I’m working to come up with qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

Translating Quantitative Points Value into Qualitative Value

Example using a Hilton Hotel in Paris, France.

A single night at the HHonors Category 6 Hilton Arc de Triomphe for dates I checked came to $495 per night. The choice is $495 or 40,000 points. The quantitative redemption value works out to be $495 ÷ 40,000 points x 1,000 (or simply $495/40) = $12.38 per 1,000 HHonors points redemption value.

This is an “excellent” redemption value in my opinion.

So here is the basis for creating a qualitative judgment based on quantitative values. I think most of us will agree that getting $12 per 1,000 HHonors points is an “excellent” value.

As value drops below $12 per 1,000 points spent we must reach a point where the value is no longer “excellent”, and simply a “good” value.

At an even lower quantitative redemption value, say $5 per 1,000 points the qualitative value at some point drops to another lower level of just an “average” value for hotel points spent.

And at some point the money saved by spending points must become a “poor” value, i.e. the cash saved is not worth the cost in points for a free night, and the choice to spend cash rather than points becomes the better value for most hotel loyalty program members.

I’m working to come up with these qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

In yesterday’s Hilton HHonors post I set $7.00 saved per 1,000 points spent as my marker for when the redemption value using points is “excellent”. I set less than $3.00 per 1,000 points as a “poor” redemption value. This is a work in progress that I am trying to refine.

The Value of HHonors Points Exchanged for a Free Room Night

(based on a set-point of trying to get $7 in cash savings for every 1,000 HHonors points spent on free night rewards.)

 

 

 

Now I know there are category 6 hotels that will cost over $280 per night (Hilton Arc de Triomphe) and these hotels provide an excellent value for HHonors points based on this scale of $7 per 1,000 points being rated “excellent” redemption value. Even if the Hilton Arc de Triomphe goes to category 7 in 2010, the redemption value will still be “excellent” when spending 50,000 points to save $495, the room rate for the July 2010 dates I checked. $495 ÷ 50,000 points = $9.90 per 1,000 points.

This table advises me that I am getting excellent value for my HHonors points if I spend 25,000 points and get a Category 3 hotel room that would have cost over $175 per night. Are there Category 3 hotels that cost over $175 per night more than just a few days per year? I have not looked into that.

Certainly there should be Category 1 hotels in 2010 where the nightly rate will be over $52.50 and using points will provide an “excellent” redemption value.

 

Here are some real examples of redemption value using San Francisco hotels for Tuesday October 27, 2009.

Hilton San Francisco Union Square (HHonors Category 6 = 40,000 points)

Pay $160.65 ($185.68 after tax) or spend 40,000 points for King Bed Deluxe Room

$186 ÷ 40,000 points (x 1000) = $4.65 per 1,000 points (“average” value)

 

The factor that complicates the calculation is determining the points a member does not earn when using points for a free reward stay. Here is an example:

 

Hilton San Francisco Fisherman’s Wharf (HHonors Category 6 = 40,000 points)

 

Pay $179 ($206.75 after tax) for a King Bed Deluxe on a special rate offering 2,500 bonus points.

A HHonors basic member can earn 15 points per $1 when choosing Points & Points earning preference.

 

This means the HHonors member is not earning 2,685 HHonors points when redeeming points for a free night rather than paying for the hotel stay. ($179x 15 points/$1 = 2,685.)

 

This particular Hilton property also has a rate offer for 2,500 bonus points per stay. The bonus points rate is no additional cost compared to the lowest best available rate for the hotel at $179.

 

By using points for a free night reward the HHonors member actually is not trading 40,000 points for $207 in savings since the member would earn 5,185 points by paying for this hotel night. If the HHonors member earning Points & Points spends $207 rather than 40,000 points, then the member’s account balance will be 45,185 points higher after the stay. (I’m ignoring elite bonuses and other promotional bonuses which will drive the redemption value even lower.)

