Cover Story – August, 26 2009

Cover Story – August, 26 2009

Johannes Ganser
Head of Loyalty & Partnerships
Air Berlin

Air Berlin topbonus boasts 1.8 million members, who, according to Air Berlin’s Johannes Ganser, have a “far above average activity rate.” Why so active? Maybe it’s partly because of the popularity of the airline itself. With roots to 1978, the airline started flying in 1992 with two jets and 150 employees. By 2003, the company was the second largest airline in Germany and today the airline serves 96 destinations throughout the world. And it has earned its share of awards. Recently it was singled out in the European Business Awards in the “Customer Focus” category–competing with all types of businesses, not just travel, and the airline was named Europe’s best low-cost airline by travelers in a recent Skytrax survey. Continue reading to learn more about Air Berlin through the eyes of Johannes Ganser, Head of Loyalty & Partnerships.
InsideFlyer
Elite members of topbonus can earn double miles through the “My Route” program. Can you tell us more about this program?
Johannes Ganser
Air Berlin is ‘your airline’ and offers anyone the right flight no matter if customers want to go on holiday or need a flight for business reasons. To emphasize the personal relationship we have with our customers and especially our frequent flyers, we reward them for their loyalty with double award miles on their favorite route. Many of our customers are commuters or use Air Berlin for flying to a specific city.

IF
What’s the most popular flight route to get the double miles?
Ganser
As you might imagine, our members choose the routes where we have the most frequency–Dusseldorf to Munich and to Berlin or Hamburg to Munich.

IF
You recently added a companion award option for 50 percent fewer miles than a normal flight award. Why did you decide to add this option and have many members taken advantage of it so far?
Ganser
We believe that our members who fly a lot should benefit a lot from topbonus to become loyal to Air Berlin. Few people want to travel alone and many want to take along their family–therefore our companion tickets make topbonus much more relevant for many of our members. In addition, companion tickets are a nice way to help new people experience Air Berlin–and we know that afterwards these travelers will book Air Berlin again.

IF
Are there any other new awards you can tell us about? Any to come?
Ganser
As of December 2008, we offer ‘top deal tickets’ from just 3,000 award miles. Until members have benefited from a loyalty program, it doesn’t mean anything to them–3,000 miles are collected after not more than one domestic and one European return flight or after just six hotel stays or car rentals. This way our customers enjoy the feeling of being rewarded much faster.

IF
The topbonus airline partner list is rather limited, with only one airline partner: Hainan Airlines. Why Hainan? And why only one airline partner?
Ganser
We have a codeshare with Hainan Airlines. Since January 2009, we’ve marketed flights between Berlin and Beijing. Members of the frequent flyer schemes operated by Air Berlin and Hainan have been able to collect and redeem miles from both route networks since November 2008. Hainan Airlines is the fourth largest airline in China and a high-quality carrier, comparable to Air Berlin. The airline has already received numerous international awards for service, friendliness to passengers and punctuality.

IF
Although the airline partner list is limited, Air Berlin has an extensive list of other partners. Are there any new partnerships?
Ganser
We are always working on our partner portfolio to make it even easier for topbonus members to get their free flights. But at the moment it is too early to talk about certain new partners.

IF
Air Berlin has a rather unusual partnership with booking.com. Can you describe it?
Ganser
We are very proud to offer our members the opportunity to earn miles via an online hotel reservation tool at booking.com. Not a lot of airlines offer their customers the advantage of double dipping. When you book a hotel with booking.com via airberlin.com, you earn miles from booking and with most of our hotel partners on top of that. Booking.com is embedded along the whole Air Berlin travel chain. The implemented booking engine of booking.com is mostly a white label solution that is designed with the Air Berlin look and feel. The inclusion within the online booking confirmation shows customers customized offers, that fit their booking details.

IF
Most of our readers are based in North America. Why would membership in topbonus be a good option for someone living in North America? And how about those living outside of Germany in the rest of Europe?
Ganser
Anyone living in the U.S. who flies to Europe just twice annually using a flexible economy ticket is granted silver status. As Air Berlin is the fourth largest carrier in Europe in continental operation, travellers all over Europe benefit from collecting and redeeming topbonus miles. Not only in Germany, but in Spain and Austria Air Berlin offers domestic flights. An award ‘top-deal ticket’ within Europe is only 4,500 miles, for which only one domestic and four European flights are needed. In addition, with only one return flight a month silver status is awarded.

