Starwood Hotels & Resorts Worldwide Inc. is expanding the benefits it offers its most-frequent customers, part of a continuing race by the world's largest hotel brand companies to generate more business from recurring patrons.
Starwood on Wednesday is enhancing its loyalty program by adding features for frequent travelers, such as rolling 24-hour check-in and check-out times and personal travel assistants, dubbed "ambassadors," company executives said.
Chief Executive Frits van Paasschen said the company is investing around $25 million in the program. Mark Vondrasek, who heads Starwood's loyalty program, said that the money is coming out of the pool of fees paid by hotel owners, but it won't increase costs to owners.
Hotel owners, who usually sign management contracts or franchise agreements with the brand companies, pay a feeóoften roughly 5% of the room priceóto cover costs for the loyalty programs, as well as the costs of extra meals and other perks provided at the hotel.
The use of the perks will be determined by the frequency of stays, with customers who spend 100 nights a year at Starwood properties qualifying for the highest level of service. Starwood, which owns nine hotel brands including Westin, W and Sheraton, declined to say how many customers stay at its hotels 100 nights or more per year but said the number is "in the low tens of thousands."
"Innovation in our industry isn't another thing, another shower," Mr. van Paasschen said in a recent interview. "It's a relationship to travelers."
Starwood's expansion of its loyalty program comes as the hotel industry competes for repeat travelers and their business, which generates a disproportionate amount of the company's earnings before interest, taxes, depreciation and amortization. The Stamford, Conn.-based company estimates that just 2% of guests drove 30% of EBITDA for 2011. A company spokeswoman said the company expects full-year EBITDA between $980 million and $990 million.
The use of loyalty programs to lure guests has led hotel brand owners to match each other and ratchet up benefits. Programs for the highest frequency guests routinely include complimentary meals and free wireless Internet access and opportunities to generate extra points to spend on hotel rooms.
Hilton Worldwide Inc. will begin allowing its top-tier members, those who stay at least 36 nights, to get automatic room upgrades and other perks, such as breakfast, said Jeff Diskin, who runs Hilton's loyalty program.
Previously, guests had to choose between an upgrade or another perk.
The escalation of perks doesn't always sit well with hotel owners, who say the costs they have to pay for loyalty programs are rising as brand companies expand their offerings. Some owners, many of whom operate competing brands, have complained they don't always see benefits from the programs and don't have a say in the decisions.
"Since we own a bunch of different brands, you're stealing from one hotel to give to another," said Monty Bennett, CEO of Ashford Hospitality Trust Inc., which owns about 125 hotels including Starwood brands and hotels from Hilton, Marriott International Inc., Hyatt Hotels Corp. and International Hotels Group PLC. "It's just costing more."
Still, many hotel owners say the loyalty programs boost business.
John Belden, CEO of Davidson Hotels & Resorts, says loyalty program customers rose to 54% of occupancy from 31% after he converted a Holiday Inn in Stamford, Conn., into a Sheraton. That, he says, allowed him to charge higher room rates.
"If that's bringing me another traveler I wouldn't have had that is paying a higher rate than I would have been getting from someone else then the cost is relatively insignificant," Mr. Belden said. "I'm going to win on that trade all day long."
Starwood has been quietly testing its changes for around 2Ω years under a pilot plan. The program has also focused on mining data of customers by creating more sophisticated tools to better identify people who have the potential to become profitable customers, company executives said.
Mr. Vondrasek said Starwood initially reached out to a few thousand customers and invited them to get the extra perks, such as the personal assistant.
Karen Feeney, who works in the financial-services industry and stays at hotels more than half of the year, said she speaks nearly every day to a Starwood ambassador named Jennifer. The personal travel assistant found her a car when she was stranded in Chicago a couple of years ago and took care of all of the arrangements for her niece's Sweet 16 party, including ordering monogrammed T-shirts, Ms. Feeney said.
During a hurricane on the East Coast last summer Jennifer contacted Ms. Feeney's husband when Ms. Feeney was having trouble reaching him and reported that she was all right.
"I can't think of anything in my life she doesn't do," Ms. Feeney said.
