Can you be bought?

Meetings & Conventions: Can you be bought? March 1998 Current Issue
March 1998
Can you be bought?

When supplier perks become planner payoffs

BY MARIA LENHART

Thousands of frequent flyer miles on the airline of your choice. A free cross-country roundtrip air ticket. A complimentary stay for two at a luxury resort, with no tiresome site inspection or promise of future business attached.

All of these are tempting offers that many hotels and even a few tourism organizations use to attract meeting business. So what's the harm? Travel benefits are one of the upsides to the meetings business, right? And, all things being equal, why not go with the hotel that rewards your loyalty, right?

Or wrong?

For many planners -- and even some ethics experts -- there is no clear answer. While most everyone would agree that hotel choices should not be based on personal gain, the issue of whether or not to accept points or other rewards for simply booking the business is somewhat murkier. Depending on the situation and viewpoint, one planner's perk is another planner's bribe.

A MATTER OF MARKETING
Ironically, more hotel companies seem to be coming out with point programs for meetings at the same time that concern over the ethics of such programs is growing. The concept is even being adopted by tourism organizations, among them the St. Paul (Minn.) Convention & Visitors Bureau and Tourism Switzerland, each of which offer frequent flyer miles to planners who book meetings in their destination.

But while there may be more point programs in existence these days, the practice of rewarding business with travel benefits is hardly new, notes Randy Pennington, an ethics consultant and president of Pennington Performance Group in Dallas. "What's changed is that suppliers are much more open about it now -- it's become institutionalized," he says. "In the past, a hotelier would just say 'come for a weekend' and that sort of thing. Now there are formal programs."

While not an advocate of point programs, Pennington thinks they're an improvement over how incentives were offered in the past. "The secretive nature of the old system was really bad," he says.

Why are hotel companies, especially given the advantage they already hold in the current seller's market, offering these programs? Hoteliers say they are an effective marketing tool that helps generate business, particularly when and where they need it most. Some hotels offer booking incentives only during their slow seasons, and many of those that offer year-round programs beef them up with double or triple bonus points at certain times of the year. And most company-wide programs offer far more points for booking hotels in less popular locations than they do for those that already enjoy high occupancies.

"It's really helped us fill some holes," says John Lavin, vice president of national sales for Doubletree Hotels in Phoenix, in reference to the company's "Ticket to Success" program, which awards airline tickets to planners who book 50 or more room nights. Originally intended to cover only the last quarter of 1997, the program has been extended until the end of this month.

Similarly pleased with its point program is the St. Paul Convention & Visitors Bureau, which began its St. Paul Meeting Miles program in late 1996. The program, which awards frequent flyer miles on Northwest and KLM, was designed to expire this month; it has been extended for another two years. Why? The city credits the program with generating at least 800 room nights already, according to CVB spokesperson Jean Friedl.

But pressure to keep up with competitors may also be a big reason behind the offerings. "We probably wouldn't have a program if it weren't for the fact that Hyatt and Marriott also offer them," says Brian Stevens, vice president of sales and marketing for Hilton Hotels Corp., which recently expanded its Meeting Planner Bonus Program to encompass all corporate and most franchise properties. However, says Stevens, just three percent of the meetings booked at Hilton hotels involve the company's point program for meeting planners. "We have to match what our competitors are doing and keep things at parity. Sometimes the competing hotels in a given destination are so alike that mileage points can be a deciding factor."

That was indeed the experience for a sales manager with a hotel company that does not have a point program. "I recently lost a good-size piece of business to a competitor because we don't offer points for meetings," he remarks. "I don't like point programs personally, but I'd certainly use them to close deals if I could."

GIFTS UNDER SCRUTINY
But while programs with booking incentives are growing, so are the numbers of companies and associations that are placing tight limits on the gifts or perks that employees can accept from vendors. "Conflict of interest is a huge concern right now, the interests of the individual versus those of the corporation," says Dr. William Brown, president of the Ethics Institute in Sterling, Va., who helps corporations form ethics policies. "Ethics codes are now moving from the theoretical to the specific and, as a result, gifts and perks are coming under scrutiny."

Michael Daigneault, president of the Ethics Resource Center in Washington, D.C., and a former association meeting planner, agrees organizations are increasingly worried about conflict of interest questions surrounding perks and gifts. And he believes point programs for meetings should be no exception.

"Whether it's frequent flyer miles or cash, anything that is intended to influence the conduct of the receiver is a bribe," he says. "If you book a hotel because you're getting frequent flyer miles, you're in a definite conflict of interest situation."

For many organizations, avoiding the appearance of impropriety is equally important. "Even if companies don't believe that it's wrong for employees to accept perks or that the practice influences business decisions, they are concerned with how it looks to the outside world," says Brown. "Organizations don't want to be perceived as being ethically slipshod, so they're doing what they can to prevent it."

