Beginning of the End for Generous Hotel Rewards?

Feb. 15, 2011 — -- The outlook for frequent-flier miles and points in 2011? It depends.

While travel overall is rebounding nicely from the recession-dampened demand of the past three years, it isn't doing so uniformly.

The airlines, for example, are now routinely filling their planes to 80 percent capacity, even during off-peak periods.

More importantly, they're flying profitably. The largest U.S. airlines posted combined profits of $2.3 billion for 2010, and $4 billion when one-time costs associated with mergers and the like aren't counted, according to the Air Transport Association, an airline trade group. That compares to a loss of $26 billion in 2008 and 2009.

With capacity aligned with demand, and travelers willing to pay above break-even prices, the airlines have little incentive to deploy generous frequent-flier promotions to boost business.

The picture is less rosy for the hotel industry, but more rewarding for members of their frequent-stay programs.

Hotel occupancy rates for 2010 were up 5.7 percentage points but, even with that increase, occupancy reached only 57.6 percent, STR, an industry research company, reported. And average daily room rates actually declined very slightly, to $98.08.

Accordingly -- and proving yet again that the industry's pain is consumers' gain -- most of the largest hotel groups are offering bonus points or frequent-flier miles or free nights for stays during the next few months.

Here's a summary:

Best Western

Between Feb. 6 and April 11, Best Western Rewards members can earn up to 1,000 bonus American AAdvantage miles for every qualifying stay, as follows:

Separately, and during the same period, Best Western is offering one free night after three qualifying stays.

Double points for general or Gold elite members who book through a third party, beginning with the second stay (registration required)

500 bonus points for Platinum or Diamond elite members who book through a third party, beginning with the second stay (registration required)

Hilton

Through March 31, Hilton Honors members who opt to earn fixed mileage for their stays can earn up to 2,000 Delta miles for qualifying stays of one or more nights at Hilton family hotels, as follows:

1,000 miles for one night (200 miles at Hampton Inn and Homewood Suites)
1,500 miles for two nights (300 miles at Hampton Inn and Homewood Suites)
2,000 miles for three or more nights (600 miles at Hampton Inn and Homewood Suites)

The above figures include both the base and bonus miles.

InterContinental

Between Feb. 1 and April 30, Priority Club Rewards members can earn 3,000 bonus points for every third qualifying night, up to a maximum of 30,000 points, at InterContinental, Hotel Indigo, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites hotels.

Marriott

Between Feb. 1 and April 30, Marriott Rewards members can choose to earn a free night after two paid stays, up to two free nights (the MegaBonus offer), or triple airline miles for the second and subsequent stays (the MegaMiles offer).

Starwood

Through April 15, Starwood Preferred Guest members can earn double points for all nights, plus an additional 500 points for Thursday, Friday, Saturday, and Sunday nights, at more than 930 participating Starwood family hotels (Sheraton, Four Points, St. Regis, Luxury Collection, Le Meridien, W, Westin, aloft, element).

Triple points or miles for the third stay

Quadruple points or miles for the fourth stay

The offers are a continuation of what has been the longest period of sustained promotional activity in the hotel industry's history. No one expects such marketing largesse to continue indefinitely. The question is: How much longer?

STR's CEO, Mark Lomanno, is bullish on the industry's near-term prospects.

"While it may be the second half of 2011 before we begin to see rapidly accelerating room rates, by the time we get to 2012 we now expect room rate growth to rival the boom years of 2006 and 2007."

If that's true, we could be witnessing the beginning of the end of an exceptionally lucrative era for deal-seeking travelers.

Because when the hotels are no longer down and out, their customers will pay more and reap fewer rewards for their stays.

Tim Winship is editor at large for SmarterTravel, as well as the editor and publisher of FrequentFlier.com, and a frequently quoted expert on frequent-flier programs. This article originally appeared on SmarterTravel.