 

The simple calculation is 40,000 points saves $207. Redemption value = $5.18 per 1,000 points. This is a “good” redemption value.

 

But, the real calculation should be $207 ÷ 45,185 points = $4.58 per 1,000 points. The redemption value is now below $5/1,000 points and I rate this as just “average” value.

 

And depending on what bonus points promotions you are eligible for and what elite or HHonors credit card spending bonuses you may be entitled to the redemption value for HHonors points drops even more.

 

Hampton Inn San Francisco/Daly City (HHonors Category 3 = 25,000 points)  Oct 27, 2009

Pay $139 King Bed ($152.90 after tax) or 25,000 points?

$153 ÷ 25,000 points = $6.12 per 1,000 points. This is a “good” redemption value.

 

A more precise calculation will count the points I do not earn when using a reward stay.

$139 x 15 points per $1 = 2,085 points

My new calculation is $153 ÷ 27,085 points = $5.65 saved per 1,000 points and this still ranks as a “good” redemption value.

 

Caveat: Although the Hampton Inn Daly City is quantitatively a “good” value, the added benefit of being in downtown San Francisco at the Hilton Union Square or Hilton Fisherman’s Wharf is value that one must consider when making a hotel points redemption. You may get better value quantitatively with the Hampton Inn Daly City, but the quality of a hotel stay in downtown San Francisco is a factor one must consider when choosing where to spend points.

 

 

 

Here is the link to the Qualitative tables by HHonors Hotel Category from yesterday’s Part 1 post.

Here is the link to Part 2 with rationale for why I created these qualitative tables.

 

I plan to develop qualitative tables for Starwood Preferred Guest next. And the SPG post will not include the detailed explanation of why and how I am creating these tables.

What is a good value when spending hotel points?

This is the basic question I am asking. This is a qualitative and subjective question. Yesterday, I just threw out some charts of qualitative value without much discussion of why I created the tables.

I’m working to come up with qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

Say I spend 40,000 hotel points instead of the $200 room rate (after tax) being asked by the hotel.  

Did I get “good” value for my points?

Quantitatively I can say I received $5.00 per 1,000 points I spent.

$200 ÷ 40,000 points x 1,000 = $5.00 per 1,000 points.

 

This is a simple quantitative value I can calculate based on the money I saved by using points. But my main question is qualitative.

Is spending 1,000 HHonors points to save $5 a “good” value for a Hilton HHonors member?  

When I spend 30,000 points rather than spending $100 for a hotel room I can calculate the quantitative value of my points spending as $100 ÷ 30,000 points x 1,000 = $3.33 per 1,000 points.

Is spending 1,000 hotel points to save $3.33 a “good” value? I know I can get much higher value when spending my points if I am selective about when and where I spend points.

In real travel I am often faced with choices. When I search Miami and see 12 hotel choices how do I determine which hotel is a good deal for my points?

I can stay at one Hilton hotel, rated HHonors Category 6, that will cost $300 per night or I can spend 40,000 points and leave the hotel with no credit card charge for the room night. (Tax is usually included in a hotel room night reward using points although some hotels have additional resort fees or city tax not covered in the hotel points reward.)

Another Miami area Hilton brand hotel is only a Category 3 hotel at 25,000 points or a room rate of $140.  Which hotel – the category 6 at 40,000 points saving $300 or the Category 3 at 25,000 points saving $140 is the better redemption value? Quantitatively it is easy to see that the Category 6 hotel provides better value on a simple numerical basis (Redemption value = $7.50 per 1,000 points), but how much worse is the value for the Category 3 hotel (Redemption value = $5.60 per 1,000 points).

Saving $7.50 per 1,000 HHonors points I spend is a better value, but is getting only $5.60 per 1,000 points a much lower value for my points? Should I be concerned if I only save $5.60 per 1,000 HHonors points? Am I wasting the value of my points?

