It doesn't seem to be a good time to be in the U.S. hotel business, at least according to the statistics. Virtually thousands of rooms are vacant around the country. But as a result, it's a great time to be a hotel guest.
A countrywide hotel building boom has left the supply of rooms towering over the demand. For example, Chicago has 46,032 available rooms but only a 58.6 percent occupancy rate; in Houston there are 38,745 rooms available with only a 50.2 percent occupancy rate.
As a result, hotels have become fiercely competitive to attract frequent travelers. And, like the airlines, many hotel chains have developed programs that reward guests for their loyalty. Now, at Marriott, Intercontinental, Ramada and other chains, you can earn free stays, rental cars and airline tickets to a variety of destinations.
When the Houston Intercontinental opened early last year, hotel officials clearly were worried about occupancy. To lure guests, they initiated something called "Houston Plus." Any guest staying a total of seven nights (not necessarily consecutively) would receive a free Pan Am ticket to Europe.
The expensive program was an unqualified success and soon other Intercontinental hotels were added to the program, under the new name "U.S.A. Plus."
"In Houston," reported Joseph Smyth, Intercontinental's senior vice president of marketing, "we saw occupancy soar. We are now averaging 100 rooms a day to members of the program."
The program had an impact at every participating Intercontinental hotel. A year ago, the Mark Hopkins in San Francisco averaged a 62 percent occupancy rate. This year it jumped to 77 percent. Recently Intercontinental expanded the "U.S.A. Plus" program again to include many Ritz-Carlton, Fairmont and Regent International Hotels -- a total of 17 hotels in 16 cities.
In theory and execution, it's a very simple awards program. All you have to do is spend eight nights -- they do not have to be consecutive, nor at the same hotel -- at any of the participating hotels in this country before Sept. 1, 1986. The award: a free round-trip ticket to Europe on Pan Am or American Airlines.
"It's a great bonafide bargain," said Smyth. "There's no gimmick here, and people are using their tickets." But there is a caution: Group, tour and corporate discount rates don't apply. In order to qualify for the program, guests must pay a minimum "eligible" room rate, which can get expensive. For example, the minimum qualifying rate at the Ritz-Carlton in Boston is $180 per night; and the Mayfair Regent in Chicago has a base rate of $170 a night for this program.
Despite the high room rates, demand is increasing, mostly from business travelers whose companies are paying for the rooms. "In some cases," said Marcel van Aelst, general manager of the Mark Hopkins, "companies will only pay the corporate discount rate, and many of our guests are offering to pay the difference in rates to qualify for the free Europe tickets." (Sometimes that difference can be only $40 a night. Thus the "free" ticket to Europe actually costs $320. But it's still a good deal. Also, there is no limit on the number of times you can earn free tickets. If you stay 24 nights you can earn three free tickets.)
In its first year of operation, the Intercontinental program sent more than 10,000 people to Europe. "We sent an entire wedding party to France," Smyth reported. "Another woman took her kids to Rome and had an audience with the Pope."
Most hotel award programs don't offer such extra benefits, and many require guests to do their own award record-keeping.
Omni/Dunfey Hotels has a "Select Guest" program that began in early 1984 and now has about 50,000 members who can stay at 47 participating hotels. Prizes are earned by collecting stamps: one stamp per room night. The minimum number of stamps needed for an award -- eight -- earns you a 50 percent discount weekend for two. The top award level is 64 stamps/nights, which qualifies you for ESP (Executive Service Program) Plus. This means you are a "most preferred" customer and you will be upgraded to a suite, if one is available, for regular corporate room rates as long as the program is in effect. And you can continue to earn other awards for additional increments of eight stamps.
"Right now we are also looking for ways to make the program simpler, especially for the guest," said Stephanie Seacord, manager of advertising and promotions for Omni/Dunfey. "Now the burden is on the guest to first get the stamps and then send in the sheets when they are full. We may go to a computerized tracking of nights."
A slightly better awards program is one offered by Holiday Inns. The chain's "Priority Club" is now in its third year. Staying one or two consecutive nights at a Holiday Inn earns a guest one point, three or more consecutive nights earns two points.
The awards start at 10 points: a half-price weekend at a Holiday Inn, a 25 percent discount off the price of one round-trip Republic or Pan Am airline ticket if you purchase another ticket on the same flight in the continental United States and a free car rental for one weekend day when you purchase at least another weekend rental day.
The top Holiday Inn prize available -- for 100 points -- is a free week at a Holiday Inn worldwide, plus one free round-trip airline ticket to any location served by Republic or Pan Am and seven consecutive days free car rental worldwide.
In addition to the chain hotels, a number of individual hotels are planning to offer frequent-stay awards.
The Ritz Carlton in Washington and the Beverly Wilshire Hotel in Los Angeles are both evaluating repeat guest programs and plan to initiate them by February.
The Vista International Hotel in Washington already offered a Premium Award Program earlier this year.
Nearly 1,200 guests (who have accumulated 6,954 nights) signed up for the awards. The highest award level -- for those who stayed 30 nonconsecutive nights and paid at least $130 a night for their rooms -- entitled winners to a free room for two for eight days and seven nights (or a combination of stays totaling that number) at any of three Hilton International Hotels in Europe, Egypt or Israel, and round-trip coach tickets on TWA to those three destinations. More than 225 people have flown overseas on their awards. The program recently ended, but Vista is planning to start another early next year.
Not all awards programs are based on the number of nights you stay at a hotel.
For example, Ramada's Dividend Awards Program currently has 325,000 members. Points in the program are based on the total charges on the guest's bill, including meals, laundry, phone charges, etc. One point equals $100 spent, and a maximum of 30 points can be earned at any one stay.
The highest point level in Ramada's program is 300. This earns you six consecutive nights free at any Ramada worldwide, up to seven consecutive days free rental of a luxury Hertz rental car and two free international round-trip airline tickets. But of course that means you've just spent $30,000.
Points in Marriott's Honored Guest Awards Program are also based on the dollars spent in the hotel -- 10 points for every dollar -- and the number of nights you are a guest: 100 points per night.
"We're not room rate structured because a traveler should be able to get whatever rate we offer," said Roger Dow, vice president of marketing for Marriott. "Also, most people go to the hotel, drop their luggage and meet friends elsewhere. It's structured on dollars as an incentive to eat in our restaurant, go to our lounge and buy a gift in the gift shop."
Awards range from Level A -- 17,500 points -- good for one weekend night free at any hotel (not resort) worldwide, plus one car class upgrade on a subcompact through full-size Hertz rental car; to Level K -- 150,000 points -- good for 12 days and 11 nights free at any hotel or resort worldwide, two free round-trip tickets on Continental, Eastern, TWA or Western airlines anywhere they fly, plus one week free use of a full-size Hertz rental car.
Marriott is currently planning how to increase their awards schedule. "Thousands of people are already at the top point level and are asking what they can earn next," said Dow. The top award may soon be a stay on a floating hotel. Next month Marriott is planning to add Sun Line Cruises as an award sponsor.