Some meeting planners also are sensitive to how participation in point programs might be perceived by co-workers, even if their companies don't prohibit them from reaping the rewards. "My company doesn't have a policy on accepting non-monetary perks, but we have our own policy within the meetings department not to accept them," says Susan Thompson, corporate meeting planner for McKesson Corp., a health-care products supplier based in San Francisco. "While I know that accepting points wouldn't influence my decision, I also know that it would raise some eyebrows within the company. I don't need that."

While Thompson is concerned over perception among co-workers, Tony Pastor, New York City-based site and contract specialist for McKinsey & Company, a management consulting firm, says he is troubled by the negative light point programs may be casting over the entire meetings industry. "In this industry, which has a history of abuses, the last thing we need is a partner putting out a system that is so easily misused," he says.

While Pastor has no problem with frequent guest programs where the person actually staying in the hotel receives points, he "takes great offense" at hotels that offer points for booking meetings and even avoids doing business with them at all. "When I see brochures that say 'now you can earn personal rewards for making a business decision,' I find that very offensive."

He acknowledges, however, that hotels are not entirely to blame. "If point programs do work, then part of the problem lies within the planner community."

On the other hand, Peter Rosenstein, executive director of the National Association for Gifted Children in Washington, D.C., has no qualms about accepting frequent flyer miles from hotels when booking meetings, particularly since he often uses the miles for business trips made on behalf of the organization. "What I consider important is not the fact that I'm accepting miles, but that I don't base my decisions on them," he says. "That's where the question of ethics comes in."

But Rosenstein does believe that organizations, particularly those that book a high volume of hotel rooms, should develop policies on how planner incentives are handled. "It's not a big issue for my association because we don't have many meetings, but I can see where points would be very valuable to those who sign dozens of hotel contracts a year," he says. "I think associations have to make a conscious decision about whether these points go to the individual or back to the association -- there could be a lot at stake."

MAKE YOUR OWN RULES Is it always unethical to accept frequent flyer miles or other travel benefits as a reward for booking a meeting? Ethics experts say a lot depends on how the situation is handled. Here are a few guidelines for ensuring that a perk does not become a bribe.

Make an internal decision about how you feel about booking incentives, and be consistent in your actions.

Never accept anything under the table. If you work for a corporation or association, let your supervisor or board members know what is being offered. If you're an independent planner, let your clients know.

When hotel or mileage points are transferable, let your organization use them to defray such business costs as transporting a guest speaker or staff member to the meeting, or donate the points to charity.

If you do accept points for personal use, take an honest look at whether or not that influenced your booking decision. * M.L.

FULL DISCLOSURE
While point programs are roundly denounced by some planners, others believe the difference between a perk and a bribe has largely to do with how the individual handles the situation. For some, it's a matter of being completely open about what you're doing and making sure all parties with a vested interest know about any booking incentives that have been accepted.

"I don't see anything wrong with planners accepting incentives, but it is wrong if you hide what you're doing," says Pennington. "The key is to be honest about it."

He believes that corporate and association planners should always keep their organizations informed about any perks on the table. And while independent planners have more flexibility in accepting booking incentives than corporate or association planners, Pennington believes they have a moral obligation to disclose any such information to their clients.

"When you're getting a fee from a client and an incentive from a hotel at the same time, that's double dipping," he says. "What I would do in that case is tell the client, 'Look, I'm getting such and such for booking this hotel, but because of that I'll reduce your fee.'"

Michael Burns, director of account management for Conferon, a meeting planning company based in Twinsburg, Ohio, feels strongly that any points received by planners should clearly be stated in all hotel contracts, but says this is rarely the case. "The fact that hotel companies do not disclose the point awards in their contracts makes this a bribe and encourages secrecy," he says. "What typically happens is the hotel sends a private contract to the meeting planner after the meeting is booked that lets them know what they've earned for booking the meeting. The hotels say this is okay because it went out after the fact, but, of course, what it does is entice the planner to keep on booking because of the point program."

FOR THE GREATER GOOD
While disclosure can mean the difference between a perk or a bribe, so can the way in which booking incentives are used. Even the most steadfast opponents of point programs believe donating points to charity or transferring them to the organization for business use makes them tolerable.

"While I don't think it's fair to use the points for private gain, I'm a lot more comfortable with them if they can be transferred back to the association and used for staff travel or in a drawing for members," says Burns. "The points rightly belong to the organization and, especially in the case of an association on a tight budget, I can see where they could be a real help in defraying travel costs."

Adds Daigneault of the Ethics Resource Center, points transferred to the organization are less likely to influence a planner's decision. However, that doesn't necessarily ensure an entirely ethical situation, he says. "The question then arises if it's possible to bribe an institution -- and the answer is 'yes.'"

Complicating the issue is the fact that not all points are transferable. For instance, while Hyatt's point program has recently been modified to allow the awards to be transferred or even donated to charity, Hilton's program allows only the planner enrolled in the program to claim the awards.

