• by Karl Greenberg , February 4, 2010

InterContinental Hotels Group (IHG) is poking fun at Hilton's decision recently to raise by as much as 10,000 the number of points required for Hilton's "HHonors" loyalty-program members to get free nights at its hotels.

IHG's somewhat tongue-in-cheek program, "Luckiest Loser," is aimed solely at its own Priority Club Rewards (PCR) members who also happen to be members of the HHonors program and might be looking at a way to express a little frustration.

InterContinental, which says Hilton's points-value change drops the value of HHilton points by about 20%, is offering customers a chance to gain back their "lost" loyalty points through the "Luckiest Loser" program. The PCR member who has the highest-verified Hilton HHonors points balance -- two million Priority Club points -- can redeem them for about 80 free hotel nights at the company's 4,000-plus hotels worldwide. Another 20,000 "Lucky Losers" will be awarded up to 400 million total Priority Club points, per the company.

To enter the competition, which runs through Feb. 28, participants must have been registered Priority Club Rewards members as of Jan. 31 and follow the verification process. They have to supply their Hilton HHonors points balance at www.priorityclub.com/luckiestloser. Each qualified participant will automatically get 1,000 Priority Club points for entering.

Don Berg, VP of loyalty programs at Atlanta-based IHG, says one of the biggest values for InterContinental of programs like PCR -- beyond building loyalty -- is "putting someone in a database and being able to track their stay behavior and market to them accordingly," he says. But, he adds, there is a big overlap, with about 50% of PCR members also members of HHonors and other competitor programs. "The average member belongs to three or more loyalty programs, so we watch very closely what competitors do."

And, Berg says, InterContinental's effort around poking fun at HHilton higher rate levels is focused solely on its own PCR members. "We aren't doing mass media advertising. The communications are mostly direct-mail," he says.

Berg says that on average, about a fifth -- or maybe 9 million -- of PCR's 47 million-plus membership is active within the year. That means, with a 50% overlap, that about 4.5 million members of InterContinental's loyalty members are also HHilton members. "Those are all estimations, but it's millions of customers, not thousands."

Berg says the fact that Hilton raised its points level needed for free nights is critical, as about 80% of loyalty points are redeemed for free nights versus merchandise and services. "So when someone like Hilton raises the point price by 20% in one fell swoop, it's like raising the price of milk and bread in a grocery store. We started listening to blogs and online comments and, since there is overlap, they told us how angry they were. Many said they wouldn't stay there any more. We saw that as an opportunity."