The initial contract is for 55,000 smartcards, which will be used in the UK and across Europe. Launches will follow in America, Australia and Asia, taking the total number of cards to more than 250,000 by 2003.
The announcement is a welcome boost for the smartcard industry, whose technology has not been widely adopted by industry, despite early high hopes.
The hotel smartcards, designed by specialist Gemplus, will combine a smartcard chip and magnetic stripe technology.
The computer chip inside a customer's card will hold details of his or her personal profile and payment and discount details.
This information will allow the hotel to better understand customers' needs and tailor services to suit their preferences, Millennium & Copthorne said.
Hotel receptions and points-of-sale will be equipped with smartcard terminals. The terminal reads the chip on each card and transmits the day's transactions to be processed.
Customer data from the loyalty scheme will be held centrally and can be be accessed through the terminals or online through a Web site. This will allow customers to join the loyalty scheme online, see their rebate records and make reservations.