Luxury Hotel War: Ritz Launches Loyalty Program

Sept. 15, 2010— -- The fight for luxury hotel guests heated up today with Ritz-Carlton announcing the creation of its own frequent guest program.

Ritz-Carlton, owned by Marriott, has long resisted giving its guests points for stays at its 70 hotels, although Marriott guests could redeem points for Ritz stays. The idea was: you paid for service and quality not for commodities such as points.

But most hotel chains including Marriott, Sheraton, Hilton, Hyatt and Holiday Inn offer guests such rewards to keep them loyal to their brand. Luxury hotels have been slow to follow.

Four Seasons, Peninsula, Mandarin Oriental all keep detailed information about their guests likes and dislikes -- think sparkling water instead of flat water -- but don't offer free nights for their most frequent guests.

Ritz will join Starwood's St. Regis brand and Hilton's Waldorf-Astoria brand in the small group of luxury hotels rewarding guests for their stays.

So why the change? Ritz-Carlton's new CEO Herve Humler said it was because his guests demanded it. But the recession and a steep drop in business is also a likely cause.

Ritz and other luxury hotels have had to drop rates to stay competitive. They also have been hurt by a drop-off in convention business from companies afraid to appear lavish during hard times.

It's called the AIG effect and stems from an embarrassing disclosure that insurance giant American International Group had spent $400,000 on a retreat at a St. Regis resort after taking $85 billion in federal bailout dollars.

As part of its new free program, called Ritz-Carlton Rewards, meeting planners can early up to 50,000 points for each event held.

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