Travel loyalty programs have gotten more complex. Even where there are underlying philosophies, programs don’t stick to those consistently. They seek to meet the needs of tens of millions of members, while changing year-over-year based on the immediate perceived needs of the business.
Occasionally programs revisit their benefits and structures, but too often that’s done again based on immediate business needs rather than a view towards the long term (though – skewed by those immediate needs – programs often think they’re restructuring for the long term).
Let’s take a look at differences between hotel and airline programs as one place we can start to see this. In general hotel reward nights counts towards qualifying for elite status. They count as qualifying stays and nights with:
- Hilton HHonors
- Starwood Preferred Guest
- IHG Rewards Club
- Marriott Rewards
Marriott Seattle Airport
Hyatt Gold Passport now stands alone among major hotel loyalty programs in not counting reward nights towards elite qualification (although their cash and points awards do count). Perhaps Hyatt’s new CRM system will allow them to make this switch eventually.
That’s interesting because no airline program intentionally counts reward travel towards elite qualification.
When I visited with Starwood Preferred Guest in advance of their announcing a whole bunch of program changes about four years ago, the head of the SPG program Chris Holdren explained the change to count reward nights towards elite status. He said that it shouldn’t matter how someone was paying for their stay, they were still staying with Starwood and should be treated the same way.
W Union Square
That’s not quite right of course — Starwood Preferred Guest doesn’t count points stays towards promotional earning. Interestingly Hyatt does when staying on cash and points. I assume that’s a systems limitation. There’s a cash rate, it triggers a stay, and the juice necessary to change that wouldn’t have been worth the squeeze. Hyatt’s IT has historically been more limited than other chains’.
- Hotel programs treat earning and burning more revenue-based than airlines.
- Hotel programs treat elite status as more about loyalty, wallet share, and time spend with the brand than airlines (straight stays and nights and not spend).
At some margin Hilton is an exception to this because they:
- Vary the price of an award night at a given category based on seasonality/price (their reward prices are ranges rather than being fixed to a category).
- They will award status not only based on stays or nights but on base points which are a function of spend.
Still, hotel programs are simultaneously more revenue-based (earn/burn rewards) and less revenue-based (status) since the major hotel loyalty programs don’t have minimum spend requirements the way that United and Delta do.
It’s also not 100% correct to say that airlines don’t credit award trips. For instance, british midland used to happily credit awards. If you booked a Star Alliance first class award between the US and Southeast Asia using United miles, and sent the boarding passes to bmi for credit, you’d earn enough miles in bmi’s Diamond Club to:
- Earn Gold elite status (Star Alliance Gold) in their program
- Have enough miles for a ‘cash and points’ business class award roundtrip between the US and Europe
bmi wasn’t the only program that would do this, of course, and back in the day it was quite common for members to double dip with partners. Although there was always a risk — get caught and have your accounts shut down, so I wouldn’t do this myself.
But airlines haven’t intended to reward time spent in the air, such as when spending points.
It’s an interesting dichotomy because until the past couple of years it’s airlines that have been more about wallet share and loyalty than hotels, given that hotel programs have based points-earning on the basis of dollars spent.
Except, of course when hotels haven’t — even with a revenue-based earning system, you still need to incentive certain transactions. There are slower times of year when you want to ramp up your marketing spend to put heads in beds. There are new properties and new brands. And then chains get into competitive bidding with each other. In other words, they layer promotions on top of base earning. And those promotions often aren’t strictly based on spend (stay X times or nights, earn Y points or nights).
There’s no philosophically consistent approach and that’s largely a function of expediency and needs at any given time. Consistency and philosophy give way to the incentives facing a program manager at any time. The programs are large, the program’s networks or flights or hotels are large, and the needs are varied. So complexity gets built on top of complexity.
There’s little inherent a priori logic. Why does Hilton HHonors get the reputation as providing consistent breakfast when there’s no breakfast benefit at Waldorf=Astoria properties? Diamonds used to receive a bonus amenity at check-in, but now it’s a choice benefit for instance at Hilton Garden Inns you can choose breakfast throughout your stay… or a flat 750 points (worth less than $4).
Every so often it does make sense for a program to step back and re-evaluate whether the past choices they’ve made still make sense rather than simply building on those past changes. The thing is, though, that those re-evaluations rarely benefit the member. Sometimes they do.
- Hyatt Gold Passport completely revamped its program in spring 2009 with positive changes across the board — confirmed suite upgrades and guaranteed full breakfast or club lounge for Diamonds, internet for all elites, and elimination of capacity controls on award nights for everyone. There really weren’t any downsides.
Park Hyatt Maldives
- Club Carlson replaced Goldpoints Plus with a really generous earn-burn program, and introduced second night free on award redemptions with their co-brand Visa (which they later eliminated). The only real downside to the breakaway from the old Goldpoints program was the loss of ‘Our World, Your Lounge’ at Radisson’s Europe, Africa, and Middle East properties — welcoming all elites to use the internet and have a free coffee even when not staying as guests.
So there are no hard and fast rules, only tendencies. And the tendency to devalue – which isn’t universal – is consistent with the trend towards rewarding less across the board, tying rewards to spending (while rewarding even high spend less), and then making tweaks to the less rewarding model as business needs dictate.
Business decisions made in isolation compound over time taking what was once a simple program and making it complex. Multiply that out over tens of millions of members that a given program is trying to serve and tweaks along the way get made which only add to the complexity.
Delta and United didn’t get rid of elite qualifying miles. They simply added on elite qualifying dollars. United devalued its award chart a couple of years ago, but as a sort of give back introduced a whole new add-on chart for United-only travel (or travel where United is the primary carrier). American simplified their program several years ago as the first major US carrier to offer one-way awards. But they introduced a whole new set of rules that aren’t even published on their website to limit how those awards could be constructed.