Two and a half years ago Hilton reported 60 million members. Then at the beginning of 2018 they reported 70 million. Now they say they are up to 94 million Honors members.
Hilton was the first to aggressively advertise ‘member rates’ which are small room discounts that require you to join the loyalty program. Unsurprisingly that’s just what guests do. And since the number of members has gone up recently, driven by this savings, these are ‘engaged’ members with recent Hilton activity.
At the beginning of 2017 Hilton formally eliminated award charts which has let them devalue their points without telling members.
Then at the beginning of 2018 ” target=_blank>they started awarding fewer points to general members and silver elites. So when Hilton’s CEO claims in the chain’s earnings call that they’ve improved the program for infrequent guests you shouldn’t believe him.
What it’s been about is more getting lower level members of Honors engagement while they may not stay as much. They may stay two, three, five night a year and not a 100, that’s business right and that’s important business and the more that that can be a direct source of business rather than indirect, obviously it adds to our RevPAR premiums and it does so in an incrementally efficient way in terms of distribution costs.
It’s not just the general member portfolio that’s growing, however. According to Hilton’s CEO the “number of elite members up 25% year-over-year in the second quarter and those members reaching 100 nights, up nearly 60% versus the same period last year.”
I think two things are relevant here,
- How easy it’s become to be an elite whether by status matching anyone with a pulse or through American Express credit cards.
- Marriott’s struggles which have largely been a frustration for the chain’s elites, and where Hilton is seen as the only reasonable alternative. (For guests who stay 50 or more nights per year defecting to HIlton is actually nuts.)
Hilton doesn’t (yet) offer top elites any promise of a suite upgrade, even when available at check-in. They don’t guarantee late check-out.
The chain’s CEO is most proud of the redemption slider (choose how many points to use, but if you don’t pay for a stay entirely on points you still pay taxes on the stay). he calls it the “Flywheel” and he also notes “selling points and getting more money in the system.”
These are ways to engage infrequent guests, but don’t forget that Hilton gives fewer points to infrequent guests with program changes a year and a half ago when they eliminated double dipping. He gets the importance of “people are using their points and doing things with it that get them active in our system, that get them in our app and get them thinking about us, the more they spend with us” but what the chain thinks they’ve discovered is that they can give members very little and still have positive metrics to report to Wall Street.
This is what “[y]ou will continue to see more of” from Hilton “both for higher level members and lower level members..provid[ing] a bit of the Flywheel…focused on is getting greater engagement from our customer base and having more direct relationships.”
It all goes back to what Hilton Executive Vice President Jeff Diskin described as the program’s key insight back in 2010. He said the program doesn’t benefit from giving too much to members, instead “being over indexed in terms of the base level doesn’t give you enough payback” and “it’s much more important to have promotional activity in the marketplace to segment divide and conquer and put different initiatives in place for different groups of travelers.”
The problem with Marriott is the absurd number of blatant problems after its SPG merger. The “Bonvoyed” account on Twitter is quite a spectacle. Hilton has issues, but they’re much more minor in comparison.
As Marriott has gone downhill, I’ve often found Hilton to be a preferable alternative, including for the value of free breakfasts for elites at some of its resorts and other nice vacation properties my wife and I occasionally visit. Plus, while there’s no guarantee of a status-linked suite upgrade, there’s a decent chance in many fine Asian or Middle Eastern Hilton properties. (I find that perk cuts across many chains.) More generally, I’m just diversifying my revenue and award stays among various chains these days, as opposed to previously concentrating on maintaining Starwood status.
I agree with you on the point about giving top tier status with a credit card, I find it slightly insulting. I spend $12,000+ there every year (OK, well my company’s money) and they are saying my loyalty is worth somewhat south of $450 (annual fee of credit card but minus direct credits and other benefits they give you).
Sometime around my 40th birthday I will hit lifetime Diamond status with Hilton (10 years min + 1,000 nights). At that point I may pivot and spend my 40’s shooting for lifetime Titanium with Marriott. Then I can feel free to spend the rest of my life not caring about accumulating status and just earning/burning points with whoever has the “best” actual properties for whatever my travels may be.
When they give something away for free (Hilton Diamond), it can’t possibly be that good. But hey, for free, it’s not terrible, even if the benefits are light.
@Steve S – you can’t get LT Titanium w/Marriott anymore
I’ve been an HHONORS member since 1988 and made Diamond every year after it became available. I also became a lifelong Diamond the first year it became available. However a couple of years ago I shifted everything over to Marriott/SPG/Bonvoy. There just isnt enough to keep me with Hilton as they devalued the program. I’m Titanium Elite this year and will be in 2020 again so Hilton lost out on quitea bit of revenue while chasing eyeballs.
By the way I must be in the minority but I had zero issues with Bonvoy merger. I had a lot of currency in both SPG and Marriott and it went through without a hitch. It was over a million points so I had my concerns going in.
@UA-NYC: Darn…still lifetime gold? Is it worth chasing lifetime Gold with 400 nights? I can earn the “years at gold” easy because I get gold status automatically via United Platinum status but if there’s little value in Bonvoy Gold why divert my attention to them…
Sorry I meant lifetime Platinum & 600 nights, forgot that was the “50 stay” tier…not Gold…
Three points:
1. Hilton is growing their customer base by promising and delivering on a modest range of benefits. The Marriott-Starwood merger obviously created a situation where too many benefits were promised to top elites. When those lofty expectations were/are not met, it creates ill will (“Bonvoyed”). So the lesson (from Marriott) here is don’t over-promise and then under-deliver.
2. The Diamond status given by Hilton to Aspire cardholders should have minimal impact on Hilton’s frequent business travelers. Casual travelers, by definition, don’t travel that much (let’s say 10 nights per year). So the probability they will rob a [100 nigh-per-year] business-traveler Diamond of their benefits isn’t high.
3. In a similar vein, the free weekend night certificate is only valid Friday/Saturday/Sunday nights, so while this is a valuable benefit to casual travelers (e.g. weekend stay at Conrad in New York or in Hawaii, etc.), it is not likely to bump against the weekday business traveler whose company is probably footing the bill and who is looking forward to their complimentary room upgrade.
Let’s face it: the benefits of high Honors elite status is pretty modest. In the vast majority of their properties, which are of the Hampton Inn variety, my Diamond status gets me a free candy bar and little else. The only place the status is really worth anything is at their full service hotels. How many people frequently stay at full service Hiltons on their own dime? I actively seek them out, but if I didn’t have status, I’d avoid them and stay at properties where non-elites get similar benefits. And even actively looking for full service properties, I don’t stay at them very often. At the Grand Wailea — probably the World Capital of Honors elites looking for perks, so lots of competition — the benefits I received were pretty modest. I pretty much have to go overseas for my elite status to be worth anything real.