IHG targets unhappy Hilton loyalty plan members

* IHG sees opportunity in Hilton point devaluation

* More than 400 mln IHG points to be awarded

By Deena Beasley

LOS ANGELES, Feb 2 (Reuters) - InterContinental Hotels Group (IHG.L) aims to capitalize on any discontent stirred by rival Hilton Worldwide's recent decision to raise the number of loyalty points required for a free hotel stay.

InterContinental, operator of brands like Holiday Inn and Crowne Plaza, plans to give out more than 400 million loyalty points to members of its "Priority Club" program who lost the most Hilton "HHonors" points.

Hilton, acquired in 2007 by Blackstone Group LP (BX.N), said late last year that it was raising as of mid-January the number of points required for a free hotel night -- effectively devaluing members' point balances by about 20 percent.

Under InterContinental's "luckiest loser" promotion, the member with the highest-verified Hilton points balance will gain two million Priority Club points -- enough for about 80 free stays at Intercontinental hotels.

Another 20,000 hotel patrons will share in up to 400 million Priority Club points as compensation for what they are losing under the Hilton program.

"There is a tremendous amount of overlap of our customers with their customers -- as much as 50 or 60 percent," said Don Berg, IHG's vice president of loyalty programs.

He said InterContinental uncovered a "large reservoir of anger" from members of Hilton's loyalty program who saw the point devaluation as particularly unfair given that room rates have softened during the recent recession.

"The most important part of a hotel points program is the ability to redeem them and redeem them easily," said Lu Reynolds, an employee of the federal government and member of both hotel operators' loyalty programs.

London-based InterContinental operates some 4,300 hotels around the world. Hilton, which last year moved its headquarters from Beverly Hills to McLean, Virginia, operates more than 3,500 properties -- under brands ranging from Hampton Inn & Suites to Waldorf Astoria.

"People think about loyalty points as cash in the bank," said Tom Seddon, chief marketing officer at InterContinental. "I think what Hilton did is relatively unprecedented in the hotel business -- a 20 percent devaluation in an economic downturn. It's just strange."

Jeffrey Diskin, senior vice president of global customer marketing at Hilton, said the loyalty program changes simply brought Hilton's terms in line with changes made by competitors over the past several years. (Reporting by Deena Beasley; Editing by Tim Dobbyn)