For years, being a triple fudge diamond MVP executive elite was a part of a persons existence, fiber, Twitter bio and maybe even Linkedin profile, like the way people write “proud New York Islanders supporter.” Maybe that’s just me. Go Isles!

When life is constantly, literally, up in the air or crashing onto a hotel mattress, an elite status is a part of you, with the program acting as a blanket of comfort and familiarity while you travel to new or uncertain places.

It’s a belief that you’ve invested in yourself by being savvy with your travel decisions and that as a result, you have a travel brand which cares as much about you, as you’d like someone to. You go out of your way to stay loyal, and hope that they, in turn, treat you accordingly.

For many, it seems those days are over — and programs have only themselves to blame.

Loyalty Programs Are Under Threat

From the jump, let’s remember that loyalty programs are extremely sound and logical concepts designed to extract extremely unsound and illogical behavior from people, as a result of stickiness created. The faster the hamster wheel spins, the harder it is to get off. The faster it spins, the more “extra” people spend.

It’s taking the flights with more connections and terrible departure times, just to get priority boarding, or picking the hotel on the wrong side of town, just because they do a great elite breakfast.

They’re designed to extract money from you which you did not intend to spend, or to get you to forgo easier options with competitors, to unlock some kind of benefit. Each “extra” purchase is another win in loyalty world.

After more than a year when most people weren’t able to keep up pre-pandemic travel levels, when too many brands held onto their money; and familiarity at the local pizza place trumped familiarity at the boarding gate or hotel lobby, many people now feel detached from their elite status, and questioning whether they’ll ever “dive in” again.

The hamster wheel stopped, and a lot of people realized that they were in fact on a hamster wheel, and not in logical control of their travel, after all. That’s actually sound and logical thinking, for a change.

Making things more complicated, once restrictive hotel benefit programs became more publicly available to people, and a la carte services which allow you to add perks as you wish, rather than earn them, have become more mainstream with airlines.

GSTP Premium members have access to hotel booking benefits which trump most mid tier elite status perks, without having to pledge any loyalty or jump through hoops at all. The benefits are similar to those which a mid to even top tier guest would receive, just for booking the right way. Forget going out of your way to earn enough nights!

Marketing Is No Longer Good Enough For People

“But this status comes with 8 suite nights”. An elite status is only as good as the value you extract from it. If the main elite benefit is a free checked bag, but you never check a bag, that’s a problem. If a main benefit is suite upgrades, but they’re never available when you want them, that’s a problem.

In an increasingly metric and data driven world, delivering real, quantifiable results is the future of loyalty. Unfortunately for airlines and hotels, that’s going to mean less of the marketing mumbo jumbo, and more of the nuts and bolts “wins” customers can unlock. Yes, just like video games, people love to ‘unlock’ things.

An upgrade shouldn’t be wrapped and dragged in red tape. Hoops should be set sufficiently so that anyone who earns one, is free to use it with as little resistance as humanly possible.

They unlocked it and they want to have fun with it right away.

When times were good, loyalty programs did little to make benefits more accessible. Instead, the focus was put on safeguarding benefits, so that they “sounded” great, but weren’t often as useful in practice, to help protect revenue.

Now, even with the floodgates on perks and points opened to the tilt, people aren’t bothering en masse. Airlines and hotels have tried just about everything to get people back into their loyalty program wheels, but performance metrics continue to lag.

It’s why airlines and hotels continue to begrudgingly roll out elite status extensions. Without these people even remotely engaged, feeling like there’s something to ‘unlock’ it’ll be even more of a bloodbath than it currently is.

To be clear – I still care about status. I hold top tier elite status with two major competing airlines and top tier with a global hotel group. At least one, if not two of those will go away this year though, if not automatically extended.

If they’re not, I’m not jumping through hoops to regain them. I’m focusing more on easy wins, and only one is creating them for me at present. The things I’d lose from others, I can pretty much just buy a la carte.

There’s A Way Out For Everyone

I love the “game” of loyalty, in part because I feel that I approach it from a logical perspective. I rarely go out of my way to achieve something, and only do, if I know that it will create an “unlock” or “win” for me, that exceeds the value of the effort I put in.

Even in those scenarios, both parties typically win.

They got me to spend more, or ignore a competitor, and the thing I value as a win worth achieving, is mostly a sunk cost for them anyway. The value I perceive to get is far more than what it actually costs them. If I spend extra money to unlock an upgrade, it’s not like they need to build a new hotel or airline seat to accommodate it.

If loyalty programs go back to simple, easy to understand benefits, but present them in a fun, personalized an gamified way, it’s going to be a lot harder to resist than a boring email saying “hey you, earn double points”. Woopdie effin’ do, i’m at home chillin’ with my wine.

That’s where we are today, and it’s not good enough. To do better, loyalty programs need to hit members, like you, in places you already are, and make it painless in every way to benefit. One touch signups, which last forever.

