Posted by Ric Garrido

There was a reason I had to ambush Heather Passe in the conference hall. At lunch time the day before, the media conference for press Q&A at the Carlson Hotels Global Summit in Orlando brought together top executives like Hubert Joly, Carlson Hotels President and CEO. Nothing even remotely related to the goldpoints plus loyalty program was discussed. The press conference did not seem like the forum for me to ask what this loyalty traveler desired to know,

“What were the reasons goldpoints plus recently reduced their category 6 hotel award level from 90,000 points to 60,000 points?”

Would the senior executives behind a billion dollar company even know the details of goldpoints plus?

My fear came true in a one-on-one interview with an executive VP who repeatedly mentioned the name Heather Passe as the brain behind goldpoints plus. I needed to meet this person who could answer my loyalty program questions.

Heather Passe, the visionary for goldpoints plus

Heather Passe, VP Marketing, Revenue Management, and E-Commerce at Carlson Hotels, didn’t have the luxury of relaxation at the end of the Carlson Global Summit sessions and photo ops since I grabbed her off the floor to talk about goldpoints plus shortly after she stepped off the stage. Before we even reached the media room I learned she spent nearly twelve years with Northwest Airlines, most recently as managing director of passenger marketing until 2008 when she started with Carlson Hotels as Vice President of Customer Relationship Marketing. Heather brings her WorldPerks frequent flier program background to the hotel biz.

Inside the goldpoints plus vault

Doubling the number of goldpoints plus members as a component of Carlson Hotels strategic five year plan was the only loyalty program reference made in the first day of the two day Carlson Hotels sessions.

I wanted details.

Winning the Revenue Battle

The second day focused on “Winning the Revenue Battle” and it was this topic where goldpoints plus was finally presented to the audience.

Fredrik Korallus, Executive Vice President, Global Revenue Generation, Carlson Hotels provided details on several aspects of the goldpoints plus loyalty program.

goldpoints plus loyalty program evolution on the timeline

Here is the goldpoints plus loyalty program timeline presented at the Carlson Hotels conference.

  • Improved and personalized member communication (initiated).
  • Enriched member redemptions (the points required for hotel awards in category 4, 5, and 6 were significantly reduced in price on February 1, 2010).
  • Launch hotel incentives for enrolling new members (Q2, 2010)
  • Launch a small to medium size business loyalty program (Q3, 2010)
  • Define next generation program evolution (Q4, 2010)

Carlson Hotels is launching a hotel level incentive program April 1, 2010 to pay hotels for new member enrollments. Actively engaging the hotel site to enroll new members should mean a higher awareness of member benefits at hotels. At least that is what I hope is an effect.

While we as frequent guests look at loyalty from the points for free nights and miles and hotel stay benefits perspective, the hoteliers are focused on the revenue aspect.

The last bullet is particularly exciting to see. Carlson Hotels is strategically committed to altering goldpoints plus. Changes will likely continue to roll out in 2010, but 2011 looks to be a pivotal year in the goldpoints plus loyalty program.

Growth Spurt Objective from 5 to 10 million by 2013

A graph showed goldpoints plus growing over the past decade from around 1,000,000 members in the year 2000 to 5,000,000 members in 2009. The strategic plan is to have 10,000,000 members by 2013. Another slide stated the 2010 goal as 1,000,000 new members. That leaves one to two million members for 2011 and another 2 million in 2012 to make the goal.

I’m thinking loyalty promotions.

10,000,000 members is about the size of Hyatt Gold Passport, Choice Privileges, and Best Western Rewards according to WebFlyer 2009 numbers.  Starwood Preferred Guest, Hilton HHonors, and Marriott Rewards are in the 25 to 30 million member range.

Optimizing Room Rates

One of the more interesting aspects of revenue management to me is the complex algorithms hotels use to establish rates. This seems to be one of the benefits of belonging to a major chain and paying the fees as a hotel owner. Carlson Hotels has the software to analyze room rate data and provide its hotel members with optimized room rates to maximize hotel revenue.

What does this mean for the frequent guest? Teams of analysts input data, jiggle the numbers, and come up with hotel rates for the next 90 days. Another day passes and rates may adjust again. At least hotel rates do not seem to fluctuate as rapidly as airfares.

I tend to be pretty good at snagging low hotel rates, but it takes observation, persistence and patience. We are alone as consumers trying to outsmart the teams of hotel pricing analysts whose job is outsmarting the guest to get the most money possible for a hotel room.

The value of loyalty

Goldpoints plus members were shown to pay an average daily rate of $127 compared to $111 paid by other guests at Carlson brands. The room rate paid by goldpoints plus members only declined 8% year-over-year compared to a 14% room rate decline paid by other guests.