IF
Who do you view as your main competition, and why should a traveler choose Air Berlin over the competition?
Ganser
First, there’s Air Berlin’s high standard of service. Air Berlin has become one of the best known brand names in Germany in the three decades since it was founded. The consistently high quality of service that Air Berlin offers its passengers has certainly had a large part to play in this success. Every year Air Berlin wins awards for the high standard of its service and quality. Take off from 29 euros–including all taxes and charges, seat reservation at check-in, as well as onboard service. It is easy to book flights online, and you’re sure of getting bargain fares. Second, there’s our extensive route network. Air Berlin operates flights to major European cities, as well as to the most popular holiday resorts around the Mediterranean, the Canary Islands and in North Africa. No other airline offers more frequent flights to Germany’s favorite holiday island, Majorca. Since 2007, flights to North and Central America, Asia and South Africa have been part of the Air Berlin Group’s route network.

Dorothy Dowling
Senior Vice President
Marketing and Sales
Best Western International

Probably just about everyone reading this has at some time in their life stayed at a Best Western. After all, they are everywhere–there are more than 4,000 locations in 80 countries. But are they the type of hotel road warriors would be interested in? We posed this question and more to Dorothy Dowling, Senior Vice President, Marketing and Sales at Best Western International. The loyalty program celebrated its 20th anniversary in 2008 with a new name–read below to learn something new about this long-standing program.

InsideFlyer
Best Western Rewards has been around awhile and not too long ago went through a name change from Gold Crown Club to the present name. Can you tell us a little about why the name change? And did just the name change, or was there more to it?
Dorothy Dowling
We changed the name of our program to more accurately reflect what it is–a program that rewards consumers for their loyalty to Best Western. The new name is also part of our ongoing efforts to make sure our brand is contemporary and relevant. Along with the name change we made other improvements to add value to our members. We’ve dramatically increased room night availability and have been offering almost constant promotions during the last year.

IF
How have your members responded to the “new” Best Western Rewards? How many members do you currently have in North America? And worldwide?
Dowling
Response to our new program name has been extremely positive. In fact, enrollment is up by 20 percent over last year–bringing us to 9.6 million members in North America and close to 11 million worldwide. Our recent promotions have boosted this positive response. We’ve had a bonus points, Travel Card or free night offer in the market virtually every day since last fall to help our members earn rewards faster. Our pre-summer offer (stay twice, get a $50 Travel Card to use in summer) and our current summer offer (stay two times, get a free night) were wildly successful, both in the number of people who were able to get the free Travel Card or night, and in the number of new Rewards members they attracted. So we know our members are taking advantage of our offers!

IF
Do you actively continue to get more members? And how do you attract members outside of the U.S.? And once they are members, what do you to to keep them engaged?
Dowling
Best Western was the first brand to introduce customized loyalty programs, and they all have boosted our membership numbers. Our “AAA Preferred” and “CAA Preferred” for members of AAA and CAA guarantee that these members always get our best promotional offers. They also earn 10 percent bonus points for each qualified stay and receive up to 20 percent discounts on their hotel stays. We also have a SpeedRewards program for NASCAR fans and a RideRewards program for motorcycle enthusiasts.

Our promotions also have had tremendous impact on driving enrollment. In North America, each bonus rewards, Travel Card and free night promotion brings in tens of thousands of new members. It’s the same globally–promotions, supported by advertising and public relations, drive membership.

As much as we’re focused on bringing in new members, we’re even more focused on offering great hotels, friendly service and generous promotions to keep our existing Best Western Rewards members happy. Our hotels make a point to recognize Rewards program members and many offer special perks–things like upgraded rooms, free bottled water or a cocktail reception. Our hotels customize their experience to best fit their markets and their guests’ needs. And we are continually adding new and exciting partners to our portfolio–including Southwest Airlines, who we added as a partner earlier this year.

Another important piece of member engagement is communication. In addition to traditional e-mail newsletters, we’re taking advantage of social media. Follow us at Twitter (theBestWestern) or check out our blog (youmustbetrippin.com) to hear about our latest program updates and even get special points offers or giveaways.

We’ve also started a new program with our 100 most frequent travelers–who we call our Diamond 100. Our business travel expert, Chris McGinnis, is talking with these volunteers to find out what they love about Best Western and what we can do better. In thanks, we’ve created a special customer service channel for them and will continue to offer other special benefits as our work continues.