I am only considering the numbers here and not specific hotel attributes like location on the beach, hotel facilities, and TripAdvisor reviews which may all be important factors in your final decision on where and when to spend points.

The primary qualitative question most of us want answered when trying to get hotel value out of our points spending still remains after determining the quantitative redemption value for hotel points.

Is redeeming 1,000 HHonors points for a $5 hotel cash savings a “good” value?, an “average” value?, or a “poor” value?

Loyalty Traveler Guide to HHonors Hotel Value

My Loyalty Traveler question is whether I can create a guide for hotel loyalty program members to reference and quickly decide what is a good value for any hotel program?

Yesterday, I started on this path of qualitative analysis with HHonors.

I have redeemed around two million HHonors points for free room nights over the past 10 years. Intuitively when I started to create tables I thought getting $10 per 1,000 HHonors points would be the benchmark for getting “excellent” value from points spending for free hotel nights. This means if I spend 25,000 HHonors points I want to realize a $250 cash savings with my hotel points redemption reward.

Once I placed these values into tables I had to reconsider my initial qualitative analysis. When looking for $10 per 1,000 points redemption value as the standard for determining an “excellent” use of points instead of cash, I am saying that I don’t rate a hotel redemption as “excellent” in a Category 6 property unless I am saving $400 by using 40,000 points for a free night.

Finding a Category 3 hotel requiring 25,000 points for a free night or charging $250 per night may be tough in the real world. I doubt Hilton has many hotels in the Category 3 level charging $250 for a free night.

In my economic reality I will be happy if I can save $300 by spending 40,000 points. Sure there may be better redemption values possible, but when faced with the choice of spending $300 or 40,000 points I almost certainly would go with spending points.

Higher category hotels can have outrageously high-priced room rates. Finding a Category 6 hotel requiring 40,000 points for a free night or charging $400 per night might be much easier to find than a $250 Category 3 hotel to realize  “excellent” value for my points.

Finding  a $200 per night Category 2 hotel costing 20,000 points per night is probably not that common a redemption value. I adjusted my initial tables based on seeking $10 redemption value per every 1,000 HHonors points to a lower $7.00 per 1,000 points to better match the real world rates of most Hilton Hotels across the 7 hotel redemption categories and Waldorf-Astoria Collection.

If you think being underwater $100,000 on your home mortgage is bad, imagine trying to sleep at night thinking about how your $400 million hotel investment has lost $100 million in value with the real estate crisis of the past two years.

The western playground of Scottsdale, Arizona has newly opened hotel properties like the InterContinental Montelucia and Starwood’s W Hotel Scottsdale sitting around waiting for foreclosure auctions.

So why are hotel loyalty programs being so generous?

And why are loyalty travelers so happy?

Hotel loyalty program bonus promotions have offered some of the most generous bonus incentives for frequent guests in years. Free night offers and bonus point offers are hard, fast, and repetitive, yet hotel occupancy and hotel room rates are still declining after a full year of unprecedented declines for the lodging industry.

Hotel loyalty programs are increasing the value of hotel points by offering repeated discounts on the cost of a free night using points. IHG Points & Cash; Marriott Rewards discount on PointSaver nights; Starwood Preferred Guest eliminating higher point peak season rates for 2009 on free nights using points at its high-end hotel Category 5, 6, and 7 properties.

Ironically, in the face of increased value for hotel points, Hilton HHonors has cut back on availability using Point Stretcher discount nights with HHonors points for 2009. A rumor spread on FlyerTalk in July stating HHonors Point Stretcher nights, free nights using points at a 40% discount, would be discontinued for 2009. In August, a Hilton HHonors posted a statement on its website stating Point Stretcher awards would be posted in September. It is now September 28 and there have been no hotels posted.

The message now simple states: Point Stretcher Dates are currently unavailable.

http://hhonors1.hilton.com/en_US/hh/rewards/pointstretcher.do

And occupancy levels are still declining and hotel rates continue to fall every month for the past year.