They need to integrate better with daily consumer brands beyond simple credit card rewards and they need responsive and fun apps, with visual call outs and games to make loyalty creative.

Ironically, this was how loyalty started, but the bean counters took too much control, once they realized the power. I’d argue they made loyalty less effective in the process. If you’re feeling disenfranchised from loyalty, you’re not alone. The game isn’t as fun as it once was, as any frequent traveler from the glory days will tell you.

Actually, that’s a fairly straightforward and simple approach! Spent far too long trying to retain a card in order to queue up at the crack of sparrows for a free coffee when there is a perfectly decent and good coffee shop empty next door…

Most of all, loyalty programs need to offer “choice” again.

What good is a free welcome to drink to someone who doesn’t drink?

What good is lounge access for the member, plus one, when traveling as a family of four? Guess what: no good. It either causes fights, abandonment of the perk or the need to beg outside of a lounge for someone to guest the other two in, during what’s supposed to be a relaxing vacation. What fun is that?

Why not retain lounge access for the member and a plus one, but create a game within a game for a set number of buddy passes, or being able to trade away perks you don’t like, for extra ones you do. That way, the whole family sees the benefit of loyalty, which can then actually push people to lean in further!

This is just one of a million examples where one size fits all loyalty is dead.

Ultimately, technology holds the key to most of the great wins ahead, but airlines and hotels are slow to prioritize technology spend in loyalty, even though loyalty was the only thing keeping the lights on during the pandemic.

How good would it be if a hotel loyalty program app allowed you to pick from a series of perks on each stay, based on status, allowing a set number to be guaranteed, rather than “subject to availability”.

To put things in real terms, airlines and hotels are facing existential crises. Many loyalty programs were “mortgaged” during the pandemic to raise cash for the larger business, and in many cases the loyalty programs were valued at multiples of the business itself.

You can’t have one without another, but one has huge debts like planes, or hotels and huge staff numbers, and the other makes money by leading people on epic journeys in search of rewards, where the “money” the earn is points. Loyalty programs are the way out for airlines and hotels, but not the way they’ve been operating.

If those that bought the mortgages don’t want them to go underwater, they need to do more to get people like you (reading this) onboard again.

If the status quo remains, many travelers won’t hop back on the hamster wheel, and will instead become proverbial snipers. They’ll find solutions for each trip on a one off basis, based on price, convenience or location, and put all the other stuff to the side. No loyalty, no problem. I buy what I need a la carte, with the savvy of the internet.

Never Too Late To Make Things Right

Hotels added ridiculous destination fees and devalued points charts. Airlines made everything about price. Accordingly, whether they admit it or not, naturally, they can’t be too surprised when people ditch loyalty to take advantage of a better deal offering more comfort on another hotel or airline.

Who cares about lounge access as a status perk, when you get it “for free” by virtue of flying business class on a deal? The only way to win people back is to build more value for members, not just the businesses which lean on loyalty to survive.

How do you feel about loyalty programs, after the “great pause?”

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

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17 Comments

  1. Wow! Excellent piece Gilbert, and spot-on!

    Ed Bastian’s “heartfelt email” on Tuesday night was pretty transparent in it’s meaning: We were happy to conserve cash and let Diamonds and 360s sit on hold for 110 minutes; Advertise on our planes that we were pandering to our crew at the insult of our customers; and roll out a chat CS program that was apparently staffed by exactly two people in Bangalore.

    So, your status now extends to February 2023. Translation: “Spend every single point and penny in your account and wallet as quickly as humanly possible. Don’t leave enough residual points for a magazine subscription”. Then, use other assets to find the “best deal for you” at the moment you need them. Never look back.

    It would be great if you could dedicate an article, or just PM me at my attached email, about some of the concrete examples that your premium-tier subscription can offer for hotels.

    Keep up the thought-provoking work!

  2. Great article. Hotel loyalty is effectively dead. The horrible devaluation made it meaningless. I do still like my airline perks as I rarely check a bag and getting on early with a decent seat is still valuable to me. I still managed an upgrade to first or biz about 40% of time, usually the shorter routes.

  3. When Covid 19 hit last year my biggest fear was that I would lose elite status on my favorite airlines. I had to cancel business class flights to Kuala Lumpur and London. Does life have any meaning if you can’t get access to the Virgin Atlantic Clubhouse? I want to be treated like someone special and since I’m not an Oscar winning actor or a Gold Medal winning Olympian I had to buy my way into the club of being treated special. Sitting in my humble New York City apartment since March of 2020 I am simply one of Eight million schmucks trying to fill my days with any activity to see me through to another day when I can repeat the same boring process. My supermarket won’t give me a free glass of champagne when I enter and there’s no fast track that lets me check out my groceries ahead of everybody else.. I am loyal to no one and no one is loyal to me. What’s the point of a life without points?

