Here’s what hotel loyalty programs might look like after coronavirus
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The coronavirus pandemic continues to severely impact the travel industry with no end yet in sight. As a result, companies and loyalty programs have had to make significant policy adjustments to accommodate travelers, from introducing flexible change and cancellation policies to pausing points expiration and more.
With U.S. hotel occupancy rates at unprecedented lows, hotel loyalty programs have needed to quickly find ways to keep their customers happy. Most major chains have already extended elite status expiration and offered other incentives to keep travelers engaged with their brands.
There's certainly more that can be done to reward valued customers and attract new ones when travel resumes after the coronavirus outbreak settles down. I'll walk you through the steps hotel loyalty programs have already taken during the COVID-19 crisis, and discuss what more they could be doing to reengage guests when we start traveling again.
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What hotel programs have already done during the pandemic
When travel began to dry up and hotel occupancy rates started plunging, some loyalty programs took swift action to help travelers with existing reservations and elite status. Others, unfortunately, took their time before announcing customer-friendly initiatives like elite status extensions and flexible cancellation policies.
The major chains have extended elite status and points expiration
Hilton Honors led the way on March 25, when the loyalty program extended elite status and paused points expiration for all members.
The chain also extended the expiration of Hilton weekend award night certificates that come with some Hilton cobranded credit cards, like the Hilton Honors Aspire Card from American Express. Later, Hilton and Amex made these certificates even more flexible: You can now use unexpired free weekend night certificates, plus those issued through Dec. 31, 2020, on any night of the week. Additionally, certificates issued between May 1 and Dec. 31, 2020 will be valid for 24 months from the date of issuance instead of the usual 12 months.
Soon after, World of Hyatt, Marriott Bonvoy and IHG Rewards Club followed suit with their own elite status, award night certificate and rewards expiration extensions, and reduced elite-qualifying requirements in some cases. Wyndham Rewards and Radisson Rewards also announced elite status extensions around the same time, but the last major player, Choice Privileges, didn't make a move until May 21 — nearly two months after Hilton Honors rolled out its plan.
These early updates were a smart strategy to assuage fears of members who would not likely have earned the same level of elite status this year, especially those who travel frequently for business.
Flexible change and cancellation policies
In March 2020, the major hotel programs introduced more flexible change and cancellation policies to assist customers with existing or future bookings. Most programs are allowing changes or cancellations without penalty up to a certain date (including prepaid, nonrefundable rates) as long you made the booking directly with the hotel (and not a third-party site like Expedia).
Typically you'll have to make the change or cancellation at least 24 hours before arrival, and refunds sometimes take a month or more to process. These changes have been a relief to those with nonrefundable bookings, but some readers have reported difficulty getting refunds at specific properties within a chain.
At the time of post writing, the majority of programs are allowing free changes or cancellations through the end of May or June.
Elevated buy-points promotions
We've seen several programs offer best-ever buy-points promotions, including Marriott Bonvoy, IHG Rewards and Choice Privileges. We don't typically recommend buying points and miles unless you have a high-value redemption in mind or need to top off your account for an award, but these deals could be worth considering for some.
For example, the current Marriott Bonvoy buy-points promo offers a 60% bonus (which we've never seen before), bringing the purchase rate down to 0.78 cents per point. TPG values Marriott points at 0.8 cents each, so it's very possible to get good value from this sale.
This is a win for the hotel chains too, as it generates much-needed cash by essentially enticing travelers to pay upfront for future travel.
Improved credit card earning and offers
Some hotel programs have taken things a step further and improved welcome offers or earning in certain categories with their cobranded credit cards. American Express, for instance, has made limited-time changes to some Hilton credit cards and Marriott credit cards aimed at providing value to customers even if they aren't traveling.
- Marriott Bonvoy Brilliant® American Express® Card: Earn 6x Marriott Bonvoy points on up to $7,500 spent at U.S. supermarkets from May through July 2020. Plus, eligible purchases at U.S. restaurants, including takeout and delivery, will now qualify toward the up to $300 Marriott Bonvoy statement credit benefit from June through August 2020 ($450 annual fee; see rates and fees).
- The Hilton Honors American Express Aspire Card: Earn 12x Hilton Honors points at U.S. supermarkets from May through July 2020. Eligible purchases at U.S. restaurants, including takeout and delivery, will now qualify toward the up to $250 Hilton resort credit benefit from June through August 2020. Additionally, bonus points earned through eligible purchases, if they post to the card member’s Hilton Honors account between May 1 and Dec. 31, will be considered base points and will count towards elite tier qualification and lifetime Diamond status ($450 annual fee; see rates and fees).