Hotel owners and managers love to see this statistic.

Now as a loyalty member you may wonder – How is this good news if loyalty members are paying more than other guests in 2009?

Here is my Loyalty Traveler answer applicable to a member in any hotel loyalty program – goldpoints plus members are earning points and elite members receive additional benefits with each hotel stay. The question for the program member should be, “Am I getting $16 in extra value from Carlson Hotel stays?”

I’d argue yes in many cases. Do the Math (pun intended).

$127 ADR earns 2,540 goldpoints for the loyalty member.

Goldpoints has ongoing promotions for more points. Let’s throw another 1,000 points for any old promotion that is around. Goldpoints has had several promotions more lucrative than 1,000 points per stay in the past year.

Earning goldpoints plus Silver elite is not too difficult. In fact, I just received goldpoints plus Silver elite instantly for free last week through a link I found on FlyerTalk. Silver adds 25% to the 2,540 base points.

Loyalty member earns 4,175 goldpoints for a $127 rate.

15 room nights and you have 60,000 points for a free night at the best Radisson and Regent hotels in the system.

The guest paying $111 ADR over 15 nights saved $240. The goldpoints plus guest may have paid $240 more, an extra $16 per night, but also received enough points for four free nights at a low category hotel (likely to cost over $60 per night), or two free nights at a mid-category hotel (finding one priced over $120 per night should be easy), or one free night at the top of the chain category 6 hotels ($240 per night? Likely.)

Goldpoints plus free nights make up the difference in higher room rates a loyalty member may ultimately pay rather than using Expedia or another online travel agency or going the Priceline/Hotwire route.

Other goldpoints plus member benefits during hotel stays are all bonus and for some elite members can easily exceed a value of $240 over 15 nights in Carlson Hotels.

 

Heather Passe

Heather Passe presented in a Carlson Hotels conference session on the last day for “Winning the Revenue Battle.” She highlighted the role of goldpoints plus for full service Carlson Hotels.

Here are some highlights from her official presentation:

Loyalty Program customer goals:

  • Faster track to redemption
  • Improved elite treatments
  • Develop richer, more relevant marketing promotions

An example of one change is goldpoints plus enhanced email communication with items like hotel award suggestions based on your account activity. The customer profiling in email content might suggest hotels you have been to or previously searched and list the award levels. An example is shown in the photo below.

Small to Medium Size Business Loyalty Program

One of the new concepts discussed is a loyalty program for small businesses where the business earns loyalty credit along with the individual employees staying in Carlson Hotels on business. This concept is used in the airline industry with small business loyalty programs like American Airlines Business ExtrAA and Continental Airlines RewardOne, but this is the first small business loyalty program I have learned about for the hotel industry.

Evaluating ALL aspects of the global customer value proposition this year

Heather Passe’s goldpoints plus message to members is a plan to deliver value to the customer and keep the program simple.

I discussed with Heather some of the confusing aspects for me in trying to evaluate goldpoints plus loyalty program.

First, the loyalty program has different earning rates for points depending on the geographic location of the hotel. In the Americas and Asia/Pacific region points are earned per U.S. Dollar  at the rate of 20 points per $1 for Country Inn and Park Inn or 20 points per USD at Radisson, Regent, and Park Plaza.

But for hotel stays in Europe, Middle East, and Africa goldpoints are earned per Euro. A $200 hotel rate in the U.S. earns the same number of points as a €200 rate in Europe with no regard to the currency exchange difference.

Heather says the Euro currency was maintained for consistency when goldpoints plus relaunched in late 2007 as a global program. This is one aspect of the goldpoints plus program Carlson will be looking at later this year.

Second, the Points + Cash award from goldpoints plus has always confused me. Priority Club and SPG have fixed rates of points and cash for their awards, but goldpoints plus is variable. The cash portion of Points+ Cash is a system based on the hotel’s best available rate, but I still don’t quite get it. Basically I have found you need to check the Cash + Points rate against other low rates available for the hotel.

Points + Cash Award Value Example in Amsterdam

Two Amsterdam hotels show different levels of savings with goldpoints plus Points + Cash. I know without looking that if I get a Cash & Points award at Starwood’s Amsterdam Pulitzer the rate is going to be USD$90 + 4,800 Starpoints.

I don’t know what to expect with goldpoints Points + Cash? I have to calculate the different options to see the best value. Free nights with points-only awards are reduced by 10% for additional nights. A category 6 award at 60,000 points is 54,000 points for the second and third nights. The discount does not apply for Points + Cash awards.

