Priority Club Rewards Relaunch Introduces Last Minute Reward Nights

Priority Club Rewards announced an official relaunch today. I received an email at 6:56am California time stating the press release was under embargo until 10am ET.

I started downloading the 179MB file with excitement at the possibilities of new changes and my head whirling with anticipation of what might be major changes to the hotel loyalty program for InterContinental Hotels Group.

• Did Priority Club Rewards change the points cost for hotel nights?
• Did the earn rate for InterContinental Hotels change from 2,000 points per stay?
• Will Priority Club start providing the same recognition and benefits for hotel reward stays as paid stays?
• Will Priority Club set up a discount reward table for extended stays similar to the extended stay discounts given to members in Hilton HHonors, Marriott Rewards and Starwood Preferred Guest?
• Are PointBreaks reward nights still going to exist?
• Has a complimentary breakfast benefit been added to full-service hotels for Platinum elites?

After several minutes the large file had completed its download and I eagerly opened the folder to see four documents.

1. PCR Relaunch Historic Timeline
2. PCR Relaunch Press Release Final
3. PCR Relaunch Top 10 Consumer Benefits 
4. PCR Relaunch What’s New

“What’s New” caught my eye and I opened the file to reveal  large red bold font:

UNDER EMBARGO UNTIL 10 a.m. ET TUES., MARCH 29, 2011 

I scrolled down the page and my excitement balloon deflated. There is nothing bad in the changes, but there is also nothing really substantial in the program changes with the exception of a new reward option for “Last Minute Reward Nightsâ€.

Last Minute Reward Nights: A hotel industry first, “Last Minute Reward Nights†will allow Priority Club members globally to redeem Reward Nights at a 50% discount off the regular point price, for selected properties.  Members will receive an e-mail on Monday providing a list of hotels where this offer will be available the following weekend, Friday, Saturday and Sunday nights.  Initially, this program will be offered on the first full weekend of every month, starting with May 6, 7 and 8, 2011.

Last Minute Reward Nights looks like a nice program enhancement, but a minimal change to Priority Club Rewards. Although, the timing for the introduction of “Last Minute Reward Nights” in the first week of May has me wondering if the current list of Point Breaks hotels for 5,000 points per night through April 30 will be the last set of hotels we see for the PointBreaks reward option?

Here are the other three changes listed in the “What’s New†press release:

Points & Cash for Merchandise Rewards: Also a hotel industry first, Priority Club members in the U.S. will be able to redeem a combination of Priority Club points and cash for brand name retail merchandise rewards.  Priority Club Rewards currently offers points and cash capability on Reward Nights, but this will expand that functionality to merchandise rewards, a feature not offered anywhere in the industry. The program will roll out globally beginning late 2011. 

“Lucky Points†Sweepstakes: This feature will give members based in the US, Canada, and UK the chance to turn their extra points into great rewards.  Members will be able to redeem a very small quantity of Priority Club points (e.g., 100 or 200 points per entry) in exchange for a chance to win the prize or prizes that are most appealing to them. Typically, members will have 6-8 different prize draws to select from, ranging from terrific hotel packages (e.g. 4 nights at the InterContinental Times Square- New York) to popular merchandise (e.g., iPads), and even 1 million Priority Club points!  Priority Club Rewards will be the only travel loyalty program to offer members this chance to turn a single stay into a huge prize! The program will roll out in China and Japan beginning fall 2011. 

Downloadable Media Rewards:  Priority Club Rewards will be the first travel loyalty program to give members the flexibility to redeem their points directly for downloadable media, including the latest music hits and millions of other songs, plus eBooks, mobile games and applications, and computer software.  This will open up a terrific opportunity for members to turn relatively small quantities of points into tangible rewards. The program will initially rollout online in English globally and in several European languages beginning late 2011.

Reading through the documents, I see that nearly all the hype is cosmetic changes with a new Priority Club logo, redesigned Priority Club membership cards, website and photos.

Loyalty Traveler Commentary on Priority Club Relaunch:

Priority Club Relaunch press release states the program undertook extensive research “to better understand the attitudes and habits of hotel guests.â€

Priority Club Findings:

Among the top trends identified by Priority Club Rewards (bullet point paragraphs):

• Hotel loyalty program points displace airline frequent flyer miles as preferred currency: Frequent travelers place a higher perceived value on hotel loyalty program currency over frequent flier miles, as airlines’ imposition of fees, decreased reward seat inventory and greater restrictions have weakened consumer trust, and as hotel programs add additional redemption options, including access to airline inventory.

