Strategy

Loyalty programs: Disloyalty rewards

Hilton's devalued points program is an opportunity for other hotel chains.

On Jan. 15, Hilton Hotels changed the cost of a free night at their best hotels to 50,000 from 40,000 Hilton HHonors loyalty points, devaluing customer accounts by 20%. Bad move.

Other hotel chains then began to offer incentives for frustrated Hilton customers. InterContinental Hotels Group, which owns Holiday Inn and Crowne Plaza, pledged to give a cumulative 400 million loyalty points to members of its own “Priority Club” who also have HHonors points. Best Western has a program where they’ll match the elite status of any other program. Additionally, they’re considering reducing the number of loyalty points required for a free-night’s stay.

With businesses cutting back on travel, the recession forced hotels to juggle fierce competition with cost cuts. So, while Hilton says HHonors’s changes match those made by competitors over the past few years, customers who see loyalty points as cash in hand are still indignant.

Christopher Barnard, president of Points International, a Toronto-based company that operates Points.com, has watched such loyalty points grow in popularity. “At the beginning of the recession, when things started getting tough, people wanted to use their non-cash assets,” he says. Points.com was started after Barnard and CEO Rob MacLean observed consumers were struggling to manage their points and miles.

Their site allows users to track everything online, to auction off points, or redeem them through airlines or other partners. They can also trade points with peers on the Global Points Exchange, which may prove the perfect place for once-loyal Hilton guests to unload excess points.