Delta Air Lines extended 2020 status, so everyone with elite status today keeps it through the beginning of 2022. United quickly followed hours later. Then the next day Air Canada announced the same thing.
These airlines follow Hilton and Hyatt in announcing that status earned for this year – that members aren’t getting full use of – can be used next year too.
The problem – for airlines – with this approach is that one of their most powerful tools to get frequent customers to pick them, when travel comes back, is no longer in their toolkit. Customers stick with their preferred carrier not merely to enjoy the benefits of status but to make sure they keep the status. Often it’s the keeping that is the more powerful motivator, especially when a competitor’s prices are lower or an airline’s schedule or hotel’s more convenient.
Several of the programs that have extended status haven’t given up their elite tools completely:
- Delta still has ‘rollover’ qualifying miles so elite miles earned later this year will still help requalifying for 2022.
- Air Canada is letting members who earn status despite the extension gift that status to someone else.
- Hyatt has benefits that accrue every 10 nights stays.
Each of these gives a partial reason to stick with them, and helps explain why it was easier for these programs to act early. (Hilton has none of these things, nor benefits which are as rich so extensions aren’t as cost – United appears to have been in the can to do whatever Delta did.)
So now that these loyalty programs have given up keeping elite status as a tool to keep loyal flyers sticking with their business once travel returns, when they’ll need to do significant marketing more than ever with empty seats and empty rooms, what are they going to have to do?
A loyalty program combines two separate programs into one.
- Recognition or elite status
- Reward the free travel rebate
With the recognition component somewhat ceded they need to:
- Get creative offering recognition incentives. That means offering either additional credit towards future status (as Delta is doing), the ability to confer benefits on others (as Air Canada is doing), or incremental benefits (as Hyatt does). Don’t expect these programs to stand still, either, they can take elements from each other and layer on more.
There remain things a program can do even once they grant a status extension to use their elite program to incentivize travel. None are quite as motivating as requalification, but the cupboard isn’t bare.
- Push the pedal to the metal on rewards. Since programs need to do even more marketing, and they’ll have less opportunity to move the needle with recognition once they’ve extended status, they need to focus on richer rewards. Already rooms and suites and seats and upgrades should be easier to get and the pressure to devalue points due to lack of redemption space or high cost of redemptions is lifted.
Expect programs though to either start printing a whole lot more points once travel returns, or add on new bonus programs offering free nights and free flights (as expiring certificates).
Loyalty programs are marketing tools. There hasn’t been need to spend nearly so much marketing to fill empty rooms (when there haven’t been empty rooms) or empty seats (when there haven’t been empty seats). However with those trends reversing, since we’ll still be facing recession even when the advice not to travel lifts, loyalty programs will need to become richer.
That will only last until good times return. And when travel demand comes back fully you can expect that loyalty program generosity will have its own consequences – more outstanding points liability, and seats that are once again scarce or rooms that are expensive – that will manifest themselves in future devaluations.
You are assuming travel will resume this year. There is a good shot that we are still under local quarantine for the rest of the year, as without a cure travel will just cause more flareups. See whats happening in Japan and Hong Kong as examples.
The only part that matters is the second one – rewards and real, tangible perks. Frequent travelers have bought in to programs for years and in the past few of those years have gotten less and less for their loyalty. Physical action talks – companies can show me the suites, the big seats, the comp food & bev, or else they can go pound sand.
For years the companies have believed that the consumer is replaceable and now the tables have turned, so show us what you’ve got – all action, no talk, no “improvements you will like” emails full of devaluations. Otherwise, we’ll keep shopping around – and unlike the past years, where load factors and occupancy rates in the 90%s meant that there was nowhere to run, in the recovery period, someone is going to bite.
American Airlines is conspicuously missing from this discussion. It’s obvious they will do something, I guess we just have to wait a bit longer to be disappointed.
So I’ll get a “Mile Play” from United for 7,300 bonus miles after completing 5 flights* in 2 months?
(*each trip $300 minimum)
@ Gary sez: “Hilton has none of these things, nor benefits which are as rich so extensions aren’t as cost…”
Say what???!!!
Gary, you are constantly wrong about Hilton, but to be wrong about a set of benefits that Hilton introduced when they redid their program wholesale and was much talked about is just sad!
How about this for incentivizing folks like me:
— 10K bonus points after reaching 40 nights, and…award nights count!
— 10K bonus points every 10 nights after reaching 40 nights with NO CAP.
— 30K additional bonus points when one reaches 60 nights.
— ability to gift Gold status at 60 nights and to gift Diamond at 100 nights.
— 5th award night free: the single most valuable perk with unbeatable value when used to book the most ‘aspirational’, over-water villa award stays, which ***Hyatt still does not offer even to Globalists***, and has gotten a pass on it for years.
In short, if you’re going to continue pushing the bogus meme about how “inferior” Hilton Honors is (even to BONVoY, which everyone knows is nonsensical), the least you can do is to familiarize yourself with the program. To disparage it while getting the facts wrong does not reflect well at all. In fact, it strongly supports my thesis that your beef with Hilton Honors is not rooted in reality, but in a gut-level and irrational animosity.