Hotel loyalty programs are repeatedly lowering the qualification requirements for hotel loyalty program elite status in 2009. Starwood, Marriott, and Hyatt offered double elite credit in 2009 promotions and Hilton will give most anyone a shot at Gold for 4 stays. IHG sells InterContinental Ambassador status and purchasing your way to Priority Club Platinum is a fairly easy task.

And occupancy levels are still declining around the US.

Hotel rates in the US have dropped nearly 10% in the past 12 months and some locations have posted 15% to 20% declines in room rates.

And occupancy levels are still declining around the US.

Why the next two months are important to watch for hotel industry indicator data.

A year has passed since the economic bubble burst bringing lower rates to the hotel industry. The industry is only projecting profitability to start improving in the latter part of 2010. The next two months may still show declines in occupancy and room rates and these will be based on the large declines in occupancy and rates from October and November 2008.

 

2009 snapshot of US hotel industry room rate and occupancy data.

 

December 2008

The occupancy and room rate declines were quite apparent a year ago in late 2008 when in the first week of December 2008 New York City occupancy had declined 9.2% from the same week in 2007 as room rates had fallen 14.9% over the year to average $348 per night. Rates had pushed $380 average by 2007.

 

In December 2008 PricewaterhouseCoopers predicted a 2% decline in US hotel demand for 2009 and a RevPAR decline of 5.8%. http://www.hotelmarketing.com/index.php/content/article/hotel_giants_seek_refuge_in_niches/

 

February 2009

February is the peak travel month of the year for Hawaii. In February 2009 the numbers showed a 12.4% room rate decline from 2008 with room rates dropping from $213.62 to $187.21. The room occupancy rate fell to 74.7%, its lowest level since the 1991 Gulf War. http://www.usatoday.com/travel/hotels/2009-04-06-hawaii-hotel-occupancy_N.htm

 

March 2009

Hotel Marketing published hotels.com findings in late March 2009 indicating New York City real room rates had dropped to $255, a 22% drop for the final quarter of 2008 compared to 2007. The data also stated real room rates were only 1% higher than January 2004.

http://www.hotelmarketing.com/index.php/content/print/global_hotel_prices_down_by_12_percent/

 

By mid-March 2009 the hotel industry forecast by PKF Hospitality Research (PKF-HR) called for hotel occupancy to drop 7.8% in 2009 across the US. The 6.4% predicted drop in average daily rate would designate 2009 as the greatest hotel rate decline since data was first tracked in 1932 by PKF-HR. Remember the forecast made in December 2008 by PwC was 2% occupancy decline for the year. The biggest plunge in hotel profits since the 1930s was predicted.

PKF predicts the greatest hotel rate discounting will occur in Summer 2009.

“In 2010, the vast majority of cities are still forecast to experience a decline in RevPAR for the year.  However, emerging signs of economic recovery are expected in many markets, and 14 cities across the U.S. will enjoy RevPAR increases over 2009.  Joining Anaheim and Minneapolis as the markets expected to lead the lodging industry recovery are the cities of Atlanta, Austin, Detroit, Oahu, Fort Worth, Raleigh, Chicago, Dallas, Nashville, Columbus, Albuquerque, and Houston.”

 

U.S. Lodging Markets	Greatest and Least 2009 Forecast Decline in RevPAR*
Market	Decline
Pittsburgh	-6.8%
Houston	-6.9%
Raleigh	-7.5%
New Orleans	-7.9%
National Average	-13.7%
Charlotte	-18.7%
Miami	-19.1%
Phoenix	-20.5%
New York	-26.1%
Source: PKF Hospitality Research

* March 2009 Hotel Horizons Report

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=859&ArticleType=0&print=true

 

RevPAR is an indicator of hotel profitability. So did we seen signs of RevPAR declines in line with this forecast in the 6 months since the table was published?

