MickeyCrimm made a bunch of great posts in this thread about working the system to maximum benefit, and I should imagine the same is true (to varying degrees) at most, if not all, major hotel chains.

One thing that one of the franchisors did once---and this sucked---is that they made it possible to straight up purchase points from the franchisor's own website. This was also the case at the chain of hotel I managed, at one point in time. Looking at the site, it appears that they still offer this, but I can't see the specific point costs without logging in, which I'm not inclined to do.

The main thing that sucks for hotels is that this is just another way to circumvent the hotels garnering a decent rate on the room and just allows the franchisor to make more money for themselves. The value side of the equation definitely favors the franchisor over the hotels, especially when you consider that the franchisees are already paying the franchisor a percentage of all of the room rates anyway, and even more if the guest books through the online channel...which they have to do to qualify for the majority of the promotions. I think that the highest card level can book hotel direct and qualify for anything, at least they could, but that might not still be true.

The franchisors will sometimes offer a credit card, which is even more wonderful news for the hotels. There are a few reasons:

1. Getting the credit card will often have a certain amount of points associated with opening the account. There are also points incentives to make purchases with the credit card outside of the hotels. As most of you probably know, credit cards do not make money ONLY on the interest that they charge their customers, (otherwise, why would they offer points or cashback?) but also on the percentage of the transaction that they charge to merchants. Though it's not as common now, that's why many smaller businesses often did not accept Discover and/or American Express: (but would accept VISA or MasterCard) and that's because Discover/Amex has/had higher merchant fees...by a lot.

So, it's basically just a way for the franchisor to make more money as well as whatever bank the credit card goes through. In the case of points on hotel cards, this usually ends up materializing in the franchisor getting all the benefits while the franchisee has to eat providing the guests with all of those free nights. The free nights reimbursement for this chain (unless sold out) was sometimes not even breakeven cost, unless you were sold out or could make it appear as if you were sold out, then you got 90% of your ADR for the night.

2. I don't know if it has to be with the franchisor's own credit card, but the guests being able to buy points is a pain for the hotels. They sometimes will do discounted offers to buy the points or have bonuses for their own cardholders on buying points.

Depending on what is going on and how savvy the guests are, this can also be a pain in the ass for the hotels because it results in even more free nights. On rare occasions, (particularly special events) the guests could buy the full amount of the points needed for the night and after factoring in all of the bonuses, and what have you, they pay less for the room than even the room rate would have been.

Usually what would happen is a guest would be a small amount of points short of having a free night anyway, so they would buy points such that they had just enough for the free night. While still not ideal for the hotels, this is at least reasonable and I think the originally intended purpose of being able to buy the points.

More on Points Stays

The biggest problem with the points people, though I do not think this is something that MickeyCrimm would do, is that many of them are completely underhanded. Remember, Points cost the franchisor essentially nothing, so it's the individual hotels eating most of the expenses associated with this and hoping the franchisor just pays them enough (based on their arbitrary, "Demand seasons") in compensation just to break even on the rooms.

Anyway, many of the points guests knew that the franchisor would reimburse the points, almost without question, and all they had to do was complain about something. The worst part is that these complaints almost always (more on that later) stuck because the big points people are where the FRANCHISOR makes the most money, even though the individual hotels make very little on them and often lose money, all told.

At the time, the cost to the franchise for a guest being refunded points was at a rate of $10/1,000 points. Think about this for a second: If you have a guest book a stay that requires 8,000 points, but then they turn around (after checking out with no complaints, naturally) and the franchisor offers them a full points refund...that means that the hotel just got billed $80 from the franchisor. In some cases, that would be more money than we would have even charged for the room had the guest been paying directly.

---So, you would THINK that it would be at least more fair for the franchisor to refuse to reimburse the franchisee for the night, right? Of course that would be more fair, but the next time the franchisor cares about what is fair will be the first. So, here's how it would work:

Hotel Compensation for Room: $25-$35

Points Refunded to Guest: 8,000

Net Result for Hotel: ($45)-($55)

In other words, the guest stays at the hotel for free, the franchisor MAKES a profit (from the hotel) if the guest complains AND the hotel directly loses money. Keep in mind that this is ACTUAL money loss that doesn't even take into consideration the possibility of opportunity cost because, in some cases, the room could have been rented to someone else.

