a pool with palm trees and a body of water

If there’s a “metric to move” which hotel chains seem to be using right now, it’s “how unhappy can we get away with making our members before they quit” rather than “how much more can we get from them by making them happier.”

A huge issue hotels have, versus airlines, is that they are in a two way battle with their fundamental business and pulls them in opposing directions, which often makes at least one of the two sides mad.

The big chains don’t own most of the hotels they operate or license their brand to, so they need to keep the building owners happy, or risk other hotel chain brands winning the business away. It wasn’t always this way, but these days, keeping hotel owners happy seems to means keeping guest and brand standards costs down, which then in turn make guests less happy.

Right now, no one happy – not owners and not guests – and some hotel chains are leading a short sighted race to the bottom faster than others. There are no grand prizes to win in this race.

a beach with a hat and a bag on a blanket on a beach

Better Hotel Programs Come From Guests

The costs associated with running a great loyalty program were once acknowledged and understood by hotel owners, because of the flywheel of success it drove for all involved. Sadly, it’s gotten downright ugly of late, as that flywheel erodes, with brands too afraid to stand up to owner and owners seizing on that fear.

The guests? Well, they’re just getting screwed left right and center. There’s one repetitive story we’re seeing more and more of, and its one of hotels refusing to deliver on things which they’re contractually obligated to give to guests, per terms of the loyalty program they bought into to bring all those heads to their beds.

I applaud the blogs that lead these stories in the news cycle and draw vital attention to them. View From The Wing, One Mile At A Time and Frequent Miler have each highlighted at least 100 instances of individual properties not delivering on the contractually obligated responsibilities to the big chains or the guests. They find ways to…

  • deny suite upgrades to members entitled to them by loyalty program terms
  • diminish or deny “free breakfast” benefits guests receive by loyalty program terms
  • abuse terms and conditions of late checkout to ensure few, if any are truly able to use it
  • add junk fees to bookings when these fees are restricted by loyalty program terms

The big “today” problem is that the big chains no longer clap back and do anything to enforce their standards or the obligations these properties owe to their guests. When you look at the major benefits that drive loyalty; late checkout, complimentary breakfast and the potential for “complimentary” upgrades are three of the biggest.

When you fail to deliver on any of the above, alarm bells should really be ringing for any leader who wants to still be leading in 5 years. But… they’re not? The big chains tell members to take it up with the property directly, the property gives the runaround — and until it makes it to a visible blog or news story, nothing changes. They often revert once coverage dies down too.

The only way these things change is if people meaningfully change their behavior. That might be cancelling a credit card, trying more boutique hotels or only being loyal to a travel agent and not any individual travel brand. They can unlock perks at most brands, no loyalty required.

If there’s anything that does get attention at a big chain loyalty program, it’s an exodus of co-branded credit card holders, a measurable loss of share of wallet and or direct bookings going to third parties.

The existential threat to hotel loyalty is the programs themselves. They own the brands and if a hotel wants to benefit from the halo those brands offer, they must play ball. They have the real leverage if their brand actually matters. Side note: that’s why I don’t understand the bizarre “brand” quest we’ve seen, where every program now has like 19 brands. It’s hard enough to build a really strong identity for one brand. Anyway.

Programs have an existential need to grow a spine again and recognize that their most defined power is in the delivery of the expectations their brands create. If a hotel owner doesn’t want in on that, go ahead and find another brand. Growth “at any cost” actually often has a regrettable cost.

We’re already there and if hotel loyalty programs want to be relevant at all in 20 years, once their heyday generation slows down their travels and the young skeptics of the internet become their prime time guests, creating emotional loyalty is existential.

That doesn’t come from throwing a microwave egg at someone and saying “you spend 50,000 last year to get this for free”, right?

SPG (Re) Enters The Chat

If you ask anyone who’s been around hotel loyalty long enough about their favorite programs through the years, there’s almost one uniform answer. The answer is the Starwood Preferred Guest program, which represented brands like St. Regis and W Hotels before the merger with Marriott. People l-o-v-e-d this loyalty program because it truly recognized its loyal guests.

There’s no question it cost the loyalty program and hotel owners a lot to run, but by every indication in financial performance filings, those expenses created even greater revenue premiums and deeper loyalty and share of wallet than any other brand in recent history.

It’s wildly amusing to me that in recent weeks, as dreadful slashes to member points pricing, delineation of benefits and bad news festered in the cycles, news of a Starwood reemergence came about.

The owner, Barry Sternlicht retained the rights to the SPG loyalty brand and is looking to reboot it. Sternlicht could potentially using it as an anchor for the subsequent brand launches under his umbrella including 1Hotels, Baccarat and Treehouse brands. Hotel loyalty needs a new meaningful challenger brand. Dis-loyalty is the best I’ve seen recently.

Hotel Loyalty Is Belief In Better

I start by asking a simple question: why do people join loyalty programs or change their financial services products to get closer to a brand or loyalty program?

I’d say it’s because they believe in them enhancing their travel. It’s a binary yes or no type thing, and historically it’s been easy to side with yes. What enhancing means will differ by person, but I believe everyone believes that enhancing what matters to them is the driver.

They believe in these programs when they deliver tangible value that makes their traveling life better, be it a late checkout, a breakfast, a suite upgrade or a meaningful way to turn personal spending into discounted or free stays. When those meaningfully better travel disappear, so too do all the profitable pieces like the credit card signups or points purchases.

This all starts with customers and ends with brand standards and if hotels wish to keep their many multi billion dollar loyalty programs and co-branded credit card deals, they’d better think a whole lot more long term and less about appeasing greedy hotel owners. Right now, they’re definitively not.

It amazes me we even need to have these talks, sometimes.

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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2 Comments

  1. The need for so many brands is because most hotel owners have non-competes that prohibits multiples of the same brand in a geographic area. The answer? More brands.

    1. I’m aware of the non-compete challenges but still feels bizarre. You’re basically just boutique hotels at that point, which is counter intuitive.

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