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2010 COLUMNS

COLUMN ARCHIVE

CRYING IN MY BEER OVER REWARDS PLANS
By Michael Matthews
September 23, 2010 -- Marriott's decision this month to add Ritz-Carlton Hotels to Marriott Rewards and create a near carbon copy plan called Ritz-Carlton Rewards reminds me that I've been wrong about frequent-travel programs for almost 30 years.

And I've been crying in my beer about it for decades.

In the fall of 1981, not long after American Airlines pioneered frequent flyer programs with AAdvantage and United promptly responded with Mileage Plus, I was a guest speaker at the Pacific Area Travel Association (PATA) convention in Vancouver, Canada. Several thousand delegates were awaiting my words of wisdom about loyalty programs and frequency plans and points-and-miles schemes. And I punted it.

I proclaimed that AAdvantage and Mileage Plus were doomed. I theorized that no one would be bothered to collect miles to get free flights. I suggested that the traveling public was smart enough to realize that the cost of running the programs and awarding the supposedly "free" miles were actually added into the fare.

John Q. Public really wasn't getting anything for nothing, I confidently expounded. I even said that I'd buy everyone a beer at the next PATA convention if any of the so-called mileage or rewards programs were still around.

As you well know, these days there isn't a single thing you can buy without some sort of "rewards" program kicking in. There are about 60 million people signed on to the AAdvantage program alone!

Being an obstinate SOB, however, I stuck to my guns over the years. Throughout the 1980s and into the 1990s, I predicted that hotel companies would never join the frequency marketing fray. They did. Marriott Rewards has 30 million members now. Hyatt Gold Passport, Hilton HHonors, Starwood Preferred Guest and InterContinental's Priority Club Rewards all have their adherents. Even otherwise independent hotels have cooked up a program called Stash Rewards.

But I never give up. So I amended my thinking again and said that luxury hotels would never have programs. My reasoning was simple: If you're paying $400 or $500 a night for a room, why would you want to get points for a free stay down the road? You'd want that $400 or $500 totally devoted to getting you a fabulous stay while you were already at the hotel.

If I say so myself, I was mostly right on that score. For years, only St. Regis, the Starwood brand, played in a frequency plan. It was a part of Starwood Preferred Guest, the chainwide scheme that launched in 1999 as a replacement for the once-independent Westin and Sheraton programs.

I also put my career where my mouth was: When I was in charge of all the marketing and sales for St. Regis properties, I did my damnedest to get my hotels out of Starwood Preferred Guest.

My thinking? If you stayed at one of Starwood's limited-service brands like Four Points or checked into one of the dumps that they then called Sheraton, it only took a few nights before you'd earned a freebie at a luxury St Regis hotel. That's nice for Joe the Plumber, but it's a nightmare when you have to accommodate him, by corporate mandate, in your luxurious hotel. Joe and his wife arrive in ugly shorts and polyester Hawaiian shirts. They tote a few six packs in a cooler, then they order pizza from Domino's.

Sounds cruel, I know, but I promise you that Mr. and Mrs. Joe the Plumber were not who high-paying St. Regis guests wanted to see traipsing across the lobby. I saw it more than once. It was bad for the paying St. Regis guest and worse for the St. Regis brand.

Over the years at St. Regis and the even more luxurious Rosewood and Regent hotel companies, I did surveys with our regular guests about rewards and frequency programs. There were a few guests who said they'd like to see some sort of awards plan. But the vast majority couldn't care less. They already knew that regular guests of a luxury hotel group got a steady stream of upgrades, fruit baskets, wine and gifts. And luxury hotels had some great gifts, believe me. The Peninsula in Los Angeles used to give custom-made Armani suits as a reward.

Although other corporately owned upscale brands eventually caved and joined their parent's frequency plan--think Park Hyatt and Hilton's Conrad properties and Waldorf Astoria Collection --independent luxury hoteliers have resisted. Peninsula, Mandarin Oriental, Rosewood, The Dorchester Group, Four Seasons and Orient Express still eschew any kind of formal program. Even Ritz Carlton, owned for a decade by Marriott, resisted the siren song until it caved this month.

The so-called Ritz-Carlton Rewards will give you free stays and deals with partners such as Neiman Marcus. Will this initiative pull guests from other luxury brands? I don't think so. But, of course, I've been wrong before!

Ritz-Carlton also has been added as what they call a "full earn and burn" partner in Marriott Rewards. With 3,300 Marriott hotels and just 70 or so Ritz-Carltons, you know how this is going to go. Lots of frequent guests at Marriott's lowest-priced brands are going to be cashing in at Ritz-Carlton and Ritz will have the same problem I had when I was running St. Regis.

Now please don't misunderstand me. Most corporate travelers, like you, have their lodgings chosen for them by their corporate travel department. You often have very little say as to whether you are sheltered in a Hilton Garden Inn or a Courtyard or a Ritz or a Park Hyatt or a St. Regis or a Four Seasons. You and your long-suffering spouse deserve the points and it's great that you'll occasionally be able to claim a free night at a luxury property after endless nights making do at lesser hotels on business trips.

And I think I finally have an answer for the Joe the Plumber types. I'm going to raise some money to build Domino's franchises and beer joints next to each Ritz-Carlton. I'll be a millionaire in no time.

Frankly, I need the money. I owe all those PATA folks a beer. So many beers, in fact, that I've never been able to afford to return to a Pacific Area Travel Association convention.

Of course, I probably should check my American Express Membership Rewards account. Maybe I have enough Amex points to cover a round of beers for an entire convention…

ABOUT MICHAEL MATTHEWS Michael Matthews has managed and marketed fine hotels around the world for more than 45 years. He spent 14 years in Hong Kong building the legendary Regent International group. He has also worked with St. Regis, Ritz-Carlton and Rosewood hotels. Matthews is currently based in Arizona. He began writing Do Not Disturb in early 2004.

THE FINE PRINT Joe Brancatelli makes this space available to Michael Matthews in the spirit of free speech and to encourage editorial diversity and the wider discussion of important travel issues. All of the opinions and material in this column are the sole property of Matthews. This column may not be reproduced in any form without the express permission of Michael Matthews.

This column is Copyright © 2010 by Michael Matthews. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.