Hotels are turning aggressive in recruiting business travelers to their loyalty programs.
In the past, properties pretty much limited their sales pitch to pamphlets at the check-in counter, and tended to emphasize the perks of membership, like upgrades and gift baskets. But in recent months, travelers say, they have become more vocal about the benefits of joining — and have begun punishing guests who refuse by putting them in less desirable rooms or saddling them with surcharges.
”If you’re not part of a hotel’s frequent-guest program, you’ll get a brochure pushed in your face when you check in,” said Frank Kwan, a communications director for the Los Angeles County Office of Education in Downey, Calif. ”They strongly encourage you to join the program. And if you don’t, you pay for it.”
For example, Mr. Kwan says he felt compelled to join Wyndham’s ByRequest loyalty program because otherwise he would have had to pay for high-speed Internet access and phone calls. Similarly, Hilton HHonors members are allowed a late checkout, but noncardholders have to pay for an additional day.
At Starwood Hotels and Resorts Worldwide like W, Sheraton and St. Regis, elite-level frequent stayers can sometimes make free local calls when other guests have to pay, and they can secure reservations at lower rates in peak times, when ordinary travelers are paying top dollar.
”Without a card, you’re shunted off to the side,” Mr. Kwan said — most chain hotels offer special check-in lines for program members.
Why are hotels putting the squeeze on business travelers? It is not just to load them up with incentives to come back. A new dynamic is at work: a rush to accumulate as much information as possible about as many guests as possible, as quickly as possible. The big chains, realizing that such information is crucial in a booming economy to keeping the customers they have and enticing new ones, are discovering that their databases are woefully inadequate.
”They’re desperate for data,” said Robert Mandelbaum, a hotel analyst with PKF Consulting in Atlanta. ”Hotels need information about their guests and especially about business travelers and getting them to sign up for their loyalty programs is the easiest way to get that information.”
Registering for Wyndham’s frequent-stayer program, for instance, means telling the hotel chain your preferred bed type, whether you like to relax with a Coke or a Chardonnay after you check in and which airline loyalty program you belong to. Guests also submit their addresses, phone numbers and e-mail addresses — and the online sign-up form automatically registers them to receive a monthly e-mail newsletter called ”Wyndham News ByRequest,” which features ”member-only offers, program updates and information.” To opt out of the electronic dispatch, users must uncheck a box.
Hotel representatives say they use the data to better serve guests. But they also use it to serve themselves, specifically to hone sales and advertising efforts to capture more market share, according to experts.
Until now, they have done a feeble job of tracking their guests’ habits and tastes, said Robert Burke, whose company, Egroup Communications of Miami, manages e-mail databases for the lodging industry. He calculates that the American hotel industry has collected reliable data from no more than 10 percent of its business travelers.
”Hotels see the data as a key to their growth,” he said. ”But if you take a look at these databases, you see that they’re incomplete or disorganized. A lot of the databases are just in shambles, and you really begin to understand that hotels know next to nothing about their guests. That’s why they’re getting so aggressive.”
Many are trying to emulate the one chain that has set itself apart in ”turning data to dollars,” to use an industry term. Hilton’s reservations system, OnQ, contains 7.5 million active profiles of guests, with information on everything from the frequency of their stays at Hilton Hotels properties and the sort of rooms they like to their newspaper preferences.
OnQ can prompt a reservations agent to greet guests in a certain way at check-in. If they are members of its HHonors loyalty program, for example, it can welcome them back; if they are not, it can encourage them to sign up. ”Our relationship with our guest is based on data,” said Jim VonDerheide, Hilton’s vice president for customer relationship management strategies.
Bruce Mainzer, a hotel consultant and former vice president for marketing at Hyatt, says properties harvest information like frequent-flier membership data from airline partners, combine it with their guest information and use it to create promotional campaigns. ”If I know you’re a frequent traveler but you only stay in my hotel two nights a year, then — boom — I’m going to hit you hard with marketing,” he said.
For Hilton, the efforts have paid off. The rate of staying at Hilton hotels instead of at rivals has soared to 61 percent from 41 percent two years ago, Mr. VonDerheide says, giving a huge lift to the company.
