Hotels, airlines offer treats to lure customers

With many people staying put during these tough times, the travel industry is going to great lengths to woo people back on the road with promotions that range from the creative to borderline kooky.

This is not your mother's fare sale or rate cut. British Airways, for instance, is holding an essay contest for grown-ups. It's offering free round trips to those who make the most compelling argument for why they need to travel overseas for business.

Book a business meeting at a Starwood hotel, and your company or organization can qualify for a free concert with British singer Natasha Bedingfield in honor of your favorite charity. And Kimpton Hotels will have you jumping through hoops, literally. Guests who can hula hoop for 20 seconds can win a free room upgrade.

"A lot of hotels and airlines are thinking of any excuse to put somebody in a room or on a plane because, of course, demand is down considerably," says Roland Rust, chairman of the marketing department at the University of Maryland. Rust, who's extensively studied airline competition, says, "When the hotel rooms are full and airlines are running full, you don't need to do nearly as much of this."

The number of passengers flying with premium tickets on international flights was down 23.6% in May compared with May of last year, according to the International Air Transport Association.

Meanwhile, the national hotel occupancy rate was 55.7% in May, compared with 63.1% last year, according to Smith Travel Research, a hotel research company.

British Airways launched its essay competition on July 14, and says it will award a free business trip to more than 1,000 people.

Already 1,000 people have submitted essays. The deadline is July 31. Winners will travel later this year from New York, Chicago and Los Angeles on the same flights, which airline officials say will become networking confabs at 38,000 feet.

"If we're going to say face-to-face is the best way to grow your business, then what better way than actually offering that opportunity to a large number of businesses?" says Simon Talling-Smith, British Airways' executive vice president for the Americas.

With British Airways' first class and business cabin traffic down roughly 15% in June compared with last year, the airline says the contest is part of an effort to remind businesses how critical travel is to success.

A survey of Harvard Business Review readers last month, commissioned by British Airways, found 95% considered face-to-face meetings a building block for long-term relationships.

"While it's OK to hunker down and protect your business in the short term, if you're going to grow in the long term, you're going to have to do the traveling," Talling-Smith says. "You can't survive on teleconferencing alone."

Starwood Hotels is offering companies 4% off the meeting tab if they book a meeting requiring 10 guest rooms by Aug. 31.

Hotel officials acknowledge that a discount can be easily matched by a competitor, so they're setting the chain apart by tossing in complimentary PepsiCo refreshment breaks and the chance to win a free Natasha Bedingfield concert.

"Just as we come up with 4% off … our competitors could offer 5% off," says Dave Marr, senior vice president of brand management North America for Starwood Hotels and Resorts. "In this climate, we needed to do something a little bit different from our competitors."

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