Finding the best deals, episode 2: making reward points count

Is this for real?

Suppose a night’s stay at a four-star hotel in Hua Hin costs Bt5,000. For the upcoming low season, instead of leaving those rooms empty, the hotel is happy to earn half the published rate. But to retain the “four-star” brand position, the management would not risk announcing a bold 50-per-cent discount. 

Likewise, when business at an international chain hotel’s buffet restaurant is very slow on weekdays, a stronger and more sophisticated co-promotion with a credit-card provider could stir diners’ interest. The card company itself is also seeking a more attractive deal to beat competitors. However, the existing weekday half-price promotion has already left them no more room for a better deal. 

Thus, a frequently applied marketing tactic nowadays is a mix between a special rate and a reward point redemption campaign. From the outside, it might look like a double-tiered benefit to credit-card holders. 

What is really there on the inside? 

If the 30 per cent-off low-season rate offered by the Hua Hin hotel has already cut the price from Bt5,000 to Bt3,500, but hasn’t generated enough attention, the combination of a straightforward discount plus point redemption could surely tempt vacationers. 

After receiving the base discount, customers will be asked to redeem the same number of credit card points – in this case 3,500 – in exchange for the on-top 10-per-cent discount or a cash rebate of Bt350 to be credited to their accounts. 

Can you see that customers are actually paying for their own additional benefits, only in a different “currency”?

When such promotional techniques are used, most customers think they are saving more, while hotels maintain their market positioning and brand image. 

What happens behind the scenes is that customers’ points will be deducted, converted into cash, and transferred to the hotels. 

The same rule applies to the buffet restaurants if they do not wish to go beyond their base discount. A 50-per-cent discount on a fine-dining bill of Bt6,000 leaves only Bt3,000 to pay for the customer. If this deal is still not attractive, then a 3,000-point redemption will earn the patron either an extra 10-per-cent discount or a Bt300 cash rebate. 

Is this something many customers are truly willing to do? 

Yes – especially when customers have earned only a small number of points and, therefore, are unlikely to accumulate enough points to redeem higher priced items like airline tickets or electrical appliances. Rather, they opt to spend points on a small purchase to get direct additional discounts so that there will be less to pay off at the end of the statement cycle. 

Some prefer to save their reward points for free air tickets, but the “point-burner” customers might argue that these days, cheap air tickets can be found anywhere anytime. 

It all depends on the individual card holder: some are happy to grab a discount now, while others prefer to wait and accumulate their reward points. 

 

Janejit Ladpli is vice president of Travel and Leisure Marketing at KTC (Krungthai Card).