IF
Why should a business traveler choose to stay at a Best Western over a Marriott or Hilton or any of the other hotel groups?
Dowling
We really take care of our loyal customers with lots of opportunities to earn more points and faster rewards. And our loyalty program is global–you can earn and redeem points at 4,000 hotels worldwide. It is one of the few loyalty programs that is truly global. And when it comes to value, no one beats Best Western. We know travelers and businesses must squeeze value out of every trip and every hotel stay. Best Western really views itself as a partner in helping find that value. We respect our guests’ budgets and we respect their time. We don’t nickel and dime for Internet access, phone calls, use of the business center. All are free. Breakfast and parking are free at most of our properties, too. Generally, with Best Western, your room rate is what you pay for your stay. Many of our properties in North America are newly remodeled, so business travelers will find updated guest rooms with great workspaces, and staff ready to provide friendly service.

IF
Looking at your program, one would guess that the Best Western Travel Card would be a popular option for members to spend their points, but what is the most popular way for members to spend their points?
Dowling
You’re right–our Best Western Travel Card is one of our most popular redemption items. People love it because it’s so flexible. It’s basically like cash at any of our 4,000 properties around the globe. Free room nights are actually the most popular redemption item for Best Western Rewards customers. More than half of our Best Western Rewards points are redeemed for free rooms. After that, people spend their points on retail gift cards, especially for stores like Best Buy, Home Depot, Target and Walmart.

IF
Are there any new award options you can tell us about, or any to come?
Dowling
We just started a partnership with Universal Music so Rewards members can redeem their points for music downloads from chooseyoursongs.com. Also new is using points to pay for AAA or CAA membership. And earlier this year, we added World Vision to our list of charitable redemption partners. Members can donate their points to buy things like water purification tablets or backpacks full of school supplies to help those in need.

IF
How has Best Western been weathering the current economy? And how has Best Western Rewards been called upon to help with the bottom line?
Dowling
As you know, Best Western is in the midscale segment. When you look at all past recessions or downturns, the midscale segment usually holds up the best. That is true in this recession as well. In fact, as a brand, Best Western is performing better than the industry. And our Rewards program member loyalty has remained strong.

As I mentioned earlier, over the past year, we have had continual Rewards program offers. When we created our spring and summer promotions, we wanted to help our members make their summer vacations affordable and, of course, give them a reason to stay at our hotels. We know free nights are important, so our summer offer gave travelers a free room after two stays. And our offer last spring gave travelers a $50 Travel Card to use in the summer. Both promotions were extremely successful.

IF
How is it determined how many free nights are available in a particular hotel?
Dowling
In North America, our hotels are required to allocate at least two percent of their rooms for free nights. Our program doesn’t have blackout dates. However, at some of our busiest hotels, it can be difficult to get a free room during peak travel times. In these cases, Rewards members can use their points to buy a Best Western Travel Card (the equivalent of cash at our hotels), and use the Travel Card to cover the room cost. We also have a special toll-free number our premium guests can call to help them get their rewards.

IF
Can you tell us about some of your personal favorite Best Western properties?
Dowling
That’s a tough question! Our brand is so diverse–no two properties are alike and I don’t want to play favorites. But here’s what I can say: When I look for a hotel, I look for a hotel that makes me feel comfortable. My son is on a traveling hockey team, and so we stay at many Best Western hotels during his tournaments. I look at these hotels through a mom perspective, and they have what a sports mom is looking for–guest laundry, healthy breakfasts–Best Western hotels love families and they know how to take care of families. When I’m traveling for business, I love that so many of our hotels have small meeting rooms where I can have a quick personal meeting with a client or customer. They all have free high speed Internet access, and again, I know I’m going to be able to get a healthy breakfast on the road.

Brett Snyder
Travel Blogger
The Cranky Flier

Brett Snyder, a.k.a. The Cranky Flier, is one of the business travel bloggers featured at BoardingArea.com. He’s worked in the airline industry in several different capacities and has been employed by US Airways, America West, United Airlines and Eos. His CrankyFlier.com blog is well-respected and has received recognition from leading publications. The Observer (U.K.) included it in its list of “The World’s 50 Most Powerful Blogs.” We read it because it’s informative, insightful and frequently entertaining.

InsideFlyer
You describe yourself in your blog as an “airline dork.” What is it about airplanes that you like so much?
Brett Snyder
I think it’s a mix of things that appeal to me. The complexity and sheer scientific wonder of it all certainly grabs me, just as I think it grabs most kids when they’re growing up. But I’m particularly attracted to what air travel enables. Because of airplanes, people can see things themselves that used to only be found in books. Families can live across the country or around the world and still see each other on a relatively regular basis. It’s inspiring. That’s probably why my favorite part of the travel experience is the airport environment. That’s where everything begins and ends, and it’s where all the great action occurs.

