Intercontinental Takes Loyalty Fight Straight to Hilton

The hotel business—already hard-fought in this era of reduced business and pleasured travel —has now seen that fight extended squarely into the loyalty arena.

Earlier this month, Intercontinental Hotels Group launched an in-your-face campaign targeting the members of Hilton’s HHonors loyalty program, which announced last November that it would impose a 20% reduction in reward point values beginning January 2010. Soon after, IHG’s Priority Club Rewards program rolled out the “Luckiest Loser” competition and says it is looking for the HHonors member who lost the largest number of Hilton rewards points in its rival’s year-end devaluation.

The game, open only to those who were members of both Priority club and HHonors as of Jan. 31, 2010, asks participants to enter their current HHonors point balance. IHG will calculate from that total how many Hilton points those entrants had amassed before the downgrade.

The 20,000 entrants who are judged to have lost the most value in HHonors points will each be awarded up to 20% of the value of their loss (up to 20,000 points)—but in IHG Priority Club rewards points.

The player determined to have lost the most in the Hilton loyalty reset will earn 2 million Priority Club points, sufficient to stay free at IHG hotels for almost three months, according to the contest announcement.

“If you want your loyal customers to stick with you during tough times, it’s vital to show you appreciate them and give them more value, not less,” IHG chief marketing officer Tom Seddon said in the release. “So it’s no wonder there was such a negative reaction to Hilton devaluing their points program. Some of our customers, particularly ones we’re talking to on social networking sites, asked us if there was anything we could do to help.”

In a January 2010 interview, Hilton CEO Chris Nassetta explained his company’s decision to reset its loyalty point values as an overdue correction to business expense factors.

“We haven’t changed our redemption model in six years,” Nassetta told Hotels magazine’s Jeff Weinstein. “Cost structures go up and at some point, to run these programs you have to make adjustments. I don’t think we are in any way out of sync with the industry other than that we have given a benefit to our customer, because we have waited longer [to reset point values.”

The Hilton decision reset HHonors point values required for stays at the company’s properties. For example, a night at a property ranked in the top of the chain’s seven hotel categories now costs an HHonors member 50,000 points rather than 40,000—in fact, a cost increase of 25%. However, a bottom-category Hilton property still goes for 7,500 points a night.

The IHG “Luckiest Loser” contest runs through Feb. 28.