IHG’s Priority Club Rewards is the oldest hotel loyalty program and millions of members strong. Vice President of Loyalty Programs, Don Berg, tells us about the program’s longevity – and its importance in a down economy…

How did Priority Club Rewards come to be?
It was the first hotel loyalty program, founded in 1983. Today it’s the largest by count of membership. Today there are 47 million members enrolled in the program. The concept of any loyalty program is that if you provide a tangible reward, the customer will bring market share.

How important are loyalty programs in the current economy?
Very much so, and we’ve seen some big trends since the economic downturn last fall. One trend we’ve seen is that people have seen their financial returns go down, but what they noticed is their Priority Club account did not decrease in value. There was a sense of having an account they could actually spend currency out of, so what happened is that people started increasing their usage of the points. We’ve seen that trend continue into 2009 and there has been an increased redemption rate of points in general. People can save their traditional currency and spend this nontraditional currency.

The other interesting trend we’ve seen from the hotel owner perspective from the last recession in the early 2000s, we saw a dramatic overall decrease in our business but when we segregated it by Priority Club members and non-members, what we saw was there was not nearly the decrease of Priority Club members’ business versus non-members’ business.

Those were the two trends I have seen related to the economy and its decrease.

There have been issues lately with hoteliers and companies who automatically enroll guests into loyalty programs.
We don’t do that because of data privacy issues. There are different levels of governance and control with regard to how it’s enforced. In European countries data privacy is strictly enforced, so you cannot go in and enroll someone without their knowledge. We just don’t choose to do it.

Any new program features in the works for the coming year?
We have a couple of things that are just new and have been out only a few months. The first one is called Flights Anywhere – it’s a product that allows Priority Club members to redeem their points for a paid seat on one of 400 airlines. That’s different from what has been the case in the past where you can redeem for frequent flyer miles. The problem is that you’re then in line with the other frequent flyers of that airline, trying to redeem for that same seat as everyone else. This allows you to actually go on our website and browse an airline’s inventory and you can get a seat with points or a combination of points and cash. It addresses the frustration people feel when trying to redeem airline miles in the tough financial situation.

Another new program is called Points & Cash, which is a method of redemption for reward nights. The vast majority of redemptions for any hotel loyalty program is for nights – it used to be the only option. We established the ability for customers to redeem not just their points, but a combination of points and cash for the free nights. It’s for people who don’t quite have enough points – say, 20,000 points for a 25,000-point Crowne Plaza stay – or for those who have a lot of points but don’t want to redeem them all at once.