Hilton IPO’s Effect On HHonors Loyalty Program?

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LoyaltyLobby reader sent me a link to an article on WSJ’s MarketWatch (access the piece here) that discusses the IPO’s consequences to the hotel loyalty guest.

marketwatch-hilton-ipo

Hilton has devalued the HHonors program several times in the past few years (read more about the March changes here) and the recent ditching of fixed miles Double Dip option (read more here) is only the latest move.

When Hilton made its IPO prospectus public, I read through the entire PDF and made some interesting findings (read more about them here).

Here are the most interesting tidbits:

Another area that Hilton might invest in is the rewards programs, which can be lucrative for hotels, says Weissman. Indeed, market research firm Phoenix Marketing International found that frequent guest programs drive significant revenue for hotels. Among individuals redeeming a room award, 73% purchase at least one additional room night with each redeemed award, the study found. “Among the redeemers, they purchase an average of 2.1 room nights with each redemption,” explains Greg Diaz, Vice President, Phoenix Marketing International. “With a 2012 industry average daily rate of $106, plus any additional food and beverage revenue, or revenue from other sources, there is quite a bit of additional income coming into a property with frequent guest award redemptions.” Hilton might boost its current rewards structure or improve or add partnerships with airlines, railways, rental cars and more. But, cautions Meliker, these rewards program improvements, if they happen, are likely to be things that don’t cost a lot of money.

It is interesting that 73% of those that redeem for hotel awards would purchase an additional hotel night or two to go with the award. It is obvious that there are often food and beverages charges to go with the awards that are very lucrative for the hotel.

Conclusion

Hilton has been gutting its HHonors program a lot in the past few years.

The high end aspirational awards that used to be the Hilton’s bright spot went often up by more than 100% in number of points required for a night during the March deval.

Once can only hope that there is something positive coming from Hilton HHonors to its members in 2014.

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