- The Washington Times - Monday, August 31, 2009

Do you still find having top elite hotel status worthwhile? Are you worried that cost-cutting might take away some of the benefits that make you stay loyal to your preferred chain?

The management of those loyalty programs desperately wants you to believe that, despite the hard times in the travel industry, the perks you’ve become used to aren’t going away. After all, the last thing they want in this difficult economic environment is to lose their best customers.

As if they needed a reminder of the dire business climate, the latest figures for the week that ended Aug. 22 showed that U.S. hotel occupancy fell more than 7 percent to about 60 percent compared to the same period last year. The hardest hit are the luxury brands, where occupancy dropped by about 14 percent during the past year through July, according to Smith Travel Research, a hotel data company.

So it was no surprise that a Bloomberg News story last week left some executives with a bitter taste. The article said some luxury hotel chains are “dropping five-star ratings to conserve cash,” a reference to rankings published by third parties such as AAA and the Mobil Travel Guide.

Bloomberg reported that Starwood Hotels & Resorts Worldwide Inc., owner of the luxury brands St. Regis and the Luxury Collection, “will let some of its properties reduce their level of service — and number of stars.” The Hilton Hotels Corp. and the InterContinental Hotels Group “have already cut the ratings for some locations,” it added.

K.C. Kavanagh, a Starwood spokeswoman who was quoted in the story, said the Bloomberg story “created some confusion” about St. Regis and the Luxury Collection. “We are not aware of any hotels within these brands that have fallen below their current star ratings, and it is absolutely not our intent for them to do so,” she wrote in an e-mail message.

It’s well known in the industry that those “star ratings” are simply marketing tools with little operational value, as Smith Travel Research Vice President Jeff Higley put it. Although hotels care about them because travelers read them, they can be very misleading, as there are no consistent global standards they follow.

“It’s far more important for hotel chains to follow their own standards than some third-party systems,” Mr. Higley said. Chains rate their properties in several categories that determine how many points are necessary to redeem a free stay.

I’m no fan of “star ratings,” so the Bloomberg story’s main point had little relevance to my choice of hotels. However, as a frequent traveler with both Hilton and Starwood top elite status, I’m concerned that cost-cutting might devalue the benefits that come with that status. It would be understandable if that happened, but loyal customers deserve to know in advance, rather than finding out at check-in.

For the time being, executives insist we have nothing to worry about. “There have been no program changes to the member benefits this year,” said Scott Carman, Hilton’s director of communications. Ms. Kavanagh at Starwood conceded that “controlling costs” is necessary, but she said that was being done “largely behind the scenes” and doesn’t affect elite benefits.

Mr. Higley said that, even though “some brands have relaxed their standards,” they still want to “maintain their integrity by meeting their best customers’ expectations.” The people who keep traveling today “are the hardy travelers,” and hotel chains can’t afford to disappoint them, he added.

To cut costs, some hotels might consider eliminating turn-down service on weekdays or lowering the number of towels they leave in the bathroom, Mr. Higley suggested. It’s less likely, however, that they will take away elite perks, such as free room upgrades and access to executive lounges, he said.

Lounge access may still be a benefit for top elites in theory, but some hotels have shut down their lounges. Last month, a receptionist at one of the Hilton hotels in San Francisco informed me at check-in that its lounge had been closed for months. Earlier this year, another Hilton property had done the same, although only on weekends. It would have been nice if that information had found its way onto the hotels’ Web sites.

While upgrades to bigger rooms or suites are still published benefits, a hotel’s ability to maintain lounges and keep luxury suites in perfect condition is directly related to staffing and other costs. It’s conceivable that, at some point, hotels might give them only to guests who actually pay for them.

So far, Starwood has been able to avoid such measures by cost-cutting that includes behind-the-scenes “consolidating vendors and leveraging the collective buying powers of Starwood’s brands,” Ms. Kavanagh said. “We believe there has been no discernible impact on the guest experience.”

Click here to contact Nicholas Kralev. His “On the Fly” column runs every Monday.

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