Many travelers are happy to trade personal information for preferential treatment. One HHonors member, Sonia Vining, a music teacher from Plymouth, Mich., says skipping the long check-in lines is reward enough. ”It really takes very little effort to join the program,” she said, ”and you’re getting something in return for a few minutes of your time.”
But not all road warriors like the trade-off. ”I’m not comfortable with the amount of information the hotels collect about me through their loyalty programs,” said Addison Schonland, the chief executive of the Innovation Analysis Group, a San Diego market research company. ”I mean, I don’t really know what the hotel knows about me. I don’t even know who owns the information — is it the hotel chain or the property owner?”
What about guests who refuse to get with the program? Hotels are also collecting statistics about them. Two years ago, for example, the InterContinental Hotels Group began culling reservations data from its computer systems on frequent visitors who declined to sign up for its Priority Club. The information already makes up about two-thirds of its customer database.
”The future belongs to those hotels that recognize data is one their most important assets,” said Steve Sickel, InterContinental’s senior vice president for loyalty marketing.
Although InterContinental wants to sign up more Priority Club members, who spend 30 percent to 35 percent more within the chain after they join than before, Mr. Sickel says it will get the information one way or another. The chain uses algorithms based on existing information in its database like names, length of stay and amount of money spent. ”We can predict the lifetime value of a customer based on the transactional data in just one visit,” he said. ”And it’s 98 percent accurate.”
But until the rest of the industry catches up to these computer models, the best predictor of guest behavior, and a hotel’s behavior, for that matter, remains a membership in its loyalty program, as Lyn Greenhill recently discovered.
Mr. Greenhill had booked a room at the Courtyard Portland Southeast in Portland, Ore., through an online-booking service that apparently did not note his membership in Marriott’s frequent-stayer program. ”The room overlooked a freeway, and was right next to an elevator,” he recalled. ”It was absolutely the worst room in the place.” Mr. Greenhill, a Roseville, Calif., engineering consultant, asked to be moved, but was told there were no more rooms available at the rate that he had paid.
”Then I pulled out my Marriott Rewards card,” he said. ”Needless to say, I got a better room.”
Hotels are turning aggressive in recruiting business travelers to their loyalty programs.
In the past, properties pretty much limited their sales pitch to pamphlets at the check-in counter, and tended to emphasize the perks of membership, like upgrades and gift baskets. But in recent months, travelers say, they have become more vocal about the benefits of joining — and have begun punishing guests who refuse by putting them in less desirable rooms or saddling them with surcharges.
”If you’re not part of a hotel’s frequent-guest program, you’ll get a brochure pushed in your face when you check in,” said Frank Kwan, a communications director for the Los Angeles County Office of Education in Downey, Calif. ”They strongly encourage you to join the program. And if you don’t, you pay for it.”
For example, Mr. Kwan says he felt compelled to join Wyndham’s ByRequest loyalty program because otherwise he would have had to pay for high-speed Internet access and phone calls. Similarly, Hilton HHonors members are allowed a late checkout, but noncardholders have to pay for an additional day.
At Starwood Hotels and Resorts Worldwide like W, Sheraton and St. Regis, elite-level frequent stayers can sometimes make free local calls when other guests have to pay, and they can secure reservations at lower rates in peak times, when ordinary travelers are paying top dollar.
”Without a card, you’re shunted off to the side,” Mr. Kwan said — most chain hotels offer special check-in lines for program members.
Why are hotels putting the squeeze on business travelers? It is not just to load them up with incentives to come back. A new dynamic is at work: a rush to accumulate as much information as possible about as many guests as possible, as quickly as possible. The big chains, realizing that such information is crucial in a booming economy to keeping the customers they have and enticing new ones, are discovering that their databases are woefully inadequate.
”They’re desperate for data,” said Robert Mandelbaum, a hotel analyst with PKF Consulting in Atlanta. ”Hotels need information about their guests and especially about business travelers and getting them to sign up for their loyalty programs is the easiest way to get that information.”
