Boosting returns

Hotel loyalty programs – in which customers earn points that they can redeem for anything from a free night’s stay to a Starbucks gift card – have been offered to international business travelers in China for some time. With an increase in domestic business travel and a global economic slowdown, these hotels are now beginning to tailor their rewards programs for Chinese customers as well.

 "As the Chinese travel abroad in greater numbers, they become exposed not only to foreign brands but also to international standards and quality," said Nelli Yong, vice president of brand management for Starwood Asia Pacific Hotels & Resorts. Starwood owns hotel brands Westin, St Regis and Four Points by Sheraton.

"Chinese vacation less than Europeans and Americans, so we try to provide reward programs that allow them to redeem points immediately, for items like jewelry or the latest gadgets."

Repeats from abroad

The ratio of mainland Chinese hotel guests to international guests varies greatly, depending on both the location of the hotel and price. Hotels in inland cities that generally offer lower rates, such as the Sheraton Xi’an and the Sheraton Urumqi, cater to a clientele that is more than 80% Chinese. At the Beijing St Regis, however, less than 30% of guests hold Chinese passports.

Hotels brands with a presence across the country report that their hotels with a higher percentage of foreign customers tend to do better in signing guests up for their loyalty programs.

"The number of SPG (Starwood’s guest program) members in the Beijing St Regis is sometimes as high as 60%, compared to a rate of 40% throughout Asia," Yong said.

Another Beijing hotel, the Grand Hyatt Beijing, occupies a central location near Wangfujing shopping street. "I’ve been here 13 years, and for the industry as a whole, I have not seen tremendous changes in guest rewards programs, just diversification and improvement," said Regina Lourenco, the hotel’s director of marketing. "The hospitality industry just copied the program from the airlines, and it has worked great for us."

Hyatt’s loyalty program, called Gold Passport, is similar to other rewards programs. Hotel stays and credit card purchases yield points that can be redeemed for free stays around the world. Gold Passport members can also log onto Yattit, a website where travelers can "share their insider tips on worldwide travel."

Pricing positions

For most hotel customers, though, membership in a loyalty program is a passive experience.

"I get all of these emails from hotel programs but I never read them," said Ma Qing, who stays frequently at the Shanghai Sheraton as general manager of a Chinese manufacturing company. "A lot of times when I do register for the programs they don’t record my points. But the Shanghai Sheraton sometimes has very cheap rooms over the weekend."

Price remains a factor for many travelers like Ma. For example, a free weekend night’s stay in the Four Points by Sheraton in Shenzhen costs three thousand Starpoints. Loyalty program members earn two Starpoints for each dollar spent in a Starwood-brand hotel. So, after spending US$1,500, it is possible to stay for free in a room that retails for US$100 per night.

The Sherton and other mid-level hotel brands tend to see more price sensitivity among customers than the luxury end of the market. At Beijing’s Ritz Carlton Financial Street, a five-star hotel, service trumps a small price difference or the promise of a reward.

"Money does not matter to them; location does not really matter either because a chauffeur drives them everywhere," said Ada Tsoi, director of quality for the hotel."

The hotel also collects information about guests’ preferences in a database, building a customer profile. "If a guest hates garlic, we’ll make sure to serve him garlic-free food. If he has big feet, we will provide extra large slippers," said Tsoi.

For many, efficiency and a high service level can be enough. "I tend to stick with the Hyatt even though I never redeem the points," said Simon Graham, an engineer for a British chemical licensing company,. "Sometimes we’ll stay at the Sheraton, because the company manager wants to collect points."

But Graham is content with the Hyatt. "The service is good, and it’s what I’ve done in the past."