By: Elizabeth Olson
Published: August 2, 2010 (New York Times)
The rewards points given by the big hotel chains have worked out well for business travelers like Michael Burden, a commercial real estate consultant, who uses the points for a family trip or vacation.
“It’s not the sole motivation, but as a family man with young children, a goal is to accumulate enough points to spend with them,” he said. But the down side, he said, is that a room at a chain hotel in one city can feel pretty much like a room at the same chain in another city. “There are times when you can forget where you are.”
That is exactly the sentiment that motivated Jeff Low, who formerly worked for the travel Web site Expedia, and e-commerce veterans of Amazon, Microsoft and Zillow to start a network of independent hotels that gives out points and serves as a counter to the points giants like Marriott, Hilton and Hyatt.
The service, called Stash Hotel Rewards, started in May and has signed up 79 hotels in 63 cities, including Boston, Chicago, Los Angeles, New York, San Francisco, Seattle and Washington. The hotels include boutiques, spas and resorts and are all properties with ratings of three stars and above.
The ratings, Stash’s Web site says, are based on its own assessment of the hotel’s service, amenities, reputation and location. They are also patterned, Mr. Low said, on those of large travel sites like Travelocity and Expedia.
Members of the network include the Hotel Griffon, on the Embarcadero in San Francisco; the Little Palm Island Resort on Little Torch Key, Fla.; and the Sunset Marquis hotel in West Hollywood.
“Travelers said they often felt forced to make a frustrating trade-off,” said Mr. Low, the chief executive of Stash Rewards. “An independent hotel offers a more memorable, personalized guest experience, rather than the same bland room and identical bed in the big-box hotel just to earn points.”
Independent hotels have long sought ways to compete more effectively with their larger brethren, but stark differences in hotel type — properties can range from individual motels at the side of a highway to luxury getaways — hindered efforts. Then, the economic downturn made the need to attract more business more pressing.
At independents, overall occupancy dropped 8.9 percent last year, according to figures from Smith Travel Research. Rates also dropped 9.5 percent for the 22,600 independent hotels last year. Through June of this year, occupancy was up 3.4 percent, but rates were down 1.1 percent, according to the travel industry figures.
The figures were similar so far this year for the top 234 highest end independent hotels, where occupancy rose 4.2 percent, and rates dipped nearly 1 percent.
Banding together in a loyalty points system also became more feasible as computer technology became more affordable.
Having a rewards system is important, said Jan Freitag, vice president for global development at Smith Travel Research.
“All the chains have rewards programs, and they are in an arms race over points,” Mr. Freitag said. “Independent hotels can now say that we’ve got what you’re looking for, and there’s also something in it for you, the traveler.”
Points drive business, said Yogi Hutsen, chief executive for the Coastal Hotel Group, who signed up his hotels for Stash Rewards. “Not giving points has been a drawback for independent hotels. We can now compete head to head.”
The independent hotel points network, operated from Palo Alto, Calif., awards five points for every dollar a customer spends. Points are earned immediately and do not expire. The system has no blackout periods or category restrictions, and travelers sign up free, Mr. Low said.
Under the Stash Rewards system, each hotel sets the price for its room based on availability. A hotel in Florida, for example, would charge more for a room in the peak winter season than in the summer — and a guest member would have to cash in more points to secure a room during high seasons.
The new network charges independent hotels less to obtain guest business than online booking sites, according to independent hotel operators.
Independent hotels pay such sites around 25 percent of the gross amount of the booking, said Eric Horodas, chief executive of Greystone Hotels, which owns and operates independent hotels in San Francisco, Palo Alto, Los Angeles and San Diego. In contrast, Stash Rewards said it charged an average of 7 percent of the room revenue each guest member accumulated.
Online booking sites “have a gigantic market,” Mr. Horodas said. “But I think this independent effort will grow, and the cost of capturing customers will come at a significantly lower cost.”
Mr. Low said he hoped to sign up 200 or more upscale properties by next year.
“We think we’ll soon achieve scale in the U.S. that matches some of the big chains,” Mr. Low said. Those include Hyatt, which has 240 properties, and Starwood, with 500 properties in the United States.
Andy Horrow, an independent marketing consultant from Chicago, who was among the 1,000 people who signed up the first week for the Stash Hotel Rewards program, said in previous jobs he had little choice in hotels because his employers often had deals for corporate rooms.
But business travelers making their own choices, he said, “want to be comfortable, but not the kind of grandma’s quilt comfort, but something hip and young at heart.”
“There are a lot of amazing hotels out there that I want to try,” he said. He also said he saw a beach resort in Naples, Fla., listed on the Stash Rewards Web site, where he would one day take his family with the points he was accumulating.