There’s a provocative discussion on twitter about whether hotel loyalty programs are on the way out Online travel agency sites will rebate you free stays regardless of chain. It used to be that hotel programs let you earn rewards regardless of where you booked, but that’s no longer true. Now the programs are a reward for where you book – and the hotel programs themselves specify both where you book and where you stay. But they’re a lot less rewarding than they used to be!
prediction: https://t.co/YrTFXhUq1H is going to supplant all hotel rewards programs in the next ~3 years
why?
business travellers want rewards for their stays but the marquee hotels are – like airlines – still crazy expensive. & booking’s rewards actually work (i was skeptical).— Spratt (@justinspratt) September 6, 2022
Now, I’ll take the under on the demise of these programs. Direct booking channels have grown, hotel loyalty programs have grown, and continue to drive stays and higher average revenue. Remember that guests coming through online travel agency sites are usually picking largely on price rather than going to the hotel chain’s site and doing less comparisons of price.
Let’s get into the detail, though, because hotel chain programs can still be more rewarding than online travel agency programs – but that’s the fault of the online agency programs to be honest.
| General | Top Elite | Value | General | Top Elite | |
| Member Earn | Member Earn | Per Point | Member Rebate | Member Rebate | |
| Hilton | 10 | 20 | $0.0040 | 4% | 8% |
| Marriott | 10 | 17.5 | $0.006 | 6% | 10% |
| Hyatt | 5 | 6.5 | $0.0140 | 7% | 9% |
| IHG | 10 | 20 | $0.0050 | 5% | 10% |
That said I don’t see them as a reason to be loyal for non-elites, and third party rebates can be greater, but they won’t be ‘supplanted in three years’.
The author here notes that “until recently I did deals at Uber in this category and we found the exact opposite. And we had access to pretty good partner data.”
- The close current partner of Uber is Marriott, would anyone be surprised that Bonvoy would be losing traction? But that’s more about Bonvoy than about the competitiveness of online agency programs or about the industry writ large.
- And that data is perhaps skewed by the pandemic and a lower percentage of loyalty members staying [this was also true at airlines]. We’re seeing a lot of program signups now!
I am not saying hotel programs haven’t squeezed too much value out, creating room for alternatives. Booking.com probably isn’t it.
Marriott especially has driven down value in a quest for lower owner costs. Hilton has been stagnant. Even Hyatt has gone dynamic in redemption pricing which means less of an opportunity to get an outsized value for points, though they still offer good value especially for suites.
Bear in mind that whether a hotel program makes sense for you depends on what you value! If you just want a rebate for your stays regardless of where you stay, a chain-independent program is best. But if you want better treatment, pay attention to the hotel program for its elite benefits. IHG has improved its elite benefits this year, though of course the redemption proposition (which used to be outstanding!) has been decimated.
The reduction in rebate value of hotel programs in a quest for lower costs is a problem for hotel chains. In that sense Justin Spratt is correct. But it’s more of a problem against Airbnb than online travel agencies who still deliver guests to hotels albeit at higher cost.
Expedia does nothing but devalue its program and that’s been the case for years, but their recent trajectory has been to devalue even the programs of the other brands they own. Online agency sites are headed in the same direction – south – as the hotel redemption proposition.
Perhaps the best bet will be the bank sites. Capital One has built a portal which premium co-brand cardmembers earn strong rebates booking through. Chase is building its own portal and expects to be one of the biggest players not just in the bank travel space but in the travel space overall. And they can pour money into rebates because they’re using these programs to drive card spend, rather than to profit off of the difference between hotel commissions and rebates.
I still don’t love booking through a third party when things go wrong, and some hotels will give you the room over the HVAC when you don’t book direct. Which – again – means it comes back to what elements of a hotel stay are most important to you.
I don’t require anything from Bonvoy other than points that can be used for future stays. I don’t need a welcome gift, suite upgrade, they don’t need to know my preferences or give free anything.
Rewards programs sometimes succeed, sometimes don’t. AAdvantage was a runaway business success, Uber Rewards is the opposite.
