The Only Thing Consistent About Travel Loyalty Programs is Complexity. Here’s Why.

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.


Andaz Maui

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:

  1. 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).

  2. 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.

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. What you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

  2. “[SPG Chris Holdren] 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.”

    While other programs just talk about it, Hilton HHonors implements it: As far as HHonors and the individual properties are concerned, there is NO practical difference between award and revenue stays under their loyalty system. That is why I checked in at the Waldorf Astoria Beijing on 12/21/15 for 3-night AWARD stay and was informed that as a valued Diamond member I had been automatically upgraded to a suite — and how sweet that suite was! On the other, HGP DSUs, e.g., are good only on paid stays. It is also why one almost always earns bonus points from HHonors promos even on AWARD stays.

    “Why does Hilton HHonors get the reputation as providing consistent breakfast when there’s no breakfast benefit at Waldorf=Astoria properties?” Because under the Hilton system, properties are granted a great deal of autonomy, which is why you should avoid making such blanket statements because I had FREE full BREAKFAST that was nothing short of a Royal Feast at WALDORF ASTORIA Beijing.

    Bottom line: The HHonors program has not changed since their last big changes in 2012, which were designed to put a lot more distance between their Diamonds and Golds. It is a mature and consistent programs that’s very well run…really.

  3. Waldorf Astoria properties’ exclusion from the HHonors Gold and Diamond elite breakfast benefit is inexplicable, especially since the similarly upscale (if not more so) Conrad brand does provide it. That said, Waldorf Astoria accounts for fewer than 30 of Hilton Worldwide’s 4,000 properties, so the vast majority of members aren’t likely to be affected by this quirky policy.

  4. @DCS hahahaha nowhere did you reply to the point about stays being the same implying that they ought to count for promotions. And award stays in my experience have been treated exactly the same as revenue with both SPG and Gold Passport as well. The only chain that really sticks it to reward stays is IHG, where most elite benefits don’t apply when using points.

    Giving discretion to hotels on delivering benefits isn’t a good thing unless it’s to do more than promised, not less. You still don’t explain why it makes sense to allow Waldorf=Astoria properties not to provide breakfast to Diamond members if they do not wish to.

  5. “Another complete useles post.”

    Mostly useless, I agree, but that’s typically what we get whenever the “thought leader in travel” tries to own up to that label. He would invoke Milton Friedman and wax philosophical to explain why loyalty programs must devalue their points when the reason is much simpler than that: loyalty points awarded but not redeemed, which can run in millions and be worth millions of $$, are a liability that counts against the companies’ bottom line, and devaluing their points is the quickest way to bring that liability under control [especially when members begin to frantically cash in their points ahead of an announced devaluation].

  6. I am in the process of reading this post. Shouldn’t this post be entitled “The Only Thing Consistent About Travel Loyalty Programs is Complexity and devaluations” ?

  7. @Gary: “@DCS hahahaha nowhere did you reply to the point about stays being the same implying that they ought to count for promotions.”

    You must have failed to understand the points I was making because I have no idea what you just wrote means.

    At HHonors, there is NO practical difference between a revenue stay and an award stay, once the booking has been done. All elite benefits are exactly the same under the two types of stays, they both earn elite credit and they are treated exactly the same for the purpose of earning promo points. By contrast, HGP ‘pure’ award stays, e.g., earn you nothing — no stay/night credit, no ability to use DSU, not even promo points in most cases. SPG [r.i.p] may be a bit better in that regard…

    “Giving discretion to hotels on delivering benefits isn’t a good thing unless it’s to do more than promised, not less. You still don’t explain why it makes sense to allow Waldorf=Astoria properties not to provide breakfast to Diamond members if they do not wish to.”

    That was precisely the point: High-end Hilton properties tend to use that discretion to do more than promised! As @Lucky will report after he tries out the HH program, elite perks are more consistent at high-end property than at lower end ones. One is likely to be automatically or mre easily upgraded to a suite a Conrad or a W=A than a regular Hilton or a DT, e.g..

  8. @DCS it’s truly amazing you need to come on here to keep rationalizing your HH loyalty, every single time Gary makes a hotel-related post…we’ll all keep laughing at you.

  9. In regard to the “inexplicable” decision to not include WA in the breakfast benefit, apparently Marriott and IHG came to similar “inexplicable” conclusions. Intercontinental hotels do not offer the same benefits as other IHG chains, ritz Carlton does not offer breakfast like the rest of Marriott. All similar sized operations, all have a different, lower set of benefits for their higher end hotels.

  10. @UA-NYC: “@DCS it’s truly amazing you need to come on here to keep rationalizing your HH loyalty, every single time Gary makes a hotel-related post…we’ll all keep laughing at you.”

    In your informed opinion, why do you think @Gary has this comments section open to all, rather than hidden behind a subscription wall where only his “amen chorus” would chime in? I will give you a hint: he’d like to get different options, especially dissenting ones, that can would diverse and thus enrich everyone’s experience. I am not here to “rationalize” anything. I am here to offer my views on a loyalty program — HHonors — about which I know a lot more than even the host of this site.

    It is typically of narrow-minded folks like you to be adverse to views that challenge their preconceptions, and as a result, such folks almost invariably are and remain ignorant because they never learn anything new…

    G’day!

  11. Though posting from a “smart”phone… Let me fix that: I will give you a hint: he’d like to get different opinions, especially dissenting ones, that would be diverse and thus enrich everyone’s experience.

