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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Hotel Frequent Guest Programs

Unlike Starwood and Hilton, Marriott isn't simply expanding its loyalty program to the Ritz brand. Instead it is launching the Ritz-Carlton Rewards program in addition to its existing Marriott Rewards program. The new program is identical to the old one. Both will co-exist with the same rules and rewards and be honored at both chains.

So an elite Marriott member will be given the same elite perks at a Ritz and a Ritz elite member will be given the same perks at a Marriott. Guests will have to choose which program they want to join. Marriott officials said the only difference will be the marketing they receive. (Existing Marriott Rewards members can transfer over their points and status to the new Ritz program.)

And don't rule out a Ritz-Carlton branded credit card. Hotels and airlines make millions of dollars by pre-selling large chunks of miles to banks who then issue cards. Marriott already has a credit card issued by Chase providing 1 point for every dollar spent.

Loyalty programs don't just offer free nights anymore but can be used to buy all sorts of merchandise from toasters to DVD players to spa treatments. Starwood recently launched a program called Moments that lets guest bid at an online auction for concerts with back-stage tours, red carpet movie premieres, championship sporting events and private dinners with world-renowned chefs.

Ritz has partnered with a number of luxury companies to let people redeem points for similarly unique experiences.

The initial group of partners – more are expected – include tour operator Abercrombie & Kent, department store Neiman Marcus, designer Vera Wang, and National Geographic Expeditions Photography Workshops.

Abercrombie & Kent will be offering exclusive tours for Ritz-Carlton Rewards members. Neiman Marcus will provide gift cards, and offer an exclusive half day personal shopping experience. Members can also redeem points toward the cost of Vera Wang's bridal gowns, china and crystal. And National Geographic's photographers will hold workshops for small groups of Ritz-Carlton Rewards members at Ritz hotels.