COMPLAINTS

Finally (at least, for now) let's address guest complaints and WHY the only thing that we cared about was not having complaints that would, "Stick," with the franchise.

The way that this franchisor worked was that they had complaint, "Quartiles," which referred to how many complaints per 1,000 room nights a hotel would get. I don't know if it still works this way, but at the time, this was NOT even differentiated by chain or class of hotel.

In other words, since we're cheaper on points (also, on money, but some guests don't seem to care about that) guests that would usually stay at better (name and often in fact) hotels would come use their points with us expecting the same experience...even though that expectation is totally ridiculous for any possible number of reasons.

Therefore, we effectively became a hotel chain more likely to have a high amount of complaints/1,000 just because we had a bunch of people staying there who, arguably, shouldn't even really be staying there.

But, the complaints do not just come from the points guests, of course, they can come from anyone. The majority of them came from the points guests, though, because it didn't take them long to figure out that the franchisor would refund their points almost without hesitation...and why wouldn't they? They make money off of the hotel every time they do.

The most important thing was avoiding the fourth quartile. The good news for us was, despite being MAYBE an ever so slightly better than average hotel compared to the rest of those with the same flag, we were in the first quartile. That takes a lot of preventive and proactive action, though....and maybe a little luck.

The luck came from the fact that complaints/1,000 goes by room nights, not by number of unique bookings, and we had a lot of weekly and other long-term guests. The benefit there is that if they complained, which they almost never did, it would still only represent one complaint for however many nights, whereas a guest who stayed one night complaining is obviously 1/1.

The preventive/proactive measures came from showing the guests the rooms ahead of time, ESPECIALLY with points guests. I would not give a points guest a room without personally showing them the room first. These are the sorts of reasons why I worked B Shift despite the fact that most hotel managers work A shift. Anytime I had a company calling about a group contract, or something, I would just have the front desk clerk call me at home or on cell and I would call the company back during the day.

So, I would show most online bookings (other than TPW's, but even then sometimes) and absolutely ALL points guests the room first and give them the option to cancel the reservation at no charge or with the points fully refunded, whatever the case. Unless we were sold out (90% of ADR thing) there was ZERO benefit to having the free nights guests, as I mentioned, the hotel was risking losing money.

At that point, the guests would sign a separate form that I offered them the opportunity to either cancel at no charge, or cancel and have the points refunded, whatever the case. Because I did that, even if the guest would complain to the franchisor, the complaint WOULD NOT stick on our complaints/1,000. Better still, even if the franchisor chose to give/refund the guest points, (almost never happened if the guest was offered no charge and declined in the first place) the hotel would not be billed for those because the hotel had already offered a no charge cancellation. That's probably another reason why the franchisor rarely offered points in that event; there was no money to be made from the hotel by doing so.

So, the key was to offer basically everyone the opportunity to cancel at no charge, even if they hadn't complained about anything. If a guest did complain within at least a non-ridiculous timeframe, (as in, not the following morning) then you just offer them a full refund on condition that they check out of the room within the next fifteen minutes. If you did either of these things and the guest declined your offer, (ESPECIALLY if they signed a separate form stating this) then the franchisor couldn't touch you.

In many instances, the guest didn't really have a problem with the room, or they did, but they considered it a lot more trivial than they were repping. They would often counteroffer me that they would take a 50% discount and stay. I would say, "We do our best to strive for the utmost in guest satisfaction and would hate nothing more than to have a guest pay ANYTHING for a stay with which they are not satisfied. Therefore, I am extending to you the offer to check out of the hotel at no charge, or you can keep your room at full charge, if you so choose. There is no alternative offer. If you are unsatisfied with the accommodations, then we are only too happy to further refund you and make calls to determine what nearby lodgers have rooms available that may be more to your satisfaction."

Smart guests wouldn't complain until the following morning. I basically had to give them a discount, or points, if I wanted to avoid them making a complaint to the franchisor that would stick. I used to offer 25% off most of the time, until I realized that most guests thought 1,000 points meant something and would accept 1,000 points---which only cost the hotel ten bucks.