  12. @DCS – better brush up on your accounting, programs recognize REVENUE and a also a liability against future redemption for which they have cash. When the points are redeemed or expired that liability is recognized as revenue (and in the case of redemptions, nets out those costs).

  13. @Mark S — Also, most, if not all all, W=As outside of the US do offer free full breakfast (I got it last week at W=A Beijing and a couple of years ago at W=A Shanghai on the Bund, each nothing short of a Royal Feast), which leaves even fewer W=As that do not offer free breakfast. Most high-end properties tend to ignore T&C items that would make them less competitive in some locales, like not offering free breakfast in Asia, e.g., where virtually every hotel, even lower end ones, does…

  14. @Gary — I do not need brush up on anything. Devaluation of loyalty points has nothing to do with Milton Friedman, and I did debunk that WITH EXTENSIVE LOYALTY POINT accounting on this very site the last time you invoked Friedman; even a couple of accountants did side with take on it. Find the post… you are good at finding your old posts since you love to cut and past outdated information… 😉

  15. BTW @ Gary, when you wrote above “When the points are redeemed or expired that liability is recognized as revenue”, you provided the reason why programs devalue their points, so you did agree with me! They devalue so that their liability would decrease and the points awarded would count less against their bottom line, increasing revenue. Programs do get giddy when folks frantically rush to cash in their points ahead of a devaluation because it is money in their coffers! HHonors does, in fact, seem to generously reward folks who redeem their points extensively, as they did at the beginning of this year. I got 100,000 points out of the blue from them after I’d redeemed some 700K down to 10K at the end of the previous year. There is a thread about this over at Insiderflyer (MilePoint)….

    Got get ready to fly out of USM (Koh Samui) so…

    …G’day!

  16. RE: DCS – “elite perks are more consistent at high-end property than at lower end ones. One is likely to be automatically or mre easily upgraded to a suite a Conrad or a W=A than a regular Hilton or a DT, e.g..”

    I’d say that this is 100% accurate, last month I stayed at the Conrad Dublin and was upgraded, and today I am staying at the Hilton Vancouver Metrotown (which is not in Vancouver) and as a Diamond member I am on the 4th floor of an 18 floor hotel with a view of rocks and HVAC vents on a roof. They did thank me for being a Diamond member when they handed me the keys to this room next to the elevator though, so there’s that. Hilton status always seems to matter more at high end hotels, and since DCS seems to stay almost exclusively at high end asian Hilton properties, he sees the program as incredibly rewarding. At this point I’ll wait for DCS to attack me and insult my intelligence, lifestyle and travel interests because they differ from his.

  17. @Another Steve — LOL. Relax! It is not often that I find support in this HGP/SPG-is-best-in-the-business bastion called the travel blogosphere, so that rather than insulting you I do welcome your keen observation, one of few in this wilderness!

  18. Gary why don’t you just delete DCS comments they are posted, or block the snotty troll. I’m tired of his stupid comments and the responses dominating the conversations. A real negative.

  19. @Andrew — If you are tired of stupid comments dominating the conversations, then why are you making stupid comments?

    To address your comment more substantively, why do you think @Gary has this comments section open to all, rather than hidden behind a subscription wall where only his “amen chorus” would chime in? I will give you a hint: he’d like to get different opinions, especially dissenting ones, that would be diverse and thus enrich everyone’s experienclty program — HHonors — about which I know a lot more than even the host of this site.e. I am not here to “dominate the conversation”. I am here to offer my views on a loya

    It is typical of narrow-minded folks to be adverse to views that challenge their misconceptions, and, as a result, such folks almost invariably are and remain ignorant because they never learn anything new…

    If you have something substantive to say, then put it out and we’ll discuss it. Whining just does not fit well in this format or medium…

    G’day from BKK!

  20. I’m starting a petition aimed at banning the ultimate troll, never-been-wrong @DCS from commenting here. Perhaps if we can get 50 signatures Gary will consider such a ban…who’s with me??? 🙂

  21. DCS , I just don’t understand why this is so important for you . Do you value Gary’s esteem so greatly that his conceding a point is the ultimate validation to which you aspire ?

  22. “Perhaps if we can get 50 signatures Gary will consider such a ban…”

    How stupid! You do not seem to know Gary very well. He is a lot of things, but what he is not is someone who will run away from a “fight” or someone who will try to win such a “fight” through censorship or by muzzling up of dissenting voices. Also, insofar as some of his income may derive from the amount of traffic on his site, your coming here to waste your time pushing this stupid petition or anyone I compel to post a comment here is traffic and $$ that I generated for him!

    The way I see it is that you feel awfully inadequate because you are not sufficiently equipped “upstairs” to make a coherent point in this public forum. So, I suggest you go get smart quick by boning up on general knowledge on travel so that you’ll be able to engage in some of these debates more intelligently.

    Until then…

    ….G’day from Grand Hyatt Singapore where I just scored a suite upgrade as a HGP Platinum!

  23. @DCS to be clear, if you generated 1000 extra page views that might mean I’d make a dollar. I don’t open up the comments to dissent out of financial interest.

  24. @Gary: ” I don’t open up the comments to dissent out of financial interest.”

    There is no doubt about that. The juice of a discussion group on any topic is usually its comments section, especially if there are variety or dissenting opinions — something that some folks here seem to think you should squash and simply allow only those who agree with you.

  25. In the setting of someone who usually books through FHR – what is the point of building hotel status?

    For example at The Peninsula BKK I got upgraded, enjoyed free breakfast for two everyday, had late check out, free WiFi, and got a free night.

    V

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