New York RevPAR decreased 31.8% for August 2009. Nationally RevPAR decreased 19% for August 2009. Phoenix RevPar had decreased 25.8% by July 2009 according to STR compared to the PKF forecast of 20.5% for the year. These three indicators show more than a 5% negative variance on the figures in the table. The hotel industry is worse off than the March 2009 forecast.

 

April 2009

Smith Travel Research data for the first week of April  2009 showed Anaheim average room rates had dropped 17% to $107 per night. Chicago also listed above as a market recovery leader saw a 22% year-to-year drop in occupancy from April 2008 and a 24% average room rate decline to $111 per night.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=980&ArticleType=0&PageType=SameAuthor&print=true

 

At the end of April STR released a revised 2009 hotel industry forecast calling the first two quarters of 2009 to be the trough and relief emerging in the latter part of 2009. Year-end occupancy in US hotels was projected to decline 6.5% to 56.5%. The average daily room rate was projected to be down 3.6% to $102.89.

May 2009

Luxury Hotels Room Rates Drop

In late May 2009 STR’s Luxury Chain Scale, a composite of about 30 luxury and high-end hotel brands showed occupancy had declined 14.5% to 63.1% by April 2009 compared to April 2008. Room rates had fallen 16% to $249 per night across these hotel brands.

http://www.hotelnewsnow.com/articles.aspx?ArticleId=1259&PageType=Featured&ArticleType=1&print=true

 

June 2009

By June PKF revised its forecast to project falling room rates for the remainder of 2009, however, the rate declines would slow later in the year. Occupancy declines were still projected at 8.1% and room rate declines for the year were posted at 10.2% for 2009. Room rates were also predicted to fall another 3.3% in 2010.

http://www.btnonline.com/businesstravelnews/headlines/article_display.jsp?vnu_content_id=1003983721

 

STR released May 2009 data showing all 25 major hotel markets in the US saw year-over-year declines in average daily rates and occupancy. Oahu, Hawaii had the lowest occupancy decline of any major market at 4.9% drop.

Detroit, predicted by PKF to be a leading indicator of hotel market recovery in 2009, led the US in occupancy decline at -20% from May 2008. Houston and Dallas also cited by PKF as hotel recovery indicator markets had greater than 15% occupancy declines.

Nashville had the lowest decline in average room rate at just 4.1% to $91 per night.

STR June monthly data showed Minneapolis, Houston, Phoenix, and Detroit had seen the largest occupancy declines in the nation, each city with more than a 15% drop in guests. Three of these cities were cited as leading indicators for hotel market recovery by PKF in March 2009. New Orleans was the only major market to show slight gains in rates, yet still showed a slight decline in occupancy.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1577

 

July 2009

In July STR came out with a summer 2009 forecast of the hotel industry indicating some stabilization may be in sight. STR’s revised forecast called for 2009 year-end occupancy to decline 8.4% and Average Daily Rate by 9.7% to $96.43. In the three months since the STR April forecast the ADR decline had jumped from 3.6% to 9.7% for 2009.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1487&ArticleType=1&PageType=Todays&print=true

 

The STR data in July showed New York average room rates had dropped 26.6% to $180 per night. San Francisco (ADR $118), Oahu (ADR $180), Houston (ADR $86), and San Diego (ADR $124) had all seen room rates drop more than 15% over the course of the previous year.

September 2009 – The Current Situation in the US Hotel Industry

In September 2009 STR released a hotel industry forecast stating transient leisure growth was the recognizable trend. STR looks cautiously to leisure travelers continuing to spend in hotels and bring the hotel industry indicators into positive territory in November 2009.

Why are hotel loyalty programs being so generous? The leisure traveler is leading the recovery of the industry and hotel chains have a desire and an interest to retain leisure travelers.

STR monthly hotel data numbers for August 2009 shows occupancy declined 9.9% to 60.7% across the US. ADR has dropped 10.1% to $96.58 per night.

