of a limited pool of travel dollars. I assume a large proportion of women are heads of households and desire travel with their family. Remember these are women in the $50,000 to $125,000 income bracket. They have money to travel, but not enough money to overspend on travel.

I write about travel deals and show how a person who uses hotel loyalty programs with a plan can obtain much higher value per travel dollar.

San Francisco is an expensive city, but I’ve managed to stay in 4-star and 5-star hotels for an average of about $70 per night for nearly 20 hotel stays this year through strategic use of hotel loyalty programs.

Bloggers on BoardingArea.com show readers how to earn low-cost miles and travel in First Class around the world at a fraction of a published fare. And you can travel twice as often, or take a family member in economy class if you want to stretch the miles you’ve earned.

I sure would like to a survey focused solely on frequent guest elite members. I think the results would show high importance on the value of frequent guest loyalty programs and a high degree of importance and satisfaction with hotel loyalty programs. 2009 has been a great year for elite frequent guests in my opinion. Fewer guests have impacted hotel services with staff layoffs and restaurant closures, but lower hotel occupancy provides more complimentary room upgrade opportunities for elites.

 

 

Loyalty travelers may be in the decline, but loyalty travelers are far from disappearing.