IF
Why did you first start writing a blog?
Snyder
I actually started writing the blog because a couple of friends made me do it. Seriously. A couple of friends told me that they decided I had way too much random airline knowledge and that others might, for some strange reason, be interested. So they bought me the domain and kick started me. It’s now been three years, and I love doing it. I like putting my take out there on the industry and getting feedback. I like the discussion that gets started in the comments section, and I just have fun writing in general.

IF
Why did you choose the name Cranky Flier?
Snyder
My friends also chose the name. They would playfully call me “crankypants” as a reference to my general demeanor. (It was honestly playful and not a negative thing.) So that became The Cranky Flier when the blog was born.

IF
What is the first FFP you joined and how old were you?
Snyder
I’m guessing that I was way too young to even remember the first program I joined. My parents used to travel with me and my brother a lot. I remember having an old Delta Frequent Flyer card as well as a Pan Am WorldPass card.

IF
Do you have a favorite airline loyalty program and, if so, why do you like it more than the others?
Snyder
I actually don’t really have one. I consider myself miles agnostic when I fly. I don’t fly enough for elite status, and I prefer to just fly nonstop when I can. In a place like L.A., that means there are a million options. I do, however, love the SPG program and I use my SPG AMEX everywhere they let me.

IF
Many travelers are annoyed by the increasing fees for baggage, food and other amenities. Do you view the proliferating fees as positive or negative and why?
Snyder
I think some fees make a lot of sense while others don’t. The baggage fee doesn’t bother me really, probably because I never check a bag. But if someone is checking a bag then I don’t see why they shouldn’t pay more than someone who doesn’t. It makes sense to pay for what you want, but I want to be able to make all those decisions when I book. I hate having to whip out my credit card every time I want something. Just let me plan up front.

IF
What’s your take on United’s elimination of the close-in award fees–do you think this is a positive move for members and do you think other airlines will follow?
Snyder
I wrote about this on the blog, and I think it’s a great move for all involved. For customers it’s obviously great because it makes it feasible to actually use miles closer to departure. For United, the rise of ancillary revenue means that they can still make money on these people. They have to be hoping to increase the number of passengers taking advantage of last-minute booking dramatically. Then they can charge them to upgrade to Economy Plus, charge for baggage, food, etc. It’s a good way to fill empty seats and generate revenue while reducing their mileage liability.

IF
What do you think about Delta’s rollover miles as part of its revamped elite program?
Snyder
I like this idea a lot as well. I know plenty of people who reach the highest elite level they think they can reach and then they go to another airline to try to qualify there as well. The rollover miles should help keep people coming back for more even when they’ve qualified. You never know if you’ll be able to qualify next year (travel habits can change), so if you can get a head start, you’re likely to do it.

IF
How do airlines decide how many award seats to offer on any given route/day?
Snyder
It’s all a function of supply and demand. If you want to go to Hawaii during Christmas, the airline knows that demand for paid seats will be high and they won’t put very many seats out there for frequent flyer redemption. On the other hand, if you want to go to Omaha on a Wednesday in February, there will probably be plenty of seats put out there with the hope that they can fill the plane.

IF
What was the last flight award you booked and how do you typically like to redeem your miles (for domestic or international flights, coach or first class, non-flight awards, etc.)?
Snyder
I actually just booked one, so your timing is good. My wife and I just used American miles to book our return on our Christmas trip to visit her parents. There was a cheap outbound flight, so we just bought that and opted to use 25,000 miles for a saver award in first class on the return since there weren’t any saver coach seats available. I like to save up my miles and burn them where I can get the most value–on big international trips in a premium cabin, but that doesn’t happen very often.

David Canty
Director of Loyalty
Marketing & Partnerships
JetBlue

JetBlue’s inaugural flight was in 2000 and this year, the airline added Central and South America to its list of destinations. The airline currently serves 56 cities with 650 daily flights. JetBlue just announced an entirely new TrueBlue program and members may need to spend some time learning the new rules of the program, especially about earning and redeeming points (read about the changes in the Inside Edition section of this magazine). We had a chance to ask David Canty, Director of Loyalty Marketing & Partnerships, a few questions about why JetBlue changed the program and what members can expect from the new TrueBlue.

