Recession trumps the hotel card

Source : Business Times - 21 Mar 2009

As membership numbers take a hit, hotels fight back by offering sweeter deals

THE popularity of hotel cards is now at a discount. After thriving on offers of better room rates, restaurant discounts and spa packages, many issuers are reporting falling membership numbers.

For example, the Advantage Plus card, used by the Accor group of hotels, has seen sales slow down in recent months.

Grant O’Bree, regional manager of Singapore and Malaysia Advantage Plus, said that the number of new members has declined. ‘Membership signups have been static since October last year,’ he said.

‘Towards the end of last year, we were still able to record 20 to 30 new sales a day. Now, there are some days where we only see 12 to 15.’

The St Regis Hotel finds itself in a similar situation. Its Astor Card, which was launched around September last year, has seen a dip in the number of members recently.

‘There is definitely a contraction,’ said a spokesman for the hotel. ‘The take up was really good last year - the market embraced the card when it was first offered. In fact, we were surprised by the lack of buyer resistance to the price of the card.’

‘Price was never really an issue for them,’ the spokesman said, referring to the steep membership price of $788.

Facing such gloomy prospects, hotels are sweetening the pot in order to win back customers.

Membership at the Club at the Hyatt now comes with additional vouchers. The new vouchers can be used for hotel stays. This feature has been reintroduced after a three-year break.

Similarly, at the St Regis, additional vouchers are being given out. These vouchers can be used for a variety of services, one of which is the big group dining benefit.

A group of eight to 12 people will be able to dine and enjoy 50 per cent off the total bill. Now, members also have a three-hour grace period where they are entitled to free parking during weekdays.

Hotels are now cautiously optimistic. The St Regis expects to reach its cap of 2,000 members despite the downturn. ‘Most of our members are able to continue their lifestyle despite the recession and, thus far, results have been promising,’ said a spokesman.

Other hotels such as the Grand Hyatt are also banking on long-term clients.

Long-term members of both the Hyatt Gold Passport and Club at the Hyatt are buoying demand and the hotel looks to leverage on them to bring in even more members. Dining vouchers worth $50 are being offered to Hyatt members as referral incentives.

Advantage Plus is also using the same technique, offering free membership renewal to members who are able to get five people to sign up in a period of two weeks.

However, hotels may have to do more to capture the consumer’s dollar.

At a time of economic recession, the cost of membership may appear particularly hefty to some.

‘The new discounts and packages are not enough to offset the high cost of the membership,’ said Thomas Yeo, who previously held several card memberships.

‘After all, you are spending money to spend even more money.’

However, hotels beg to differ.

‘We do not expect to see a drop inmembership numbers owing to the value for money benefits offered by the card,’ a spokesman for Millenium Hotels Group said.

Mr O’Bree noted that the Asia-Pacific region has seen heartening sales figures of late, with membership growth exceeding last year’s.

‘The renewal rate for the card stands at approximately 65 per cent this year, up from 59 per cent last year.’

He said that hotel cards can be used to retain previous lifestyles during the credit crunch. ‘These customers know that the card is value for money, which is especially important in tough times like these.’