Starwood Hotels & Resorts Worldwide Inc. is expanding the benefits it offers its most-frequent customers, part of a continuing race by the world's largest hotel brand companies to generate more business from recurring patrons.
Starwood on Wednesday is enhancing its loyalty program by adding features for frequent travelers, such as rolling 24-hour check-in and check-out times and personal travel assistants, dubbed "ambassadors," company executives said.
Chief Executive Frits van Paasschen said the company is investing around $25 million in the program. Mark Vondrasek, who heads Starwood's loyalty program, said that the money is coming out of the pool of fees paid by hotel owners, but it won't increase costs to owners.
Hotel owners, who usually sign management contracts or franchise agreements with the brand companies, pay a feeóoften roughly 5% of the room priceóto cover costs for the loyalty programs, as well as the costs of extra meals and other perks provided at the hotel.
The use of the perks will be determined by the frequency of stays, with customers who spend 100 nights a year at Starwood properties qualifying for the highest level of service. Starwood, which owns nine hotel brands including Westin, W and Sheraton, declined to say how many customers stay at its hotels 100 nights or more per year but said the number is "in the low tens of thousands."
"Innovation in our industry isn't another thing, another shower," Mr. van Paasschen said in a recent interview. "It's a relationship to travelers."
Starwood's expansion of its loyalty program comes as the hotel industry competes for repeat travelers and their business, which generates a disproportionate amount of the company's earnings before interest, taxes, depreciation and amortization. The Stamford, Conn.-based company estimates that just 2% of guests drove 30% of EBITDA for 2011. A company spokeswoman said the company expects full-year EBITDA between $980 million and $990 million.
The use of loyalty programs to lure guests has led hotel brand owners to match each other and ratchet up benefits. Programs for the highest frequency guests routinely include complimentary meals and free wireless Internet access and opportunities to generate extra points to spend on hotel rooms.
Hilton Worldwide Inc. will begin allowing its top-tier members, those who stay at least 36 nights, to get automatic room upgrades and other perks, such as breakfast, said Jeff Diskin, who runs Hilton's loyalty program.
Previously, guests had to choose between an upgrade or another perk.
The escalation of perks doesn't always sit well with hotel owners, who say the costs they have to pay for loyalty programs are rising as brand companies expand their offerings. Some owners, many of whom operate competing brands, have complained they don't always see benefits from the programs and don't have a say in the decisions.
"Since we own a bunch of different brands, you're stealing from one hotel to give to another," said Monty Bennett, CEO of Ashford Hospitality Trust Inc., which owns about 125 hotels including Starwood brands and hotels from Hilton, Marriott International Inc., Hyatt Hotels Corp. and International Hotels Group PLC. "It's just costing more."
Still, many hotel owners say the loyalty programs boost business.
John Belden, CEO of Davidson Hotels & Resorts, says loyalty program customers rose to 54% of occupancy from 31% after he converted a Holiday Inn in Stamford, Conn., into a Sheraton. That, he says, allowed him to charge higher room rates.
"If that's bringing me another traveler I wouldn't have had that is paying a higher rate than I would have been getting from someone else then the cost is relatively insignificant," Mr. Belden said. "I'm going to win on that trade all day long."
Starwood has been quietly testing its changes for around 2Ω years under a pilot plan. The program has also focused on mining data of customers by creating more sophisticated tools to better identify people who have the potential to become profitable customers, company executives said.
Mr. Vondrasek said Starwood initially reached out to a few thousand customers and invited them to get the extra perks, such as the personal assistant.
Karen Feeney, who works in the financial-services industry and stays at hotels more than half of the year, said she speaks nearly every day to a Starwood ambassador named Jennifer. The personal travel assistant found her a car when she was stranded in Chicago a couple of years ago and took care of all of the arrangements for her niece's Sweet 16 party, including ordering monogrammed T-shirts, Ms. Feeney said.
During a hurricane on the East Coast last summer Jennifer contacted Ms. Feeney's husband when Ms. Feeney was having trouble reaching him and reported that she was all right.
"I can't think of anything in my life she doesn't do," Ms. Feeney said.