Melissa Tomlinson, a 32-year-old director of sales for a San Diego-based videogame accessory company, says she hasn't paid for a vacation in eight years.
In that time, she has traveled to Europe and Hawaii repeatedly, and just returned from a jaunt to California wine country. Each of the trips was earned through frequent-traveler rewards programs.
But like many travelers, Tomlinson has become disenchanted with her frequent-flier benefits as carriers have begun tightening redemption rules, charging to book an award and cutting capacity. While she once felt like a valued customer with the airline, she now looks to her favored hotel chain to fill that role.
"I accumulate these points and I can't use them [with the airlines]. It's virtually impossible, but [at the hotel] I still feel like I'm getting something out of it," says Tomlinson, who is a Hilton "Diamond VIP." "There are little things — bottles of water, free breakfast, and upgraded rooms. I still feel like I'm important to them."
Hotels in the U.S. saw their occupancy rates dip 2.5 percent in the first six months of the year, according to Smith Travel Research. They're hardly facing the same crunch as airlines — which have responded to higher than expected fuel prices by charging for checked baggage and eliminating basic perks like free beverages and pillows. In some cases, the hotel industry has compensated for the airlines' scaling back, offering credits for baggage fees and a free night with a minimum stay.
The benefits get even better for those, like Tomlinson, who belong to the hotels' rewards programs.
What loyalty gets you
At Hilton properties, Tomlinson is treated to a number of perks, including free upgrades, complimentary breakfast and Internet access, bonus points and a guaranteed reservation 48 hours prior to arriving. While Tomlinson has reached the highest level of membership — awarded to those who accumulate 100,000 points or stay 28 times or 60 nights throughout the year —lower-tier members get access to an on-site health club and free nights with a certain number of points.
Upgrades and free nights are the hallmarks of rewards programs, but many hotels have added dozens of options in recent years, including the ability to trade points for merchandise, travel packages and even unique experiences like skydiving.
Adam Burke, managing director of Hilton Honors Worldwide, says that broadening members' choices is a way of "letting people tell you their preferences." Among Hilton's offerings are a helicopter ride above New York City (80,000 points), a three-day cruise to the Bahamas (365,000 points) and a $100 gift card to retailers like Macy's (50,000 points).
InterContinental, Starwood and Marriott have also adopted this approach. InterContinental allows its Priority Club members to exchange points for DVDs, golf gear, airline tickets and activities like skydiving and sailing.
Members of Starwood's rewards program can use points to bid on auctions for tickets to a movie premiere or concert, in addition to redeeming them for airline tickets and gift cards. Marriott boasts that members can spend their points in 250 different ways.
Laila Rach, divisional dean at New York University's Tisch Center for Hospitality, Tourism and Sports Management, says that the more personalized options reflect a more demanding customer.
"What the consumer is saying today is, 'Show me your loyalty first before you ask for mine,'" says Rach.
Where things get complicated
While the numerous options may seem great — especially when compared with the shrinking benefits of being a loyal flier — redeeming points can be tricky. Each hotel has its own rules involving blackout dates, how points are accumulated and how much they are worth.
Like airlines, hotels are not immune to fluctuating prices, and many have adjusted the points-to-awards exchange rate as the average daily room rate has risen or to slow award redemption. In 2003, the last time Hilton adjusted its reward chart, the company added a sixth redemption category. It also increased the number of points needed, from 35,000 to 40,000, to receive a free night at a property in this category.
The accumulation of points can be confusing, since each dollar spent can net a member anywhere from two to 15 points at Hilton, Hyatt, Starwood, InterContinental and Marriott. To obtain top-tier status at these hotels, members must stay at the hotel from 50 to 75 nights per year. A free night is awarded when the members have spent between $750 and $1,500, depending on the type of property.
Nancy Mendelson, senior vice president of marketing for Loews, says the company decided to revamp its point-based program two years ago. Previously called "Loews First," the new program launched in July as "You First" and features perks like free Internet, custom destination packages, room upgrades and spa and golf credits. "Basically, we wanted to say thank you to our guests," says Mendelson. "What meant more was free Internet or things that people could use on [the] property, so that's what we went for."
At the Four Seasons, there is no formal rewards program. Susan Helstab, senior vice president of marketing, says the company expresses its gratitude to customers through service. While a member of another hotel's rewards program might get a bottle of water gratis, Helstab says that the Four Seasons strives to deliver the guest not just any bottle of water, but their preferred type.
"It's really about recognition rather than reward," says Helstab.
That may be true for some hotel guests.