Consumer Nation

Will Hilton Pay a Price for Not Being Loyal?

Hilton may soon learn a hard lesson about loyalty, compliments of its rival InterContinental Hotels Group.

IHG is targeting Hilton loyalty program members who were upset by Hilton Worldwide'srecent decision to raise the number of loyalty points required for a free hotel stay with a promotion IHG is calling the "Luckiest Loser."

InterContinental , whose hotel brands include Crowne Plaza and Holiday Inn, is planning to give away more than 400 million loyalty points — enough for three months of free hotel stays — to the member of its own "Priority Club" program who lost the most Hilton "HHonors" points.

It seems the majority of the IHG's "Priority Club" members are also members of the "HHonors" program, said Don Berg, vice president of Loyalty Programs at IHG. Most are business travelers.

Late last year, Hilton announced that the changes would go into effect in mid-January, effectively devaluing members' point balances by 20 percent.

That change raised the ire of "HHonors" members, according to Berg. He explained that IHG has an online community of about 300 of its "Priority Club" members that it checks in with regularly, and these members were widely discussing Hilton's program changes, and they weren't happy.

"They were asking if there was anything we could do about it," Berg said. That gave IHG an opportunity.

A Hilton official wasn't immediately available to comment. The hotel chain, which was bought by Blackstone Groupin 2007, operates more than 3,500 hotels under brands such as Hampton Inn, Embassy Suites, and Doubletree.

Not only is IHG's program a hard shot at Hilton because it draws more attention to the hotel's loyalty program change — possibly raising even more awareness about it than would have been the case — but it is also a good way of mining more data about IHG's own customers.

In order to enter the competition, Hilton members must have been registered members of IHG's Priority Club Rewards since Jan. 31, and they will have to document the points they have lost from the change in Hilton's program. This documentation will provide IHG will some valuable insights into the travel choices these consumers are making.

In return, these members will recieve 1,000 Priority Club points just for entering.

As companies fight harder to win consumer dollars, loyalty programs have been in the spotlight, and for good reason. IHG's "Priority Club" members are three-to-four-times more valuable to IHG's business than hotel guests who are not members of its program, said Berg. And club members who have earned enough points to be designed an "elite" member are about 12-times more valuable than non-member guests.

According to Berg, these guests are frequent travelers and joining the loyalty program changes the choices they make as they travel.

"We know from research that the value of loyalty points currency is paramount to members, he said. "Travelers depend on their rewards to help them cover the costs of their summer vacations and weekend getaways, and they don't expect their points to suddenly lose value overnight."

According to Berg, these personal trips help them to feel less guilty for all the other travel they do, which is often associated with business and take them away from their families and other loved ones.

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