Using hotel rewards program to fund a trip

The troubled economy has hit the travel industry hard this year as people postpone trips or vacation closer to home. For those still hoping to get away while keeping an eye on their wallets, hotel rewards programs are increasingly popular and flexible.

Some hotel companies recently have relaxed booking restrictions and offered bonuses under their programs as they try to fill rooms and boost loyalty among their customers. Jan Freitag, vice president of global development at Smith Travel Research, said consumers are probably more likely to cash in their hotel rewards points during tough times. "That rainy day is right now," he said.

Since Hilton Hotels Corp. announced in January that it would eliminate blackout dates, point redemptions in its Hilton HHonors program are at an all-time high, the company said. It's projecting a 25 percent increase in overall redemptions for the year compared with 2007.

Rewards programs also are becoming more important to hotel companies as they cope with the drop in travel spending. Last week, Smith Travel Research projected that occupancy at U.S. hotels for all of 2008 would drop by 3 percentage points to 61.2 percent.

"In this economy, hoteliers like to see any guests no matter what," Freitag said.

Adam Burke, Hilton's senior vice president of customer loyalty, said changes to Hilton's rewards program began to spur increased points redemption right before consumers began cutting back on vacation spending.

Starwood Hotels & Resorts announced in September that, through the end of the year, its members could choose rewards from a dozen different options, including free nights, bonus points or gift cards.

A program launched by Starwood in September allows members to redeem points for flights on hundreds of domestic and international airlines with no blackout dates.

Mark Vondrasek, Starwood's senior vice president of loyalty and partnership marketing, said winning the loyalty of its guests becomes increasingly important in an economic downturn. "As overall travel patterns decline, you're relying on your membership base," he said.

Marriott International will eliminate blackout dates under its Marriott Rewards program on Jan. 15. Under Marriott's new system, members will be able to redeem points for free nights at 2,900 hotels every day of the year. For every four-night stay redeemed, members can extend that stay by one day for free.

Some Marriott Rewards members are grumbling, however, about changes in the points structure and caps on room availability. Most are upset that it takes more points than it did before to win a free seven-night stay, Marriott spokeswoman Laurie Goldstein said.

"It was a good bargain," she said.

Very few members actually redeem points for such long stays, she said. Most use them for just one night, and that rate hasn't changed. The program's "elite" members also get extra bonus points, which will help alleviate the pain of the change, she said.

Regarding the limit on the number of rooms available, Goldstein said only some hotels will be affected and only on limited nights, such as the hotel in Times Square on New Year's Eve.

Goldstein said competition was a factor in the changes. She cited Hilton's announcement in January that it would lift its blackout dates for all members. Vondrasek noted that Starwood's program has not included blackout dates for nine years.

"It's clear to us that others are trying to catch up on that aspect," he said.