Hotel loyalty programs are the equivalent of each airline plane being owned by a different group of people, and someone who doesn’t own the plane telling each of the different groups of people that own each plane, that they’ll need to offer people with elite status all the free drinks they want – and upgrades too.
A bunch of bags will probably need to be comped as well, and only the finest pillows can be offered.
It doesn’t always make the people who own the planes happy, and that is exactly what makes hotel loyalty, where hotels are not actually owned by the name brand hotel chain loyalty you know and (may) love, very-very complicated.
Airline Loyalty Is Simple, Hotel Loyalty Is Not
Airline loyalty is a much simpler game than hotel loyalty, because it’s just a matter of finding a balance between airline goals and customer satisfaction. Airlines, in a sense, are one team.
Airlines figure out the balance to incentivize extra behavior and loyalty, and they instruct their teams to do their very best, because if everyone does their very best, everyone wins. People fly more, everyone makes more, happy days.
With hotels, there’s a major side conversation happening with the people that actually own the physical hotels. They take on many of the costs of making guests happy – and they don’t always like that. Particularly, now.
Correct, the hotel brands you know rarely own the branded hotel you stay at. They just manage it and help operate it, and are mostly there to help put heads in beds via the big name brand marquee, with the big marketing reach.
This creates a three-way tug of war, between the people who own the hotels, the loyalty and marketing platforms they pay dearly to bring guests in, and the guests who actually stay. There’s at least three competing interests. If you count public and private shareholders, four or five.
Hotel owners, which are typically individuals or groups of investors, are trying to cut operating costs after a tough year, and these tricky areas of hotel loyalty are flaring up. From desires of ending daily housekeeping to removing ‘front desk’ staff, just about everything is under review.
The hotel owners want the hotel loyalty programs to demand less of them. They want to spend less money per guest, per stay, but keep the flow of guests coming.
And yet again, Marriott’s CEO, Tony Capuano has reiterated that he’s all for helping owners cut costs, and basically do exactly that. Through most lenses, allowing owners to do less inherently make experiences less enjoyable for guests. Marriott, like others, is more afraid to lose hotels in their system, than guests.
Hilton already effectively gave in to hotel owners by removing daily housekeeping at a number of brands in the US. It’s a hard one to market as a “positive” change for people paying room rates. It’s a highly complicated, high stakes game.
If a hotel owner doesn’t like what a hotel loyalty brand brings, or the costs of keeping guests happy with their program, they might change the hotel to a new brand under a different hotel group. A hotel quickly could go from being a Ritz Carlton with Marriott to a Conrad with Hilton, if owners aren’t happy.
Hotels groups, like the major brands you know, compete heavily to win favor with hotel property owners, and ultimately to win contracts. In that pursuit, finding ways to promise to bring in more guests, while “requiring less” is the topic du jour.
Basically, hotel owners want to have their cake and eat it too. Making guests happy makes the loyalty program win, but rarely helps the hotel owners bottom line, in an immediate way.
Some hotel owners get it. They relish in spoiling guests, going above and beyond to create repeat business and recognizing that having guests come back and rave about the experience creates wins beyond an immediate profits and losses. By no means are all hotel owners short sighted and cheap.
By taking part in the major loyalty and marketing platforms like IHG Rewards, Hilton Honors, Marriott Bonvoy Accor ALL and World Of Hyatt, hotels benefit from massive international exposure and bookings. But many have grown tired of the expenses that come with them, like comping breakfast to elite guests and giving up suites to frequent travelers.
As the hotel marketing and loyalty programs you know, look to hold onto their hotel franchisees and keep them in the system, the hotel owners are winning the battle over guests. Hotels cave into owners before they cave into guests. Until times are booming, owners will demand less and less to recover more and more.
When guests flag to a loyalty program that a specific hotel isn’t playing by the rules, the program is reluctant to reprimand the hotel, and too often these days, stays out of it.
In the travel rebound, airlines have much more bandwidth to keep flyers happy. Their game is simply finding a balance between airline goals and happy flyers. For hotels, the balance between property owners, hotel loyalty programs, shareholders and guests is a very tricky one to find.
An interesting and informative take on things. I think that when a hotel is trying to decide which chain to join, there are a vast amount of available metrics that would show what can be reasonably expected. Loyalty has a certain reasonably predetermined average cost, and ultimately it’s all baked in and the fact that the chain is requiring an investment to keep customers loyal speaks quite well of the companies that don’t see the customer as a chump or an adversary. Loyalty is going to cost something after all but the bottom line is to get customers to make illogical decisions based on loyalty and for hotels the easiest way to do that is by earning that loyalty from those customers. Hilton and Marriott are going in the complete wrong direction so I spend my money ($3,000 last week alone) on a company that inspires loyalty, Hyatt in my case. As a business owner myself, I understand that a loyal customer is invaluable. Hotel chains allowing individual locations to cheapen their brand are actively disincentivize loyal customers from spending money at their properties and should take much stronger measures to make individual hotels keep to consistently high standards. There’s little mystery about what loyalty will cost for XYZ chain in XYZ location. The franchisees knew the cost going in and now see fit to whine because they don’t like the deal they themselves made. The hotel corporations pandering to this consistent degradation of their standards are ultimately doing their brands great harm. Maybe instead of making their products worse they should see what other companies are doing better and emulate that. I’ll step off the soapbox now.
Fascinating and informative article. As a Hilton diamond member we are very loyal to the brand but having booked 25 nights at Hilton Colonial here in Bahamas we were denied upgrade despite better rooms on sale and the whole hotel was in desperate need of a good clean and refurb. We are now at the Hyatt which is night and day better. Maybe we move our loyalties to them after 20 consecutive years at Diamond level. So far can’t even get a reply to three emails including the Hilton CEO
My earlier post had two numeric typos. 15 not 25 nights and 10 years diamond not 20. Apologies
After decades of moving around the hotel jungle without ever achieving or focusing on gaining elite status, I have finally done so with Hyatt. I can honestly say it has been one of my best travel decisions ever. This year I have been able restart a fair amount travel and have read and listened to enough other travelers to draw a few conclusions.
While the big brands will all continue to struggle with issues of profitability, maintenance and staffing for the foreseeable future, Hyatt generally seems to be dealing with it most effectively. What that basically means to all of us who travel and want to be rewarded with the best possible experience for our $$$, we need to closely monitor what’s currently happening out there and then make the most informed decisions that we can.
The bottom line is that for at least the rest of this year and probably next year there will likely be widespread challenges and struggles for nearly all hotels and therefore for us also. The advice to myself and others is to pick a winner and stick with them. So far for me Hyatt and for good has won my loyalty.
I had similar experience recently like Null. a Hilton in Istanbul that refuses to upgrade Diamond to suite although multiple suites available online. I left the hotel early and moved into a Sheraton which treated me royally as a top tier elite .
Disappointed with recent Hyatt stays as Globalist .Hyatt Regency Cologne had almost No food in exec lounge (covid excuse) yet restaurant was working normally:) Other Hyatts seems to have reclassified most suites into PREMIUM to avoid upgrading .
Best advice is to call the hotel prior and ask specifically about elite benefits.
Good article. I rather like the game theory implications here. Thankfully there’s less of a need for a great hotel scheme as so many greats are independent or in tiny brands anyway.
Writing this though I guess the same is true to an extent with airlines if you can afford private and have the ability to pick an private jet of choice! It just has a higher, sadly more out of reach, wealth bar!