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News for the Hospitality Executive

Desperate to Fill Empty Rooms, Hotel Chains
 Beefing Up Loyalty Programs
By Steve Huettel, St. Petersburg Times, Fla.McClatchy-Tribune Regional News

February 25, 2009 - Tight corporate travel budgets have thinned the ranks of road warriors. But for those still toiling in airports and rented rooms, the rewards are getting richer.

Desperate to fill empty rooms, hotel chains are beefing up loyalty programs. Most say they're trying to avoid slashing rates to attract business. But they're more than happy to toss in goodies -- free hotel rooms, free breakfast and oodles of bonus points.

"Awards in general are richer across the industry and probably will be a lot richer soon," says Don Berg, vice president of loyalty programs for InterContinental Hotels Group, or IHG. The company's brands include Holiday Inn, Crowne Plaza and InterContinental Hotels.

IHG is giving Priority Club members 3,000 points for a qualifying third-night stay through April 30, double the standard reward. Other chains -- Starwood, Marriott and Hilton among them -- are offering similar deals for frequent customers.

The recession has changed how members use points. Priority Club redemptions were up 20 percent in November and December from a year earlier. And members spent more on iPods, Global Positioning Systems and digital cameras -- a sign of people holding tighter to their wallets.

Still, as much as 80 percent of points earned by IHG customers go toward free hotel stays, Berg says. That's a good thing for hotels because of the way their loyalty programs work.

Hotels pay Priority Club about 5 percent of customer revenue to participate. When a member redeems points for a room, the hotel receives a fee from the program, ranging from full rate to an amount that covers its expenses.

Club members might eat a meal or make some other purchase in the hotel. Twenty percent pay for an additional room. That's no small deal right now. In January, occupancy at U.S. hotels fell to 45.9 percent from 10.7 percent a year earlier, according to Smith Travel Research.

Local properties such as the InterContinental in Tampa's West Shore district are battling for business with special deals and discounts. The hotel is offering a package for business meetings that includes 10 percent off the total bill, free high-speed wireless Internet in each room and other perks.

Through April 4, leisure travelers can get a spring training special: 25 percent off the lowest available room rate. Plus free breakfast and valet parking.


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Copyright (c) 2009, St. Petersburg Times, Fla.

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