The franchise model of hotels makes it difficult to deliver on a lucrative hotel rewards program. Hotels also give a lot more discretion to receptionists. You want to avoid a room over hvac? You can either have diamond status or you can…just ask politely. Same with breakfast, to be frank, these are things that hotels can give out a lot more freely whereas a flight attendant generally can’t upgrade you to first class.
To clarify I guess a hotel breakfast won’t be easily attained by asking politely. What I have done is build social rapport with hotel staff at places where I didn’t have elite membership. I’ve then received lounge access, suites, and breakfast vouchers because I am likeable. I never beg, bribe, or complain.
Hotel status is not very valuable if you have social skills.
Hotel Programs are DEAD.
Hotels dot com erroneously cancelled 4 award nights on a completed stay,. I couldn’t figure out an appeals process’ so long and short is I don’t trust the third party programs at all.
Gary,
Pardon me if this is something I should be able to ascertain with ease, but if I access booking.com through a cash back or mileage portal, do I still get all genius benefits?
Pipe dream. Hotel loyalty programs put heads in beds for global hotel chains and are their proven “cash cows”. They aren’t going anywhere. Not in three or thirteen years…
I, for one, still get nearly as much value out of both hotel and airline loyalty programs as I did a decade ago, when did my first annual Asian Escapade(tm), soon to be “rebooted” after the pandemic with a 4-week, 5-country (including the Maldives) escapade for which all the flights (premium cabins) and hotel stays (high-end) will be paid with miles and points.
Rinse and repeat year after year. Just gotta play the game with a “full deck” to get the most out of it by constantly adjusting to changing circumstances…
The predictions of the death of loyalty programs was around over 20 years ago
while attending Cornell University.It was the only disagreement my brilliant professor and I ever debated.Yet the growth and profit in these programs have exploded since then and don’t think that will change to much going forward.
The big chains and airlines have their benefits rolled into booking directly and many customers are hooked into their clutches like addicts.
I do see some possible 3rd party opportunities like with Chase and some other powerhouse as long as its through the more normal travel agency channels like Global Distribution Systems etc and not prepaid rooms 3rd party bookings where all elite benefits are off the table .
I do see customers moving more towards a 2% cash back credit card or similar more often as programs like Marriott or American overcharge insanely now more than ever for awards.
I would argue its more cost effective to pay cash than redeem points or miles often these days.
Its out of whack and that is the number one thing that can derail program overpricing rewards IMO
Especially when an aspirational award is out of reach and it pays to use revenue rather than redeem points for so many reasons.I’ve actually booked prepaid rooms where I never did in the past and greed has overtaken rational reward redemption pricing.
Betteridge’s Law applies here.
https://en.m.wikipedia.org/wiki/Betteridge's_law_of_headlines
“Any headline that ends in a question mark can be answered by the word no.” . . . It is based on the assumption that if the publishers were confident that the answer was yes, they would have presented it as an assertion; by presenting it as a question, they are not accountable for whether it is correct or not.
Thought leadership is apparently still enjoying Labor Day.
Yes, it will be interesting to see how we loyalists handle the whole hotel game over the next few years. I for one will be looking for some special perks, some DEEP discounts on room rates, some increased rewards. The luxe hotels have blown themselves up by charging more for less. The big chains have been greedy and stupid … and lazy. Why would anyone with a brain book at an InterContinental for six times the price of a Holiday Inn if there’s no difference in service? I’ve enjoyed all the perks at the top for the last twenty years, but I will not blindly be taking up my loyalty programs without a good hard look at each situation. I can receive cash back from a non-affinity card … or points that can be used to book hotels and flights through many properties and airlines.
So just to give my own personal experience with Hotels.com.
During the pandemic I stayed in some locations that had either zero, or very few chain hotel options. Tybee Island, GA, Florida Keys, etc. So as usual, I attempted to leverage my options. I found the hotels I wanted, and checked them out on Hotels.com, and they were the same price as booking direct. I was able to choose the room I wanted(Not some assigned HVAC room) and they were running some promotion that gave extra stamps(their version of a one night stay) for new members or something. I used gift cards purchased at 5x, (their gift card system sucks btw, as you can only use a certain amount per booking) and a shopping portal and booked my rooms. I ended up with Gold Status(30 nights req) and 3 free nights for somewhere.