InsideFlyer
JetBlue is relaunching TrueBlue this fall. Why did you decide to change the program?
David Canty
No airline is as obsessive about customer service and listening to the voice of the customer as JetBlue. We rely on our customers to let us know when we’re doing things right, and when we could use a little work. The redesigned TrueBlue is a direct result of feedback from our customers who told us that while they loved the JetBlue experience, their TrueBlue experience wasn’t meeting their expectations of a brand like JetBlue. We set out to change that!

IF
How will the new program differ from the existing program?
Canty
The redesigned TrueBlue is all about flexibility. It makes the program valuable no matter if you travel every week for business, or a couple times a year for leisure. Points can be earned very quickly, with the bonus thresholds we have introduced as accelerators. Then if you add the partner opportunities and the JetBlue Card from American Express, customers get to redemption levels a lot earlier than with the existing program or other more traditional programs. There will be no problem finding a seat anymore. We’ve made every seat on every flight available for redemption, and we’ve thrown all blackout dates out the window.

IF
What other FFPs did you look at when developing the new program? And what about input from current TrueBlue members?
Canty
We obviously looked at many–all the traditional airline programs, the innovative Velocity program, Starwood Preferred Guest and other hotel programs. But we also looked at other areas, like retail; there is a lot to be learned from programs like CVS, Best Buy and Tesco, etc.

Our customer base essentially designed the program for us. They were as much the architects of this program as our own team here at JetBlue. We really did take the approach of build it through the lens of the customer, we engaged our online customer panel, JetViews, and got a lot of direction from them. JetViews is made up of 15,000 TrueBlue members and they were more than happy to give us feedback from a number of surveys we did. We asked a lot of questions, gave customers multiple options of what would be important to them in the redesigned program. We took the results and went from there.

IF
What other program structures were considered and rejected, and why?
Canty
The traditional mileage program was considered, but very quickly dispelled, as we didn’t think it gave us the flexibility we wanted. There is also a lot of customer fatigue with this structure; sure there are some airlines that make it work and make it work well, but we wanted to look outside the box of mainstream. We want the customer to get value and we feel that they will relate better to what they are spending versus how far they are going. Therefore being awarded points based on the amount of dollars you spend seemed to be the better fit. I understand that there will be customers and program moguls who will disagree, and I think that is good. I am happy that JetBlue continues to look for innovative ways to deliver customer value. This is endorsed by the fact that JetBlue was voted top airline for the fifth consecutive year for customer satisfaction by J.D. Power.

IF
What kind of elite benefits might we see with the new program, both in-flight features and bonus points?
Canty
We will first off be looking at having a stable technology platform, and we want to invest in our crewmember training to ensure that all of our customers enjoy the JetBlue experience. That being said, we recognize the need to introduce elite benefits to the program. We will introduce multiple earned benefits, like pre-boarding, express security, seat selection, customer events. We will continue to engage with our customers and listen to what they want.

IF
Currently there are very few partner opportunities for earning or spending points. Does JetBlue have plans to add new airline or other partners? For example, are there any plans to offer redemption options with Lufthansa or Aer Lingus or any other carriers in the near future?
Canty
Absolutely. We continue to work with a number of partners (airlines, hotels, car rental) as well as some select retail and life experience partners. When we announce air partners we do anticipate customers being given the opportunity to earn and redeem with them.

It is also important to talk about the value proposition of our JetBlue card going forward. Now you will earn one point for every dollar you spend, and this will double when you pay for your purchases on JetBlue.com. This makes the card a very attractive option as you will be getting to realize redemption levels after $5,000 of traditional spend, which will get you to a one-way award ticket, and as low as $625 spend on JetBlue.com, which will also get you a one-way. That is a value unmatched in this space and we think our customers will appreciate that.

IF
What will happen to the current points that TrueBlue members have in their accounts?
Canty
Customers will be able to take points they earn in the new program and convert them back into old TrueBlue points to get to an award. For some people who are close to an award, that offer will be very beneficial. For others, it will pay to jump right into the new program and start earning and redeeming awards. There is more information available at www.jetblue.com/trueblue/newprogram and we will continue to keep this site updated with the latest information.

IF
Can you tell us about your new point expiration policy?
Canty
In the past, points had an expiration date of 12 months from the date you earned them. I’ll be frank: it was a huge point of pain for our customers. So we changed that. Now points don’t expire as long as you take one flight a year, or you use the JetBlue card by American Express once a year. It’s very straightforward and we like to think it is fair.

