Declare ware on the competition!

One of the toughest battles facing the current market:
"The war of  main players in the hotel industry".

After a year of crisis in the hotel industry that saw occupancy rates at historic lows, local and global hotels alike are doing everything possible to recover lost business and earn their guests back. The hotels are using every tactic they can to beat out the competition. The problem is that there are many companies and the product being offered is not as tangible, making it hard for consumers to directly compare them (unlike with a taste test). In addition, the companies are not just fighting for market share and profitability, they're fighting for their very survival.

With the stakes so high, the hotels have chosen to compete with their most powerful marketing tool -- consumer loyalty.

The main players in the hotel industry have made recent improvements to offer more value through their loyalty programs. In the second half of 2009, Grupo Posadas relaunched its Fiesta Rewards frequent guest program with a new image, new benefits and improved redemption terms. In October, Hyatt Hotels introduced their "Next Big Thing" promotion, which offered guests their choice of a free night or bonus points for every two nights paid. In November, Starwood Hotels invited members of their Preferred Guest program to use their points to bid on auctions for unique experiences, such as tickets to a Jonas Brothers concert in London or tickets and after-party access for the People's Choice Awards in Los Angeles.

Another Round
One of the most visible actions taken recently during the hotel wars was the sponsorship by Hilton Hotels of the movie "Up in the Air" (Jason Reitman, 2009). The hotel chain, along with American Airlines, made a huge investment to have the movie filmed on-location at their facilities and to feature their loyalty programs prominently in the storyline and dialog of the movie itself. In doing so, the movie producers saved on production costs since they did not have to rent or build the sets. The most extraordinary part of the deal was the inclusion of a direct reference by George Clooney's character Ryan Bingham, who said to another guest at the Hilton hotel where they were staying: "Have you tried the loyalty program? It's wonderful!"

The most aggressive move seen recently was by InterContinental Hotels to promote its PriorityPass program. On January 15, 2010, Hilton HHonors increased the number of points required to redeem a free night at some of its most-requested properties. In response, InterContinental launched the PriorityPass Luckiest Loser promotion to reward members of its own loyalty program, who were also members of Hilton Hhonors, with 1000 bonus points, if they sent in their HHonors account statement. They also gave a 20% balance bonus to the top 20,000 members with the most points and 2 million bonus points to the person with the highest HHonors point balance.

InterContinental's strategy attacked Hilton on several fronts by making Hilton look as bad as possible for adjusting the points required for redemptions. In doing so, InterContinental used the increased visibility that Hilton was getting after the movie sponsorship to cast a positive light on its own loyalty program, PriorityPass. By requiring participants to send in their HHonors statement, it gained valuable information about how their competitor was doing business, as well as the account information of its members. The promotion was designed to attract Hilton's most valuable customers to get to know InterContinental and its loyalty program better and also served to add hundreds of new members into its own program, including, without a doubt, Hilton's number-one customer.

Since then, Hilton has not commented about the promotion and has not directly attacked InterContinental. However, just like other leaders in the industry, Hilton has responded by adding new member benefits, keeping the chain in the thick of the battle of the hotels.

Loyalty is, without a doubt, the new battleground for companies looking to attract and retain customers, in the hotel industry and many others. While the smaller players continue to run ads and offer discounts, industry leaders are dedicating their time and energy into strengthening their loyalty programs and increasing the value that they offer their guests. What is your business doing to adapt?

"Up in the Air" is a movie based on a novel by Walter Kirn (2001).