Fast forward to just this past August, and I was heading to St. Petersburg, FL, followed by Siesta Key. I nearly always stay at the Hyatt Place while in St. Pete, but I didn’t wish to use points and the rooms were over 300$ a night for my stay. I knew of another hotel I loved, and looked at their prices, and then looked at Hotels.com. They were roughly 20-30$ cheaper per night on the latter, so I booked there. (Like 160-180$) For Siesta Key, I redeemed my 3 free nights for roughly 800$ in value.
So, while I don’t think hotel rewards programs are going anywhere. I can absolutely see instances where some of these travel websites offer a better reward product. Aside from Hyatt, the rest of these hotel programs are garbage, and slowly getting worse. I got excellent value from Hotels.com on rooms I’d have booked anyway. My gold status ‘supposedly’ also gets me room upgrades, early check-in, and late check out. Haven’t tested this yet. They also claim to price match. IE: Find a cheaper price, they refund you the difference. Program Wise: I can certainly see this as being a much better option for those that aren’t spending time manufacturing a ton of points.
Regarding booking.com: I don’t enough about their program to comment. However, you can currently go through a shopping portal and get 4x American Airline Miles or 3x United miles when using them. Which for many, may be worth it. I know I’d rather those than Hilton points.
If OTA’s can fix their customer service issues then maybe this is all true. The problem with booking through third parties is when problems arise you try to contact them and it’s usually a giant mess. They also have little pull with local hotels. I think a hybrid approach would work where a big OTA partners with hotels for low commission (less than their franchise) and provides preferred service. Hotel loyalty programs are losing right now but so are OTA’s.
Booking engines often provide zero support when things do sideways. Lots of back and forth over who is at fault and lots of disclaimers limiting liability. People also learned from Bookit.com. If the website takes your money and goes into bankruptcy like in pandemic when there was mass cancellations.. Money collected for prepaid hotels and vacations, it’s likely the property hasn’t been paid and you’re screwed. My view is rewards programs are here to stay and if used properly provide great value.
There is also a conflict of interest with some of the booking portals. They are sometimes owned and managed by some of the credit cards and banks that you are booking your stay with. I’ve found for example complaining to American Express card services about American Express Travel is like screaming at the ocean. They don’t want to get involved and send you back to the same incompetent people at booking portal. Same with Capital One travel portal. Chase is a little better but not great.
Buyer beware
Another thing to consider OTA will not have the consumers best interest at heart. People go to OTA to “get the lowest price”. OTA’s will shill for the properties that pay them the most fee revenue. This will guarantee reviews and ratings will be actively filtered and deleted by the OTA if they make their best customers look bad. Look at Rocket Miles and other sites that call absolutely crap properties 4 1/2 stars out of 5 that are 2 1/2 to 3 MAX. Properties that don’t pay sites will either not included in search criteria or be on page 25 of 25.
I prefer to book directly with hotels getting all elite benefits and status in their programs UNLESS there is a big difference in price and you need to compare apples to apples to ensure all fees, taxes etc are included. Lastly booking direct with Marriott, Hilton etc and having elite status gives you a much better chance of being upgraded. You’re likely not getting upgraded on an OTA.
Hilton upgraded me to a suite for 6 nights in Hilton Imperial Dubrovnik and Marriott to a suite in Palace Madrid for 6 nights . Both suites if booked direct were over 1000 EURs a night plus breakfast at both and lounge drinks in Croatia
A teacher once said that there will always be the poor.
Another teacher said that there will always be people gullible enough to believe in hotel loyalty programs.
My hotel rewards points are a no joke.
I booked a one night stay for a return trip using 3000 points and how much did I save from the regular price?
Less than $18.
It’s hardly worth the time and effort because I have to deal with calling them directly and that is a nightmare.
Sometimes I don’t even bother trying because it’s just not worth it to save $10 or $15.
Never had a good experience with OTA hotel rez but many bad ones. As we say about a certain retailer, be wary of the high cost of the low price.
I will continue to book through chain portals as long as the chains offer some useful perks and are responsive when I have an issue at one of their properties. The points are secondary but they’ve added up to some amazing stays.