Amsterdam Park Plaza Victoria, April 5-8, 2010

  • Room rate €376.20 Superior (Special Rate) or
    • 168,000 points points-only award.  Award value = $504/168 = $3.00 per 1,000 points
    • Points + Cash Award = 45,000 points + €250.80. The room rate savings is US$168 in exchange for 45,000 points. $168/45 = $3.73 per 1,000 points.
    • €418.00 Superior Room (Best Available Rate)
    • €523.00 Executive Room (BAR) or 252,000 points for Premium Award
      • Award Value = $701/252 = $2.78 per 1,000 points

Points + Cash saves $168 on the otherwise lowest rate, but costs 45,000 points and makes the stay ineligible for earning points. The redemption value is average value, not great value.

Another interesting thing about goldpoints plus awards is the option of Premium awards offering the opportunity to book an upgraded room with points.

Amsterdam Radisson Blu, April 5-8, 2010

  • Room rate €429.30 Superior (Special Rate) or
    • 168,000 points Award value = $576/168 = $3.43 per 1,000 points
    • Points + Cash = 45,000 points + €286.20 = US$192/45 = $4.26 per 1,000 points.
    • €477.00 Superior Room (Best Available Rate)
    • €591.30 Business Room (Special rate) or 252,000 points
      • Award Value = $793/252 = $3.15 per 1,000 points

Points + Cash gives 24% more value for points than points-only  in both of these examples

Both of these examples reveal the Points + Cash rate is about 24% better value than the straight points redemption. Points + Cash are a better value, however, I would like to see the Points portion increase while the Cash portion decreases for this goldpoints option. The cash portion of the Points+Cash award is about 67% of the otherwise lowest rate and the points portion is just 25% of the normal points-only award night.

Contrast SPG Cash & Points to Carlson goldpoints Points + Cash

Starwood Preferred Guest Cash & Points awards require 40% of the points relative to a points-only award night.  The Amsterdam Pulitzer would be $90 + 4,800 points per night for SPG Cash & Points. The Pulitzer hotel was not available for the same dates as used in the examples above as a Cash & Points award, even though it is available as a SPG points-only award for 12,000 points per night.

Goldpoints plus Points+ Cash wins out here since SPG does not offer Cash & Points for the same dates.

But, if the SPG Cash & Points award were available based on the current rate €229/night the comparison of goldpoints plus Points + Cash and SPG Cash & Points would look like this:

Starwood Hotels Luxury Collection,The Pulitzer, Amsterdam

  • Room rate €687 Classic or
    • 36,000 points Award value = $922/36 = $25.61 per 1,000 points
    • Adjust SPG and Carlson to similar scale and this is equivalent award value around $2.56/1,000 points and lower than the goldpoints plus award value. (SPG earn 2 base points/$1; goldpoints plus earn 20 base points/$1).
    • Points + Cash = 14,400 points + $270. US$652/14.4 = $45.27 per 1,000 points. Adjusted to the same scale as goldpoints plus and the SPG award value is slightly better.

 

The key points to note in the comparison of goldpoints Points+Cash to SPG Cash & Points awards

  1. SPG Cash & Points rate gives 76% better value than SPG points-only.  Goldpoints plus Points + Cash award is 24% better value than points-only award.
  2. goldpoints plus Points + Cash requires a cash portion about 67% of the otherwise lowest available room rate. SPG cash portion is only about 30% of the otherwise lowest available rate. SPG will certainly not always have a cash portion as low as 30%, but this is typical for high category, high priced hotels. My searches of goldpoints Points + Cash awards indicate the cash portion is generally well above 50% the otherwise lowest available cash rate.

Important to remember: SPG Cash & Points awards are not as widely available as goldpoints plus Points +Cash awards, but  the cash savings can be huge when they are available.

Keep your eye on Carlson Hotels goldpoints plus. Changes are on the horizon.

P.S. - thank you from Loyalty Traveler to Carlson Hotels, Randy Petersen, and Inside Flyer who made this trip to the Carlson Hotels Global Summit possible.

Yours truly is cited as a “loyalty expert” at the Carlson conference.

My question though, “What happened to the … “loyalty love”?

2 Responses

  1. Thanks for the breakdowns (throughout your blog). Some of it goes over my head, but I usually get the gist.

    Congrats on the USA Today mention.

  2. This was the original line from the last slide as written on Loyalty Traveler:

    “All you Hilton HHonors people looking for loyalty love may want to check out what Carlson Hotels and Gold Points Plus offer.”

    http://boardingarea.com/loyaltytraveler/2010/02/04/carlson-hotels-reduces-points-needed-for-300-hotels-in-high-category-rewards/

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