Hyatt CEO Mark Hoplamazian demonstrated again in his quarterly earnings call that he doesn’t understand the value proposition of his loyalty program.
We believe the World of Hyatt loyalty program reinforces brand preference amongst our most elite guests. And an increase of approximately 20% in new members over the past year supports that belief.
An increase in new members is not surprising. Hyatt, like other chains, offers a room night discount for joining the program so they sign people up for the program. That’s the experience other programs are having, too, with the introduction of member discounts to encourage direct booking.
New member signups are entirely distinct from the chains “most elite guests.” It would be one thing for him to talk about the behavior patterns of elites — how many nights they’re staying, how much they’re spending, the delta year-over-year and how that compares to the industry as a whole (both occupancy and average spend are up across the board). But new member signups say nothing whatsoever about the elite experience.
Hyatt’s new program was all about cutting costs. They eliminated check-in bonus points or food and beverage amenity and replaced those with rapidly expiring free nights (breakage). They eliminated the need for hotels to provide turndown service (labor savings).
Nonetheless the introduction of more confirmed suite upgrades (which historically the program didn’t pay for) and space available suite upgrades is a positive. Providing top tier members with a dedicated reservations agent they can contact by email is at least a strong plus theoretically (providing a ‘Starwood Ambassador’ but at 60 nights instead of 100) however the execution has ranged from poor to uneven.
Focusing on member signups though, a program is built to do two things:
- Recognition (elite experience)
- Reward (earn and burn)
It’s the earn and burn proposition that’s most directly relevant to general members. And I’ve written recently about challenges that some hotels — like the Andaz Maui and Hyatt Regency Aruba — give the chain with redemption. They play games with inventory, creating new inferior room categories with only a handful of rooms in order to keep members from redeeming points.
The striking thing I’ve mentioned is that the Andaz Maui is actually owned by Hyatt, this isn’t a franchisee running rogue. Hyatt plans to sell the Andaz Maui (and the Grand Hyatt San Francisco as well as Hyatt Regency Coconut Point).
Our near-term plan is to execute on what is initially being packaged as a portfolio transaction involving three hotels. Two of these assets Andaz Maui and Grand Hyatt San Francisco will be considered part of our $1.5 billion asset disposition program, based on the nature and value of those hotels. The third asset Hyatt Regency Coconut Point will be treated as part of our asset recycling efforts.
Grand Hyatt San Francisco
Perhaps the Andaz Maui will get some of the capital investment it desperately needs from a new owner, and perhaps Hyatt will be willing to muscle a new owner on award availability the way they haven’t done with themselves.
Meanwhile Hyatt recently hired new leadership for the loyalty program, and circumvented the Chief Marketing OFficer in the reporting structure. Then they let go of their Chief Marketing Officer. Everyone is going to claim victory with World of Hyatt but that’s most telling.
And Hoplamazian seems to know it suggesting that now they think they’ll better engage their members,
With the addition of new World of Hyatt leadership in 2017, we have a team that is intensely focused on delivering value and distinctive experiences for our members. We’re confident in our ability to further enhance World of Hyatt to elevate the engagement of our loyal customer base.