Registering for Wyndham’s frequent-stayer program, for instance, means telling the hotel chain your preferred bed type, whether you like to relax with a Coke or a Chardonnay after you check in and which airline loyalty program you belong to. Guests also submit their addresses, phone numbers and e-mail addresses — and the online sign-up form automatically registers them to receive a monthly e-mail newsletter called ”Wyndham News ByRequest,” which features ”member-only offers, program updates and information.” To opt out of the electronic dispatch, users must uncheck a box.
Hotel representatives say they use the data to better serve guests. But they also use it to serve themselves, specifically to hone sales and advertising efforts to capture more market share, according to experts.
Until now, they have done a feeble job of tracking their guests’ habits and tastes, said Robert Burke, whose company, Egroup Communications of Miami, manages e-mail databases for the lodging industry. He calculates that the American hotel industry has collected reliable data from no more than 10 percent of its business travelers.
”Hotels see the data as a key to their growth,” he said. ”But if you take a look at these databases, you see that they’re incomplete or disorganized. A lot of the databases are just in shambles, and you really begin to understand that hotels know next to nothing about their guests. That’s why they’re getting so aggressive.”
Many are trying to emulate the one chain that has set itself apart in ”turning data to dollars,” to use an industry term. Hilton’s reservations system, OnQ, contains 7.5 million active profiles of guests, with information on everything from the frequency of their stays at Hilton Hotels properties and the sort of rooms they like to their newspaper preferences.
OnQ can prompt a reservations agent to greet guests in a certain way at check-in. If they are members of its HHonors loyalty program, for example, it can welcome them back; if they are not, it can encourage them to sign up. ”Our relationship with our guest is based on data,” said Jim VonDerheide, Hilton’s vice president for customer relationship management strategies.
Bruce Mainzer, a hotel consultant and former vice president for marketing at Hyatt, says properties harvest information like frequent-flier membership data from airline partners, combine it with their guest information and use it to create promotional campaigns. ”If I know you’re a frequent traveler but you only stay in my hotel two nights a year, then — boom — I’m going to hit you hard with marketing,” he said.
For Hilton, the efforts have paid off. The rate of staying at Hilton hotels instead of at rivals has soared to 61 percent from 41 percent two years ago, Mr. VonDerheide says, giving a huge lift to the company.
Many travelers are happy to trade personal information for preferential treatment. One HHonors member, Sonia Vining, a music teacher from Plymouth, Mich., says skipping the long check-in lines is reward enough. ”It really takes very little effort to join the program,” she said, ”and you’re getting something in return for a few minutes of your time.”
But not all road warriors like the trade-off. ”I’m not comfortable with the amount of information the hotels collect about me through their loyalty programs,” said Addison Schonland, the chief executive of the Innovation Analysis Group, a San Diego market research company. ”I mean, I don’t really know what the hotel knows about me. I don’t even know who owns the information — is it the hotel chain or the property owner?”
What about guests who refuse to get with the program? Hotels are also collecting statistics about them. Two years ago, for example, the InterContinental Hotels Group began culling reservations data from its computer systems on frequent visitors who declined to sign up for its Priority Club. The information already makes up about two-thirds of its customer database.
”The future belongs to those hotels that recognize data is one their most important assets,” said Steve Sickel, InterContinental’s senior vice president for loyalty marketing.
Although InterContinental wants to sign up more Priority Club members, who spend 30 percent to 35 percent more within the chain after they join than before, Mr. Sickel says it will get the information one way or another. The chain uses algorithms based on existing information in its database like names, length of stay and amount of money spent. ”We can predict the lifetime value of a customer based on the transactional data in just one visit,” he said. ”And it’s 98 percent accurate.”
But until the rest of the industry catches up to these computer models, the best predictor of guest behavior, and a hotel’s behavior, for that matter, remains a membership in its loyalty program, as Lyn Greenhill recently discovered.
Mr. Greenhill had booked a room at the Courtyard Portland Southeast in Portland, Ore., through an online-booking service that apparently did not note his membership in Marriott’s frequent-stayer program. ”The room overlooked a freeway, and was right next to an elevator,” he recalled. ”It was absolutely the worst room in the place.” Mr. Greenhill, a Roseville, Calif., engineering consultant, asked to be moved, but was told there were no more rooms available at the rate that he had paid.
”Then I pulled out my Marriott Rewards card,” he said. ”Needless to say, I got a better room.”
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