IF
It seems that some types of customers (e.g., long-haul flyers on discount fares) will not fare as well under the new program. What you would say are the pros and cons?
Canty
I disagree with that. We’ve put a “Go Long” bonus into the program that rewards those long flights. If you make five roundtrips across the country, we’ll top off your account with 10,000 bonus points. So not only do you get the regular points from your flights, but you get 10,000 bonus points, which is enough for another free roundtrip. So a discount long-haul flyer would probably earn an award faster than they would have under the old system. It is also important to emphasize that the new program is any seat on the aircraft, so no capacity controls.

IF
In your email to JetBlue members to announce the upcoming change, it reads in part, “We will be adding more benefits and more features so stay tuned, there’s a lot more coming your way.” Can you give our readers a hint of what’s to come?
Canty
Our partner announcements will begin coming in the fall. Suffice it to say, we are excited about the partners we are currently talking to–we think they are relevant to our customers and will enrich the program. We also wanted to make sure we offered benefits beyond just the traditional things like flights and cars and hotels. I think our customers will be pleased.

With regard to the additional features, these will all be around flexibility for the customer and keeping customers more connected to JetBlue. Like I mentioned previously, our JetViews panel gave us a lot of great feedback, and some great ideas. TrueBlue will be rolled out in a phased approach and we will be continually updating the program. I am very excited about 2010 and beyond!

Chris Holdren
SVP
Global Web Services and SPG

Starwood Preferred Guest (SPG) has some very active and engaged members, and you could say that some members absolutely love this program. But they are also sometimes the most vocal when things don’t go the way they’d like with their favorite program. Starwood led the way with no blackout dates and now the program is finding itself in catch-up mode after other programs followed their lead and made additional customer-friendly changes. Are they doing well? You can be the judge when you read what Chris Holdren, SVP of Global Web Services and SGP, has to say about the state of affairs at SPG.

InsideFlyer
The stay twice, earn a free weekend night promotion ended recently. How successful was this promotion? Too generous or did it help boost Starwood Preferred Guest membership and revenue?
Chris Holdren
The SPG Free Weekends promotion was a phenomenal success. Both our longtime and new members appreciated the simplicity of the offer and the richness of the rewards. Members loved that they could turn their business travel stays into leisure getaways at our premiere hotels around the world like The Westin Paris, W Hong Kong and The St. Regis Monarch Beach–all of which were among the top 10 most redeemed hotels. SPG Free Weekends has delivered on our goals, and because we look at promotions from a member perspective, there is no such thing as too generous.

IF
Marriott introduced rollover elite nights earlier this year. Have you considered offering this option to SPG members?
Holdren
Interesting you should ask. I can’t reveal too much right now, but we look forward to making an announcement soon about an exciting new way to help our elite members get a head start on earning or maintaining their elite status for 2010. More to come, so stay tuned.

IF
The SPG AMEX has won the Freddie Award for best credit card the past three years. What is it that makes this card stand out?
Holdren
What sets our card apart is that it truly offers the richest return on each dollar of cardmember spend. We’ve run the numbers to see this ourselves, but more important to us is what our cardmembers think. What I love about the Freddie Awards is that cardmembers are the ones voting, which shows us they are seeing and experiencing the benefits first hand, and that is the real measure of success.

IF
Under the current economic downturn with declining average room rates, what can members expect to see when Starwood revisits award categories? How does Starwood determine the categories?
Holdren
The development of the SPG program over the past 10 years has been a blend of art and science. But the way we determine award categories has always been pure science. We structure our award categories based on the hotels’ average daily rates to ensure our members get the strongest redemption value for their earned points.

IF
SPG launched ‘SPG Flights’ with great fanfare last year. How is that program performing compared to expectations? What types of flight awards are the most popular? (Domestic? International? Economy? First? Close-in bookings? Far away bookings? Etc.) In other words, how are members using the program?
Holdren
Simply put, SPG Flights has taken off. Since its launch last year, SPG members have redeemed nearly one billion Starpoints for thousands of free airline tickets. Members are using the SPG Flights program in tandem with our Free Night Awards for cash free vacations to our premiere hotels in places like Maui, Phoenix and Cancun, which are among the top flight destinations. Even with the initial success, we continue to evolve the program. In August we revamped the Web site and bolstered offerings to include increased search functionality, additional languages and the availability of flight insurance.