  4. Really well thought out and written. As a top tier member of every major hotel chain I’ve watched the decimation of my benefits. I don’t care much, if at all, about fancy hotels and have stayed over 120 nights since Covid and only paid for 4 of them (when 2 nights would get me a 3rd). Hyatt is the only brand that I feel has continued to attempt to give me value for my status.
    I’ve given up on airline status and become, as you call it “a sniper.”

    1. The question in my mind is – when will the airlines and hotel chains realize they’ve neutered their loyalty programs and are damaging their most profitable (per passenger) source of revenue?

      1. Unfortunately, I think for many it will be too late. Execs looking for short term revenue solutions to justify their positions will insist on keeping margins headed higher, even if that means knee jerk moves like devaluations to accomplish greater spread. I hope (sincerely) that others wake up and hire dynamic people with creative ideas, who actually play the game themselves, to figure a way back out.

  5. Good read. You’re on the mark. I’m Qantas Platinum and even in COVID free Perth I can’t justify trying to maintain it.

  6. Great article! I’m one of those weirdos who actually jumped ON the elite status wheel because of promotions this year (with Hyatt, Marriott, and Alaska Airlines). We’ll see if anything sticks beyond 2022 when I actually have to earn “the hard way” again

  7. I find that reward flights especially with BA and Virgin Atlantic come with such outrageous taxes that collecting Avios/Points is not worth the bother as you can pick up similar flights in sales. I was looking at an Upper Class return with Virgin to LAX but the taxes are now more than £700. Complete joke!

    1. I can only speak for my experience with BAEC but there, the “taxes” are not anything of the sort but various revenue streams for the airline (as with their ridiculously high seat reservation charges).
      If Gib’s predictions come true then BA’s attitude & policies will simply have to change as I can’t see many continuing to put up with an uncompetitive product and service and a (lets be generous) less than stellar reward availability.

  8. Gib, do you think the new landscape will have a differential impact on those airlines which have relied heavily on their loyalty scheme as part of their core business model (retention despite uncompetitive product)?

  9. Here’s the REAL issue – elite status has become so easy to get that it has watered it down. All the “elites” feel entitled and the airlines/hotels can’t delivery. This is a result of hotel status simply by holding a certain credit card and all the airline extensions and reduced requirements during COVID (including being able to earn in some cases without even flying).

    When I started traveling heavily on business in the mid 80s elite status really did mean something. The only way to really earn it was butt in seat miles on airlines and actual nights in hotels. All this changed with credit card offers and other attempts to make everyone feel “special”.

    Don’t blame the airlines and hotels, blame the system. I’m lifetime elite on DL and AA (around 3 million miles each) and lifetime Titanium w Marriott based on my actual travel. Then I gladly got Diamond w Hilton, Explorist w Hyatt, Platinum w IHG, etc through credit card offers.

    Frankly at this point I don’t expect anything as an elite and those that do simply are being unreasonable. If I get recognized and get benefits great but you just can’t expect it when a majority of people traveling have some type of elite status.

  10. Outstanding article, and an excellent solution. Thank you for encapsulating what I have been thinking for the past year. I’m a Delta Flyer, Platinum or Gold every year-Delta DOES take care of the business traveler, and I’ve just focused on Choice Hotels for the past few years, mostly because i want my coffee free at 2am in the morning, my wifi free, and a relatively comfy place to sleep-all of which Choice mostly provides, without paying out the yingyang for Hilton or Marriott cachets.

    But your point on Delta is spot on…would love to have a freebie option into a Crown Room for status.

    Thank you! A very good, thought-provoking piece.

  11. Spot on–for all my travels over 26 years, I have lifetime diamond, and titanium status. This does not really get me anything anymore. My free breakfast at the Garden Inn is now $10.00 which does not really go very far, I stayed 6 weeks ago at a Bonvoy hotel in Chicago, and they came right out and said that my status got me nothing. I looked at the person, and they said it again, nothing. When the bean counters took over, us Road Warriors lost. When Marriott took over Starwood, we really lost big time. I was extremely loyal to Starwood because of the perks–now I don’t really bother looking at Marriott unless I cannot find a Hyatt where I want to go. Hyatt has done good by me and takes care of me, while not as good as Starwood, a second where Hilton and Marriott are not even in the same premier league–maybe not even in the second league but in the third. Marriott has been very open and has said that their Bonvoy program is not as good as Starwood nor do they want it to be that good–a third class program designed by bean counters who are driving the business away. Many if not most of us road warriors want the benefits to take our families on vacations. Marriott waiting till 5 days before you arrive to decide if you will get up graded to your suites that are expiring, (most of mine have expired since the suites are never available) is just a way for the bean counters to drive business away while saying that they are preserving the integrity of the suite night award. I go with the company that wants to take care of me, Hilton and Marriott, get ride of your bean counters and get back to taking care of your business travelers.

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