Right now more than ever, Hilton is the dominant hospitality company that the others are imitating, like DL is the dominant airline that the others are imitating. In that analogy, Hyatt would be like United, and BONVoY would be like the dAArk side. 😉
G’day.
@DCS – as a now former multi-year diamond in Hilton’s program, perhaps I long for the old days but 10k hhonors points? Seriously? Not really much incentive at all. Even 30k pts – not too enticing.
@JakePB — I do not look a gift horse in the mouth and I better understand the value of points currencies than you do (e.g., I bet you believe that 1.5cents/Hyatt point are worth more than 0.5cent/Hilton point, when the two have exactly the same “purchasing” power in their respective programs), so therefore I am the wiser.
Moreover, the 10K milestone points do not come in a vacuum. They come after you would have spent real money on revenue stays or real points on award stays. Therefore, they are points on top of those you would have earned spending real money, or points that replenish those that you’d spent on award stays. And, they add up: 10K @ 40K + 10K @ 50K + (10K+ 30K) @ 60K for a total of 60K bonus points — nothing to sneeze at. Then at the same time, you earn the privilege to gift the Gold status as I did this past year, despite being an “Aspire Diamond.”
I do not look a gift horse in the mouth, especially when it is highly valuable if one stops to think about it, instead of being cynical.
G’day.
Impressive how many Airlines and Hotels have stepped up, and shown partnership with their loyal customers.
Except American.
Nice job Doug. Bite me.
What will be interesting will be the net affect of all these extensions, how any people will return to travel as before and how business travel will resume will it be “as before” or as many think an overall reduction. I vote for the reduced overall business travel, speaking on my company’s view. My guess is the longer extension is based on best guess for people in general for memories to forget.
Gary, travel isn’t coming back at anywhere near previous levels. Even assuming a normal economic environment, businesses will now realize that most of their previous travel was unnecessary and potentially dangerous going forward. Individuals that can afford to travel will be afraid to. People will not be afraid of getting sick (very few are now), but they will be fearful of doing anything that will trigger another lockdown, or fear of getting stranded. Much like people who survived the depression permanently altered their behavior, the same will happen here. Commercial office space may be the only industry in bigger trouble than travel right now. Readers of travel blogs will still travel, but not as much and we are not enough to sustain the previous travel eco system. You will be the first travel blogger to figure it out, but you are not there yet. I look forward to your predictions for the future, once you let go of the past.
Perhaps the extensions will spur competition among the airlines and hotels to offer status matches/challenges and easier qualifications to try to poach those who do not need to maintain loyalty to their current brands to maintain status and are open to obtaining status with another brand?
I want to go on record saying that business travel will eventually return to previous levels. Anyone who has spent the last month talking over each other on Zoom or WebEx calls can’t tell me that sitting in a room across from someone is a much better experience. And this is coming from an introvert…
@DCS – Not cynical, just capable of accurately calculating the purchasing power of rewards points. It’s adorable that you find yourself so wise, but you lost me at Hilton pts = Hyatt pts. They do not.
I never look a gift horse in the mouth either…I just don’t view loyalty programs as gifts. Those who exhibit loyalty receive perks in exchange for that loyalty…quid pro quo – not a gift.
We don’t have to agree for me to wish you and yours well – be safe and have a great day.
JakePB sez: ” It’s adorable that you find yourself so wise, but you lost me at Hilton pts = Hyatt pts. They do not.”
Yes, I lost you, and they do. Just like I’d surmised so, Q.E.D.
Be safe as well and see you at some tropical resort that I would likely have afford by topping off with the 10K or 60K milestone bonus points that you sneered. 😉
G’dsy!
@DCS, we won’t be at the same tropical resort because I don’t have the 600,000 hhonors pts needed for a 4 night stay.
Oh, common @JakePB, if you spent 600,000 Hilton points for just 4 nights at ANY of their tropical resorts, then I would have say that you do not play the game with a “full deck”!!!
For 600K Hilton points, you would be able to stay for 5, not 4, award nights at Hilton’s most expensive tropical resorts (120K points/night), like the Waldorf Astoria Maldives Ithaafushi, and have enough points left over for another decent award. The reason for that is Hilton’s “5th award night free” perk, which a Hyatt Globalist does not get, despite claims about how it is the “best” top elite status.
The Math:
120K/night x 4nights = 480K.
You pay for 4 nights but stay 5, and have 600K – 480K = 120K left over.
I did exactly what I just described (Dec 29, 2019 – Jan 3, 2020) at WA Maldives and paid 480K HH points for what would have cost me $20,333 if I’d paid cash:
The nominal redemption value: $20,333/480,000 = $0.042/point or 4.2 cents/point
See? You get great value out of Hilton points, especially if you know what you are doing.
G’day!
oops!
That’s “Come on @JakePB”. I have no idea how “common” you are! 😉