IF
Starwood Preferred Guest has two official Lurkers on FlyerTalk. Why do you think it’s important for SPG to have a presence on FlyerTalk?
Holdren
Our terrific members are at the heart of everything we do, and two-way dialogue is a critical component of this. We want to be everywhere they are, and our savvy members are spending more and more of their time engaged in sites like FlyerTalk, Twitter and Facebook. Through our involvement in these channels, we are able to foster positive relationships with our most valued customers and add meaningful benefits to their travel experiences–both online and offline.

IF
Does Starwood forecast growth in the number of hotels? If so, will it be through new construction or through reflagging?
Holdren
Starwood continues to remain bullish on long term growth opportunities around the world. In fact, in 2009, we will achieve several critical milestones including the opening of the first Aloft in the Middle East, the 150th hotel in Asia and the first Four Points by Sheraton in India. These milestones are signs of clear progress on our global journey to open more than 80 best-in-class hotels this year, including our 1,000th. While the overwhelming majority of our upcoming hotels are new construction, we are focused on working with developers on quality conversion–or reflagging–opportunities that allow our brands to enter a market to serve our guests.

IF
Can you share with us Starwood Preferred Guest’s stance on offering free Internet for elite members, especially in light of the introduction of these benefits by some other hotel programs?
Holdren
Our Aloft, Element and Four Points by Sheraton hotels already offer free Internet, and W and Sheraton provide free access in common spaces. Right now, our immediate efforts in evolving the program are focused on what our members have told us are higher priorities for them, but we will continue to keep this on the radar as a potential offering in the future.

IF
SPG used to set itself apart from other hotel programs by having no blackouts on redemption. Now that other hotel loyalty programs have introduced this benefit, where does Starwood have a competitive advantage?
Holdren
We are proud of our legacy as a leader in creating groundbreaking programs and rewards like no blackouts. And we appreciate competition as it pushes us to continue to innovate, just as we have done with programs like SPG Flights and SPG Moments. But what has, and will continue to set us apart, is our strong portfolio of best-in-class hotels located in the world’s most highly sought destinations. No other loyalty program can provide its members with insider access to the quality and quantity of upper-upscale and luxury hotels as SPG.

IF
Hyatt has introduced a well-received program for its highest level elites, allowing them to confirm four suite upgrades per year at time of booking, subject to availability. Is Starwood considering anything similar?
Holdren
We know upgrades are important, and while our elite members are upgraded the majority of the time, there is more we can do. In that spirit, we are now piloting a program where Platinum members will receive a confirmed upgrade notification prior to their arrival at the hotel. During this pilot, we expect to gain valuable member feedback and then work to expand the program so even more of our members can benefit.

IF
A unique feature of SPG is its myriad of airline partnerships and the ability to transfer points in most cases at 1:1, although there have been recent changes. Any news to share here? Can members expect the existing points transfer ratios with current partners to stay the same?
Holdren
With our best airline partners, we have a 1:1 ratio. Maintaining that equitable transfer rate is very important to our members and to us. While we already have strong relationships with the industry’s leading airlines, we do look to expand our program to ensure we continue to provide our members with access to airline partners around the world.

IF
Do you have a personal favorite Starwood property?
Holdren
With nearly 1,000 properties in 100 countries, I can’t narrow it down to just one–but I do have a few that immediately spring to mind. I just returned from W Hong Kong–and wow! The hotel captures the energy and chic sophistication of Hong Kong, providing access to all the dynamic destination has to offer. Not to mention the amazing rooftop pool 76 floors high above it all. Contrasting the steel and glass modernity of W Hong Kong is the Hotel Grande Bretagne, which is a longtime favorite of mine. Adding to the old world charm and style, the hotel also offers unparalleled views of the Acropolis, Pantheon and the original Olympic Stadium. And when I want a more relaxed escape, I love to go to the Sheraton Maui Resort and Spa, which embodies the laid back island lifestyle.

Patricia Condon
Public Relations and Events Manager
Virgin America

Virgin America can still be considered the new kid on the block but the airline has made a place for itself in the cities it serves. The airline’s frequent flyer program, Elevate, was announced just about as soon as the airline was announced, but the FFP is taking its time to achieve cruising altitude. The program just recently announced its first airline partnership and will soon welcome its one millionth member. We caught up with Patricia Condon, Public Relations and Events Manager at Virgin America to ask a few questions about the decidedly different Elevate.