The US lodging markets with the lowest decreases in occupancy are Washington,D.C. (65.5%), Boston (74.1%), San Francisco (84.7%), Oahu (78.3%), and Tampa (48.2%). The other 20 major hotel markets had occupancy decreases in excess of 5% from August 2008 led by Detroit and Houston.

The average daily rate declined the most in Denver with a rate drop in excess of 30% to an ADR of $90 per night. New York (ADR $186), San Francisco (ADR $128), San Diego (ADR $131), and Minneapolis (ADR $92), all saw rates drop more than 15% in the past year.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1914&ArticleType=38&PageType=STRPressRelease

 

Hotels and the Loyalty Traveler

Now in late 2009 we are looking at any further decline being weaker demand and rates on top of the steep hotel indicator drops from a year ago.

Loyalty travelers are loyal.

Hotels who offer a bargain to the loyalty traveler will see more frequent guests and those frequent guests will likely still be around when the group meetings resume and the general economy improves.

Happy loyalty travelers skimping to travel on the cheap in 2009 will find the way to hotels in hard times. Many of those same happy travelers will be high spending at hotels when times are better for the economics of hotels and the wallets of travelers.

That is why hotel loyalty programs are being so generous in 2009.

The more complex programmes become, the harder it is for consumers to compare them.

 

“The average consumer will not try and work out return on spend (the monetary value of earning points), never mind factoring in the value of value-added services, such as, early check-in or access to an executive lounge,” Conradie maintains.

 

– Razor’s Edge Business Intelligence press release for the Multinational Hotel Rewards Programmes 2009 report. http://www.razorsedgebi.com/

 

Thank goodness there is Loyalty Traveler for the average consumer.

 

I received an email the other day regarding Razor’s Edge Business Intelligence recently published report on Multinational Hotel Rewards Programmes 2009.

 

The altered spelling of ‘Programmes’ may clue you in on the fact that this report is not published in the USA. Razor’s Edge Business Intelligence is a South Africa company.

 

The report sounds like a great resource for Loyalty Traveler.

 

12 major hotel loyalty programs are profiled in detail.

 

·         Accor A|Club

·          Best Western Gold Crown International

·          Carlson Goldpoints Plus

·          Choice Hotels Choice Privileges

·          Golden Tulip Flavours

·          Hilton HHonors

·          Hyatt Gold Passport

·          InterContinental Priority Club Rewards

·          Marriott Rewards

·          Sol Meliá Mas Rewards

·          Starwood Preferred Guest

·          Wyndham Rewards

 

 

Loyalty Traveler has written about all these hotel loyalty programs in the past year, except for Golden Tulip. I hold a grudge against Golden Tulip Flavours. I am not convinced Golden Tulip Flavours ever got their act together. 

 

Soon after the Flavours program was launched a few years ago I had Golden Tulip stays in Amsterdam and spent time educating the staff at each hotel’s front desk on their own chain’s hotel loyalty program. I never received credit for any of my stays. Follow up emails with the company came back with replies that I would not receive any benefits or a membership card until I completed a hotel stay.

 

Those Dutch customer service representatives at Golden Tulip understood my English perfectly well, they just didn’t understand their hotel loyalty program.

 

Golden Tulip hotels are fine and I do not hesitate recommending these hotels to guests. Actually, I did include a little piece with photos of the functional and well-designed little space of my Golden Tulip Amsterdam Art 160 square feet room in this June 2009 Loyalty Traveler blog post.

 

 

The 200-page Hotel Loyalty Programmes 2009 report by Razor’s Edge is only US$1,900 if purchased by December 31, 2009. US$2,200 after that date.

 

I double-checked hoping it was priced in South Africa Rand.

 

Hey Razor’s Edge. Can you cut Loyalty Traveler a free slice?

 

Loyalty Traveler is free hotel loyalty program business intelligence for consumers.

No deep pockets here.

 

 

 

 

 

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.

Popularity of Chain-Affiliated Hotels Waning?

