Transaction vs. Relationship

I’ve been a Hilton customer and a Hilton Honors member for years. You wouldn’t have known it when I checked into Chicago’s Palmer House Hilton last week.

As I left home in the north suburbs for day one of a two-day conference, I threw a change of clothes into the car. A late-afternoon snowstorm was forecast, and I wanted the option to opt out of a hellish commute home. At about 4:30 p.m., I exercised that option and booked the Palmer House on for $93. That’s a really low price for a great hotel. Unfortunately, they felt the need to remind me what a low price I paid.

At check-in, I asked if my Hilton Honors number was in my reservation record. The front desk agent said that I wasn’t eligible for Hilton Honors points. “If you book on Hotwire or Priceline, you don’t get points.”

Hey, I know the price is low. But that’s not my fault. That’s the Palmer House’s problem. In fact, it’s not really their fault, it’s their fortune. I wish I had such an efficient business faucet when I was in the hotel business—when I put up the first hotel company website in 1994 for Hyatt Resorts, selling rooms and managing inventory online seemed, literally, like 2001: A Space Odyssey.

If a company wants to sell distressed inventory at a low price to a long-time customer, I highly recommend that their frame of reference is the relationship with the customer, not the price of the immediate transaction. The Palmer House has to pay into a redemption liability fund for each Hilton Honors reservation, but, I believe, it is a percentage of the rate they receive, not an absolute number. (I’ll try to verify that—if anyone knows for sure, please comment.) It’s this simple: If they want my business at times when the market rate for a room is $250, they should really recognize that it’s still the same “me” when I buy a room at the market rate of $93.

(And, notice that the front desk agent didn’t say, “Mr. Yastrow, since you booked on Hotwire this time, we can’t give you points.” She said, “If you book on Hotwire or Priceline,” which translates, “If you’re one of those people who book cheap.” Don’t call your long-term customers “one of those people.”)

Steve Yastrow posted this on December 18, 2007, in Marketing.
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