When J. T. Atkins, a New York investment banker, wants to spend a romantic week dining in Parisian restaurants, he catches the shuttle to Washington and checks into a downtown hotel.
It's not simply because the hotel has a nice ambience.
Every night that Atkins stays at the Vista International for business, he earns points toward free round-trip airline tickets and a week in a luxury hotel in Paris for two.
"The Vista costs about the same price as other Washington hotels, but you get a perk there," said Atkins a bachelor whose work brings him here about every two months.
Vista's "Frequent-Stay" program that sends travelers to Europe -- analagous to the airlines' "frequent flier" plan -- is one of a myriad of marketing ploys that hotel chains are using to lure travelers at a critical time in the industry. The giveaway gimmicks range from free teddy bears to free Caribbean vacations.
Hotel competition is fiercer than ever now because occupany rates are dropping even as new hotels are being built.
"1986 will be remembered as the 'year of living dangerously' in the hotel industry," the Real Estate Research Corp. said recently in its forecast of national real estate trends.
In the past, demand for hotel rooms has exceeded supply. But since the late 1970s, occupancy rates have been steadily dropping, and now languish in the 65 percent range, according to Laventhol and Horwath, the Philadelphia research firm that tracks the leisure-time industry.
Older, smaller hotels and motels, especially those in poor locations, are particularly hard hit because they lack centralized reservation systems, lower-cost supplies and the marketing that is provided by hotel chains and franchises to their members.
The average occupancy rate for D.C. hotels last year was about 69 percent, down from 70.2 percent the year before, according to the Hotel Association of Washington.
Philadelphia's occupancy rate has dropped to about 59 percent, Orlando's rate hovers at about 66 percent, and Houston's rate has plummeted to 48 percent.
Jet travel that permits shorter business trips, the increase in such substitutes as second homes, time-sharing units, recreational vehicles and campgrounds, and the rise in the number of Americans vacationing abroad are all contributing factors, said William Kaven, professor of economics and marketing at Cornell University's School of Hotel Administration. Tax Laws Spur Building Boom
Despite mediocre occupancy rates, tens of thousands of new hotel rooms continue to come on stream.
Why? Not because they are economically feasible, analysts say, but because of the tax laws.
"Part of the blame is due to the 1981 tax law that made people do business for tax reasons rather than for good business reasons," said Sam Barshop, president of La Quinta Motor Inns Inc., a chain of 165 moderately priced motor inns.
Under changes in the 1981 tax laws, building hotels became a better investment and tax write-off with accelerated depreciation, according to Mark Lomanno, an analyst with Laventhol and Horwath. So even with low occupancy rates, investors still could make money.
The accelerated cost recovery and other tax benefits allowed hotel investors to write off losses substantially greater than their initial investment, Lomanno said.
"We have more new construction going on in our system than ever before in history," said Robert C. Hazard Jr., president and chief executive officer of Quality Inns International, which is based in Silver Spring. More than 150 new Quality Inns are under construction in 34 states, and most of them are slated to open this year.
The number of Washington-area hotel rooms has increased 23.5 percent to 42,000 from 34,000 in 1984.
Over the next five years, that number is expected to climb another 19 percent to 50,000, according to the Washington Convention and Visitors Association.
"Washington definitely has a surplus of hotel rooms at the moment or coming on stream very soon," said Rex Rice, general manager of the Vista at 1400 M St.
To survive, hotels are expanding aggressively into new markets. They are beefing up their television advertising, offering frequent-traveler programs, lowering their weekend rates to attract the leisure traveler and experimenting with direct-mail marketing.
"Suddenly in the U.S., there's tremendous competitive pressures out there," said Rice. "We're at a crossroads, and a lot of hotels are experimenting and trying to find the magic formula." Marketing Strategies Abound
Along with the Vista, many nationwide chains -- such as Marriott Corp., Intercontinental Hotels Corp. and Ramada Inns Inc. -- are giving away free stays, rental cars and airline tickets to a variety of destinations around the world.
"As a mature industry, hotels are doing all sorts of things to differentiate themselves from each other, just like the cigarette and automotive industries have done," Kaven said.
"They're offering all kinds of special room rates and amenities to nail down their share of the market," Kaven added.
One marketing difficulty for hotels is their hightly perishable inventory, analysts point out. If a hotel doesn't sell a room tonight, it will never have the chance to sell that room on that date.
Intercontinental Hotels Corp. sent about 10,000 people to Europe in the first year of its "U.S.A. Plus" program, which gives away free round-trip tickets in exchange for eight nights in an Intercontinental hotel.
Marriott's "honored guests" can earn enough points to take cruises to the Greek Isles and the Caribbean or stay at any resort worldwide for more than a week and be provided a rental car.
For every dollar spent in a Marriott hotel, including meals and gifts, a traveler receives 10 points. In addition, guests receive 100 points per night stayed in a Marriott. Once 20,000 points are accumulated, the guest is eligible for a free weekend night at most Marriott hotels plus one car class upgrade on a rental car.
A customer with 40,000 points can join "Club Marquis," which offers discount rates, express check-in, check-cashing privileges and complimentary newspapers.
When a traveler accumulates 350,000 points he is eligible for Marriott's highest award -- 13 days and 12 nights free at any Marriott hotel or resort worldwide, a Marriott suite for the price of a regular room, four free round-trip airline tickets on Continental, Eastern, TWA or Western airlines to most places they fly, a rental car for about two weeks and a week-long cruise for two. Consumers Not Always Winners
Hotel marketing ploys are not necessarily good news for the consumer, according to Cornell's Kaven. By trying to differentiate themselves, hotels have become more costly to run.
