Hyatt has improved their benefits for top tier elites, while making top tier tougher to earn. They remain uncompetitive at the mid-tier. And they’re diminished the importance of their credit card at a time the rest of the industry is swelling elite ranks through credit card partnerships.
Grand Hyatt San Francisco
Here are 12 thoughts on the new program:
- Hyatt’s footprint is small, and it’s not clear how they get bigger. They’re going to require 60 nights for top status and they’re a chain of 600 hotels. That’s orders of magnitude harder than staying 75 nights at Marriott which is nine times the footprint (and Marriott lets you qualify on credit card spend alone).
Hyatt failed to buy Kimpton and they failed to buy Starwood. Who is left to buy, OMNI’s 60 hotels? Their market cap is about the same size as IHG. At some level they’re probably more of an acquisition target than an acquirer at this point but a hostile takeover would be almost impossible given the extra voting rights the Pritzkers have. In the meantime, they’re focusing on their power stay guests rather than fighting for every guest. That’s a strategy, though given the choice I’d do both.
- Hyatt’s mid-tiers are still relatively unrewarding. Someone giving Hyatt, say, 45 nights gets just 4 stays at club level. Is it too much to ask for a suite upgrade or two?
Club Lounge, Hyatt Regency San Francisco
They incentivize overperforming ‘Globalists’ with additional suite upgrades beyond qualification at 60 nights (an additional upgrade at 70, 80, 90, and 100). It strikes me that offering incentives for more than 30 but less than 60 nights would make sense, and that Hyatt could close the gap with Hilton and Marriott whose mid-tier elites always get club access or breakfast.
- No one loses next year. Anyone qualifying for Diamond in 2016, or at the beginning of 2017, will be top tier in next year’s program. Any current Diamond who doesn’t requalify gets a soft landing.
- Probably the most underappreciated piece of what they’ve done is the sheer amount of notice. They’re making changes to their program, but no one will have fewer suites or give up breakfast until March 2018. So even though the program starts in March (4 months away) they really gave us 16 months’ notice. That’s the right way to do it. Before the year starts, and people begin staying for a set of benefits in the following year, let everyone know what the benefits will look like. As a member I can take almost any change with that sort of notice, it sets a bar and draws a huge contrast with almost every other program.
Room service breakfast, Andaz 5th Avenue
- Marginal Diamonds, who qualified on 25 stays, lose out. Hyatt has decided they were overinvesting in those customers. Some of those customers will leave. That’s a tradeoff, it’s theirs to make. And it’s understandable those customers will be disappointed.
- The Hyatt narrative about caring for guests, making them their best, and building loyalty versus providing a transaction program is… both true and not quite true. Benefits like “Guest of Honor” that let Diamonds gift great treatment when giving friends and family awards generate tremendous goodwill by placing Hyatt at the center of important life events (I gifted a cousin her wedding night hotel this way) but adding a revenue-based way to qualify for status and eliminating the check-in amenity (an offer of food — caring — when you arrive) doesn’t quite match. Neither does insisting that members redeem their free nights on Hyatt’s schedule (120 day expiry) rather than their own.
- Hyatt’s credit card gets less important. The card is already less rewarding for spend than others, I didn’t even love putting Hyatt spend (at 3 points per dollar) on the card compared to earning 3 transferrable points per dollar. But I put $40,000 spend on it to generate 10 elite nights. Starting in March that benefit goes away and you can’t earn more than mid-tier status based on spend, which is the opposite direction from the rest of the industry which now lets you earn top tier status with spend alone at Marriott-Starwood, IHG, and Hilton.
That’s consistent with how Hyatt’s Jeff Zidell explained the role of their credit card five years ago, carrying the Hyatt brand in their wallet rather than becoming the centerpiece of their program. He said they didn’t see the credit card as a monetization play, so credit card holders aren’t as important to Hyatt as their own frequent guests the way they are to other chains.
- Ultimately Hyatt offers the most desirable top tier. That was already true, and they’re stacking more confirmed upgrades, better upgrades when not confirming one in advance, and a dedicated reservations person. That’s on top of the best breakfast benefit (full, not continental, breakfast when a club lounge isn’t available).
- But we don’t know what Hyatt’s new top tier upgrade benefit — which now includes suites when not redeeming a confirmed upgrade certificate — really means.
Hilton and Marriott ‘allow’ hotels to upgrade elites to suites, but do not require it. Starwood requires a hotel to provide the best room available at time of check-in, and actually violates program rules if a standard suite is available and not provided. Hyatt’s rules appear somewhere in the middle here.
They say that the hotel must provide the best room available including standard suites. But they also say there’s no recourse if the hotel doesn’t. We’ll have to wait until the program starts in March to see what it really means. My guess is it will vary substantially from hotel to hotel. Here are the terms, emphasis mine.
Globalists will receive the best room available at the time of check-in at Hyatt hotels and resorts, including standard suites and rooms with Club lounge-access. The best room available will be determined by the applicable hotel or resort in its sole discretion and may vary from stay-to-stay. The “best room” may, but will not necessarily be, of a room type/category higher than that booked by the Member.
Park Hyatt Chennai
- They’re moving towards free nights (with short expiration) in place of check-in amenity points. Free nights are a concrete benefit that people like, although they vex me because it means I have to stress over using them rather than using points on my own time at my own convenience.
- I want to keep my top tier. And I expect I’ll be able to. Hyatt will lose some business from 25 stay Diamonds, they’ll get more from me because this year (while also going for 100 night Starwood Platinum) I’m giving them just 40 nights plus $40,000 in credit card spend and of course a few non-qualifying award nights. Next year they’ll get a 50% bump in nights from me.
- That tells us something about Hyatt’s strategy. They view themselves as the only chain focused exclusvely on upscale. They’re smaller, making a bet on their most frequent guests.
It all would have worked better if they had succeeded in buying Starwood giving themselves a bigger footprint. And launching a new program would have been the perfect way to introduce new guests from another chain to the program (rather than converting everyone at Starwood into Gold Passport). That’s how Starwood brought Westin Premier and Sheraton Club International together and made everyone a ‘Preferred Guest’. Oh what might have been…