A national travel survey 2009 National Travel Monitor by Ypartnership/Yankelovich states travelers have increased preference for independent hotels by 6% over the past year. The chain-affiliated hotels do not need to fret too much as 4 out of 5 leisure travelers still prefer brand name hotels, but the survey indicates a growing preference for the individual character and pricing of independent hotels.

 

Leisure travelers also state a growing preference for limited-service hotels, i.e. hotels without restaurants, over full-service hotels since the 2008 survey conducted by this group. Room rates play a large role in the growing popularity of the limited-service hotel. Also, the perception of better value is a leisure traveler concern.

 

Still the leisure traveler preference for full-service hotels has only dropped from 66% in 2008 to 60% in 2009 while limited-service hotels have grown in popularity from 34% in 2008 to 40% in 2009.

 

As Loyalty Traveler I find the interesting data point in this survey to be a preference for chain-affiliated hotels at 80%, yet brand name is cited as a “very influential” factor in choosing a hotel for just 44% of respondents.

 

Does this mean travelers want a chain-affiliated hotel for consistency in lodging, but do not care which brand?

 

This indicates to me that leisure travelers are not taking advantage of the full array of benefits from hotel loyalty programs. Readers of my blog know there is real value in working a loyalty program for complimentary upgrades and free nights. I meet so many people who spend 20 to 30 nights in chain-affiliated hotels every year, but rather than being loyal to one major hotel chain and gaining elite status, the desire to get the lowest rate splits their loyalty among the chains.

 

The result of scattered hotel loyalty is small amounts of points in a variety of hotel programs and no elite status. The trade-off of several  hundred dollars saved over the course of the year is often at the expense of a couple of thousand dollars in potential benefits missed due to no hotel loyalty elite status.

 

A $200 savings for a 5-night vacation at a Marriott resort may be a savings for one trip, but it is not the best value if the traveler could have had a $200 per night complimentary upgrade at the Hilton resort across town based on Hilton Diamond elite status.

 

Many leisure travelers have enough hotel activity during the year to reach a high elite status, particularly with Starwood Preferred Guest or Hyatt Gold Passport (hey, Hyatt is giving away top elite status for free right now with complimentary upgrade certificates).

 

Year after year, I watch fellow travelers going after the best rates without consideration of the potential added value they would receive if they just focused on a single major hotel chain. And they spend thousands of dollars on hotels over the course of the year and could easily put out a few hundred dollars more to maintain high elite status.

 

I’ve had friends come and see my hotel room and they wonder why I didn’t tell them about the great hotel deal. “I would have stayed here for that price!”

 

Complimentary room upgrades don’t come with two or three hotel stays a year with a major hotel chain. Demonstrating loyalty means a commitment to spend thousands of dollars over the course of 15 to 30 hotel stays during the calendar year. In my case I feel the loyalty is returned by the benefits I receive from the hotel loyalty program.

 

Complimentary upgrades are based on showing hotel loyalty to the affiliated hotel chain. It is a win-win relationship. The hotel chain has my loyalty and I frequently receive value-added benefits for my hotel spending.

 

Room rate, location, and value are cited as the most important factors by leisure travelers when booking a hotel room.

 

Room rate is quite important for most travelers. The basic practice of setting room rates based on the hotel’s market segment competition means most major brand upper upscale hotels in the same area will have a similar price. The room rate variations are typically due to events and functions that will push rates higher for one hotel over another. With no special events creating higher hotel demand, then room rates are typically within a 10% range above or below an average of the hotels in a particular market segment in a specific location.

 

When location is most important and room rates among chains within a specific location tend to balance out, then value is left as the primary variable. Hotel frequent guest programs provide the added value in complimentary breakfasts, room upgrades, and future hotel room rebates in the form of points and free nights.

 

Frequent guest elite status in a major hotel chain’s loyalty program improves the value variable. Rather than downgrading your hotel market segment, try upgrading your hotel loyalty.