Loyalty Traveler comment: The high fees associated with award travel made the frequent flier game much more expensive in the past ten years. Hotel program points are much easier to redeem.

• Business travelers value loyalty more than price: Loyalty program membership is a stronger predictor of hotel selection than price or location – for frequent guests who stay a minimum of 20 nights per year – regardless of preference for midscale or upscale brands.

Loyalty Traveler comment: I frequently state that anyone staying 20 or more nights per year in hotels will likely get much higher value from hotel stays by focusing on one hotel loyalty program and earning elite status. The value-added benefits of elite membership with complimentary internet, breakfast and room upgrades makes elite an economical solution to mitigate the high cost of hotels.

Unfortunately, IHG Priority Club has the weakest elite benefits along with the easiest elite qualification requirements of the major hotel loyalty programs. Earning 60,000 points in Priority Club for Platinum elite can be accomplished for under $1,000 in hotel stays by someone who works the Priority Club promotions with that goal in mind.

InterContinental Ambassador is a fee-based status with benefits for InterContinental Hotels, but Ambassador membership is of little benefit for Priority Club  frequent guests who spend 99% of their hotel stays in IHG’s other hotel brands.

• Travelers across North America, Asia Pacific and Europe are equally point currency conscious: The value loyalty points hold as currency – for earning and redeeming – ranked as the highest priority for hotel selection by frequent travelers globally, higher than special perks, privileges or benefits in the hotel.

Loyalty Traveler comment: I find this statement about the value of loyalty points intriguing. At the same time Hilton is pushing a campaign to move “Beyond Pointsâ€, IHG research indicates points are the most desirable aspect of hotel loyalty programs.

The value of points as a frequent guest priority has me asking:  Why does Priority Club not offer discounts on extended stays using points like HHonors, Marriott Rewards and SPG discount extended stays?

The cost of reward nights when correlated to the base earn rate for points from hotel stays is fairly comparable across the different programs until extended stays are considered. Marriott and SPG offer a 20% discount on points required for a 5-night stay. Hilton offers 15% off 4-night stays, 20% off 5-night stays and 25% off stays of 6 nights or more.

For example, Marriott Category 8 is 40,000 points and InterContinental high-tier reward night is 40,000 points. Both programs have the same earn rate at 10 points per dollar for most hotel brands. Marriott has a 5^th night free for 160,000 points needed on a 5-night reward stay. Priority Club has no extended stay discount and charges 200,000 points for a 5-night reward stay.

InterContinental Hotels is still the odd brand out

InterContinental Hotels earn rate of 2,000 points per stay tends to undercut the acquisition of points with this hotel brand. For example, a four night stay at a $200 per night InterContinental Hotel earns just 2,000 points whereas the same $800 total spend at a Crowne Plaza earns 8,000 points.

Priority Club research indicates points are the top priority of frequent guests, yet Priority Club shortchanges the points earned from most guest stays at InterContinental Hotels.

• Global economy a solid indicator of consumer activity in loyalty programs: Health of the global economy has an inverse correlation with driving hotel loyalty members to use point redemption options versus stockpiling, given points’ perceived utility as cash. For example, during a single month in 2008, Priority Club^® members redeemed points for US$1 million in gasoline card vouchers as rising oil prices inflated gas prices. 

Loyalty Traveler comment: Any reader of my blog soon realizes that this loyalty traveler places  a cash value equivalent on points for future hotel stays. I would not trade my points for the low value of gas cards. 

38,000 points for a $100 gift card = $2.63 per 1,000 points redemption value.

My hotel stay redemptions average $10+ per 1,000 points. 

Leading with this valuable consumer insight, the re-launched Priority Club Rewards loyalty program is now better equipped to meet the needs of the changing frequent traveler and continues to be a key business driver for IHG. Priority Club Rewards will further empower frequent guests through an easy and efficient point-focused program that provides access to non-hotel travel related services, discount and high-end retail merchandise and gift vouchers, exclusive life experiences, and of course IHG’s more than 4,400 hotels worldwide.   

Loyalty Traveler comment: Priority Club has added one new hotel-focused redemption option with the relaunch. The addition of low value non-hotel redemption options for music downloads and Points & Cash retail options is not the outcome I expected for an efficient point-focused program. 

Consumer options for spending points are a good thing to add, but the points-focus of a hotel loyalty program in my opinion should be the addition of more hotel redemption options for the frequent guest. 

If Hilton HHonors is moving its hotel loyalty program “beyond pointsâ€, then I think this press release for the Priority Club relaunch indicates Priority Club is primarily moving points “beyond hotelsâ€.