Transferable or not, McKinsey & Company's Pastor believes point plans are targeting individuals, not organizations. "Although the points can be used for business purposes, I don't think the hotels intend them as such," he says. "They're promoted as a personal perk, a way to get a free trip."

Pastor even questions the desirability of the travel benefits awarded by point programs. "Most hotels are glad to accommodate you for a site inspection -- without booking a meeting," he notes. "We all have opportunities to travel for legitimate business reasons. There's no need to get free miles or room points for business trips."

APPLES TO APPLES?
While all can be considered sales tools, hoteliers, planners and ethics experts tend to agree that point programs have different ethical connotations than site inspections and business entertainment. Elizabeth Erickson, vice president of group sales for Fairmont Hotel Management L.P. in Chicago, believes there's nothing wrong with rolling out the red carpet during a site inspection or taking a client to dinner, but she has doubts about the integrity of offering frequent flyer miles as a booking incentive.

"If I take someone to dinner or to a ball game, that's relationship building," she says. "But point awards are not about relationships, they're about putting the customer in an awkward situation where he's tempted to choose a hotel because of points."

Daigneault agrees that the relationship element is a distinguishing factor. "If a hotel sales manager takes a planner out for a social event, it's a sales evening," he says. "But if the sales manager just gives the planner the tickets, it's a bribe."

He also sees a difference between point programs and site inspections. "Site inspections are an educational tool, not a gift or perk," he says. "Of course, if you take one to a place where you'd never book a meeting, that's not ethical, either."

While Rosenstein acknowledges the difference between business entertainment and point awards, he also says the difference is blurry at times. "Frankly, I don't see why it's worse for a hotel to offer frequent flyer points than a lavish two-bedroom suite during a site inspection," he says. "In each case, you have to decide for yourself what's right to accept." *

YOURS FOR THE BOOKING Despite the seller's market and growing awareness of business ethics, point programs and other booking incentives aimed at planners aren't going away. If anything, they're growing in number and sophistication.

Regal Hotels International cuts right to the chase with its Regal Dividends program, extended through Dec. 30, 1998. Planners earn everything from jewelry and china to exotic vacations, based on the volume of meetings they book. A meeting generating $200,000 qualifies the planner for a $10,000 travel certificate; $100,000 to $199,000 in revenues generated earns the planner a $5,000 certificate, and $50,000 to $99,000 buys a $2,500 certificate. Merchandise awards, for bookings worth $5,000 to $99,000, include gold watches, diamond bracelets, a crystal bar service and more.

Hyatt, Hilton and Marriott dole out points for meetings. Hilton offers a Meeting Planner Bonus Program that lets participants earn 5,000 frequent flyer miles on a wide choice of airlines for every meeting booked at a Hilton property. If they prefer, participants can instead earn HHonors points redeemable for free stays at Hilton properties; a two-night meeting earns up to 24,000 points, enough for a free weekend night at many Hiltons. Points are nontransferable.

Hyatt recently doubled the earnings in its Hyatt Meeting Dividends program, enabling participants to earn up to 50,000 Gold Passport points per meeting or enough for five free nights at Hyatt properties. Frequent flyer miles (5,000 per meeting) also are an option. Along with awarding points based on room nights, the program also doles out points for catering charges. All points are transferable, and participants may choose to make a charitable donation in lieu of receiving points.

Marriott also offers a point program to planners but declined to comment or provide information about it when contacted by M&C. "It exists, but we don't promote it," said Beth Viero, spokesperson for Marriott International.

Inter-Continental, which recently offered frequent flyer miles for winter meetings booked at its hotels in Chicago, New York City and Washington, D.C., plans to roll out a new program this spring called Meetings Options that will include all of its properties in the Americas. When a meeting is booked at an Inter-Continental hotel, the planner will be allowed to select from a menu that includes frequent flyer points as well as complimentary meeting components, such as receptions and group airport transfers.

Doubletree Hotels is offering a Ticket to Success program through the end of this month that lets planners earn free airline tickets on American, United or Alaska when booking room nights at participating hotels. With 50 rooms booked, planners receive one ticket; with 100 rooms, they receive two. (As of press time, the chain had not announced plans to continue the program.)

Hotel companies aren't the only ones putting incentives on the table. The St. Paul Convention & Visitors Bureau introduced the St. Paul Meeting Miles program in 1996. Scheduled to expire this month, the program has been extended through March 31, 2000. Planners who book meetings in St. Paul receive WorldPerks Miles on Northwest and KLM based on the number of room nights booked. Awards range from 3,000 miles for every 25 to 50 room nights, to 25,000 miles for more than 500 room nights.

New from Switzerland Tourism, the country's national tourism organization, is the Switzerland Conference and Incentive Club. Described as a destination loyalty program for planners, it offers club members a range of benefits, including mileage points on Swissair and Delta for every room night booked in Switzerland. * M.L.

Can you be bought?

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