Increased hotel costs are passed on to travelers in soaring room rates. While the frequent traveler is eligible for the new discounts, the infrequent traveler may end up paying top dollar for rooms that start at about $80 a night and rise into the hundreds at luxury hotels.
The average charge per night for a D.C. hotel room was up 11 percent to $87.26 last year, while the average rate in the metropolitan area climbed 10 percent to $75.73, according to Laventhol & Horwath.
The costs of the bonus award programs are particularly high, and not all hotels are willing to take this marketing risk.
"There is no question about it -- these programs are expensive," said Roger Dow, Marriott's vice president for marketing, who oversees the $16 million award program that targets the nation's 2 million to 3 million frequent travelers.
"The costs are tremendously high," said the Vista's Rice. "And what might work for an airline might not necessarily work for a hotel chain."
"We've stayed away from those programs," said Richard C. Nelson, regional vice president of the Hyatt Regency at 400 New Jersey Ave. NW. "The costs are greater than the benefits derived."
Holiday Inns Inc., the country's largest hotel chain, was the first to promote a bonus award program with free hotel rooms, airline tickets and rental cars three years ago.
But Holiday discontinued the program in January because it was too expensive.
"The awards program was not a good long-term business decision," said Dorothy Hays, spokeswoman for Holiday Inns, which is based in Atlanta. "The costs of administering the program were high, and the awards were expensive."
However, on Saturday, Holiday Inns launched a new marketing campaign -- the discount "Great Rates" program -- at most of its 1,500 U.S. Holiday Inns and Crowne Plaza Hotels. Rates as much as 20 to 80 percent off for regular rooms will be offered mostly during weekends and holidays.
Under the "Great Rates" program, which was introduced at about 200 hotels in California, Florida and Cleveland in November, the cost of a double room at a Los Angeles Crowne Plaza Holiday Inn dropped 28 percent, from $96 to $69.
In Palo Alto, the cost of a $106 room fell to $58. At Washington-area Holiday Inns, travelers will be able to save between $10 to $40 on Holiday's average room rate of $50 a night.
Reservations for a "great rate," like those for some airline super-savers, must be made at least seven days in advance and guaranteed by credit card. If you cancel with less than 72 hours' notice, you pay a $25 penalty. Marriott, too, offers super-saver weekend rates that are about 40 to 55 percent lower than its weekday rates.
Days Inns of America Inc. is touting its "Simple Super Saver" for between $19 to $29 a night, with reservations required 29 days in advance. "We're experiencing a 10 percent increase in reservations directly from this program," said Susan Melum, who manages the program for Days Inns, which is based in Atlanta.
In the scramble for a bigger market share, several local hotels are offering a plethora of discount rates, services and free gifts to entice travelers.
The Embassy Row hotel at 2015 Massachusetts Ave. has a new weekend package -- a room that normally would cost between $150 to $185 a night offered for $135, plus some free meals and champagne.
"We're doing this because we're dead empty on the weekends," said Maureen Curry, Embassy Row's director of marketing.
The Omni Georgetown hotel is giving away discount dinner certificates at area restaurants, along with a teddy bear in every room, in its "bear with us" campaign while the building undergoes a $7 million renovation.
And the Four Seasons in Georgetown, where rooms range from $165 to $200 a night, is showering travelers with sugar-coated almonds, truffles, umbrellas, briefcases, terry-cloth monogrammed bathrobes, champagne, shaving kits and Elizabeth Arden cosmetics.
"We put our investment into more personalized service instead of slick marketing," asserted Sharyn Thomas, spokeswoman for the Four Seasons Hotel.
But even the Four Seasons, which was rated the No. 1 hotel in the United States last year by Institutional Investor magazine, has been forced to increase its advertising budget about 45 percent and its service staff about 10 to 15 percent as competition heats up in the oversaturated market.
Sheraton Grand, the Capitol Hill luxury hotel, delivers personal computers to its guests or brings a rowing machine up to the room for those who can't skip a day without aerobic exercise. Business People as Promoters
The Stouffer-owned Mayflower Hotel on Connecticut Avenue has taken a rather unique marketing approach. Instead of just focusing attention on the hotel with its frequent traveler program, Mayflower executives say one of the most valuable marketing tools is promoting its restaurants to local business executives.
"Local people sell hotels better than anybody," said Anthony Stewart-Moore, manager of the 60-year-old Mayflower, which recently underwent a $65 million renovation.
"When I need to take a trip to another city, I call my friends there and ask which hotel I should stay in. So we are encouraging the local business community to come to our hotel by promoting our restaurants."
The Mayflower began sending "Mayflower Commodore Circle" membership cards, which resemble American Express gold cards, to thousands of Washingtonians last fall. With a $60 fee, the member is entitled to 12 free meals in the Mayflower's two restaurants -- Nicholas and the Cafe Promenade -- if another customer is brought along.
Members also receive two coupons for a $50 discount on a Mayflower room every night during two different stays of up to one week, and the cards are transferable to family and friends. In less than four months, the Mayflower has lured 4,000 members.
A similar "gold card" from the Hyatt Hotels entitles guests to upgraded accommodations, free drinks, discount room rates and other privileges.
Analysts predict that some of the competition resulting from overbuilding in the industry may ease with changes in the tax law. But they still speculate that some hotels just aren't going to make it in an industry with traditionally slim profit margins.
"There will be a shakeout," said Lomanno of Laventhol and Horwath.
"The winners will be the ones that are astute marketers, keep up with technological changes and still continue to provide traditional services well," he added.
"The bottom line is that you can have the greatest looking hotel with the greatest amenities, but if there's no hot water or someone's rude to you, you're not going to go back."