InsideFlyer
Virgin America was recently named the top domestic airline in a Travel + Leisure poll and has a loyal fan base. Currently, the airline serves just a few airports. Can you give us the inside scoop of when we might see more destinations? And where?
Patricia Condon
We were thrilled about our Travel + Leisure award and actually serve 10 airports now. We’re still a growing airline–we added BOS, SNA and FLL this year–and we’re continuing to look for new opportunities. We’re one of the fastest growing airlines of all time and we’re seeing good results as well as a lot of demand for our award-winning product. Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston and Orange County. And most recently, Fort Lauderdale.

IF
How many members do you currently have?
Condon
We currently have 950,000 Elevate loyalty members and launched a contest counting down to our one millionth member.

IF
Elevate takes a different route than most airlines for flight credit and redemption–can you explain how it works and why Virgin America chose a different structure than most FFPs?
Condon
Absolutely. At Virgin America, we decided to change the typical model to design a program that was simple, rewarding and flexible for guests. In order to do that, we set it up as a revenue-based model where Elevate members earn five points for every dollar they spend on the base fare. This means guests are directly rewarded for what they have bought. Most importantly, redemption of points in our program is certainly unique. Our key differentiator is to provide guests with the ability to book any seat at anytime. There are no blackouts or redemption restrictions. So, in essence, if you have the points, then you can book a flight when you want. Due to the dynamic nature of our pricing, we don’t have the typical award chart that other carriers show. However, guests can simply toggle between dollars and points on our Web site to see what awards would cost.

IF
Currently, Virgin has partnerships few partnerships. Are other partnerships in the works? Hotel partners? Airline partners?
Condon
Definitely. One of our main priorities as a program is to gain critical mass in allowing guests to earn points through other partnerships. We are planning to launch several hotel partners by the end of the year. In addition to the recent interline agreement with V Australia, we continue to explore a number of airline and ground partners.

IF
Can you tell us more about your partnership with V Australia?
Condon
Sure. Virgin-branded airlines are famous around the world for offering travelers a better flying experience–with low fares and next generation amenities–so we couldn’t be more pleased to sign our first interline agreement with V Australia, an airline known for its innovative service. The agreement will allow our guests to enjoy a seamless “Virgin” experience as Virgin America and V Australia share Los Angeles International Airport’s newly redesigned Terminal 3. The interline partnership offers a new choice for V Australia guests to connect to and from a wide range of Virgin America destinations.

As of June 8, 2009, guests are eligible to earn Elevate points for the Virgin America leg of their journey. By early next year, guests will be able to earn either Virgin America Elevate points or Velocity Points for their travel on Virgin America, V Australia or Virgin Blue flights. Eventually, guests will also be able to redeem their Elevate points or Velocity Points for flights on Virgin America, V Australia or Virgin Blue.

IF
Is there a chance the 18-month expiration might be changed to reset each time miles are earned (like other airlines)?
Condon
We are always re-assessing the value proposition of our program, including expiration policy.

IF
Will there ever be a way to upgrade with points?
Condon
This is not something planned in the very near term, but certainly is a potential change in the future.

IF
Why should a business traveler choose to fly Virgin America over a legacy carrier with a frequent flyer partnership as part of a global alliance?
Condon
We believe travelers will find Virgin America the best value for their money. We’ve got an award-winning service that is unrivalled in the domestic skies in terms of comfort, entertainment and service–all for very low fares. We have a brand new fleet–the youngest in the U.S. Each of these aircraft was retrofitted with millions of dollars in modifications to look and feel more like an upscale lounge, rather than a cattle car. We have custom-designed leather seats throughout (and even lumbar massagers in the first class cabin) and a host of tech-savvy features that give guests more control over their own flight experience–whether they choose to watch the game on live T.V., check out one of 30 on-demand films, create a playlist from a 3,000 MP3 library or plug in their laptop through the power outlets standard at every seat and hook up to the Gogo in-flight Internet to get some work done.

IF
Are there any new award options you can tell us about, or any to come?
Condon
Nothing that we can share just yet. However, we will continue to focus on educating our guests about the value and ease of booking free flights on us. As mentioned, our redemption is dynamic and very low points bookings can easily be found. For instance, there are a number of West Coast one-way flights that can be booked currently for as low as 2,300 points.

IF
And how about a cash and points option for redeeming awards? What’s Elevate’s stance on that option?
Condon
We have actually been exploring this option for quite some time and are scoping out feasibility.

IF
And an elite-level program? Any news to share there?
Condon
In our current program, we are working on a number of initiatives for our Founding Members specifically. In 2010, we will also be exploring a tier program.

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