- Hilton Honors American Express Surpass® Card: Earn 12x Hilton Honors at U.S. supermarkets (May through July 2020). Bonus points earned through eligible purchases that post to the card member’s Hilton Honors account between May 1 and Dec. 31 will be considered base points and will count towards elite tier qualification and lifetime Diamond status ($95 annual fee; see rates and fees).
Hilton Honors American Express Card: Bonus points earned through eligible purchases that post to the card member’s Hilton Honors account between May 1 through Dec. 31 will be considered base points and will count towards elite tier qualification and lifetime Diamond status ($0 annual fee; see rates and fees).
The World of Hyatt Credit Card also made enhancements. Through June 30, cardholders will earn three elite-qualifying nights for every $5,000 spent on the card, which includes the two qualifying nights cardholders already earn for meeting that threshold, plus one bonus night. This is in addition to the five qualifying nights you get each year just for having the card. These improvements can make earning Hyatt Globalist elite status more attainable, especially since most aren't traveling right now.
What hotels should be doing right now
Now that we're a few months into the coronavirus outbreak, it's time for hotel programs to look at the next steps they'll take to keep customers engaged and loyal. This includes not making or deferring negative award chart changes and extending existing promotions — especially since we're not seeing travel bounce back just yet.
No devaluations during the crisis
World of Hyatt impressed us when it suspended planned award chart changes in light of the pandemic. Originally, the chain was slated to introduce peak and off-peak pricing and make award category changes on March 22. In a customer-friendly move, Hyatt postponed these updates until 2021 — but unfortunately, not all hotel chains were as forward-thinking.
Meanwhile, IHG Rewards went ahead with changes during the pandemic. In 2019, the chain confirmed it was planning to introduce variable award pricing at some point, then quietly rolled out dynamic pricing in Greater China at the end of April. In a statement to TPG, the hotel group stated it would expand Reward Night redemption flexibility “more widely through the course of the year as appropriate.”
Devaluations like these (announced or not) don't build trust with loyal customers. World of Hyatt had the right idea to pause big changes to its program until after the pandemic abates, and other programs should follow their customer-friendly approach.
Proactively extend change and cancellation policies
We're now approaching the end of May, more than two months since hotel programs began introducing flexible change and cancellation policies, so it's time to revisit some of these deadlines.
For example, Marriott, Hilton and Hyatt have yet to extend broad change and cancellation fee waivers for bookings made beyond June 30, 2020. With travel slowly starting to open up within the U.S. and internationally, many travelers are starting to plan trips for later in the year. Extending these change and cancellation waivers will boost customer confidence in making bookings into the summer or fall.
Gear up for new promotions to encourage loyalty
Understandably, we haven't seen much in the way of new hotel promotions from major programs recently, but now is the time to ramp up again as customers begin planning future leisure and business travel.
Hilton Honors had the right idea when it extended its current Points Unlimited promotion (set to expire May 31, 2020) until Sept. 7, 2020. In addition to offering 2,000 points per stay, this extension gives customers more time to reach the valuable threshold of an additional 10,000 bonus points after every 10 nights.
Introduce or expand better earning and flexible redemptions
Of the major chains, we've already seen Marriott and Hilton boost earnings on certain cobranded cards in categories consumers are spending a lot in right now, like restaurants and supermarkets. These limited-time promotions go into the summer, but it's unlikely travelers' spending habits will shift substantially until much later in the year. Extending current promotions would foster loyalty by encouraging customers to keep earning points in a specific program to redeem for future stays.
The two chains have also made travel credits on their premium cards easier to use — namely, purchases at U.S. restaurants from June to August 2020 now qualify for the up to $250 Hilton resort credit from The Hilton Honors American Express Aspire Card and up to $300 Marriott Bonvoy statement credit from the Marriott Bonvoy Brilliant® American Express® Card. It would be terrific if Hilton and Amex could expand that flexibility to the airline-fee credit offered by the Aspire card, too.
Hyatt's boosted the ability to earn elite status through The World of Hyatt Credit Card, but for those not trying to earn status it hasn't provided other incentives to use the card for everyday purchases. And IHG hasn't made any changes to earning on its popular IHG Rewards Premier Credit Card at all.
Even though most aren't traveling right now, continuing to offer value by extending current promotions or introducing new ones will keep hotel programs at the top of consumers' minds — and their wallets.
What we hope hotel programs do moving forward
Experts agree that the return to pre-COVID norms will be gradual, with regional travel and road trips bouncing back earlier than international and business travel. Loyalty programs will need to adjust to these new realities by finding ways to attract and retain loyal customers who may be traveling much less than before, perhaps for a very long time.
Bold promotions and bonuses
In the wake of the 2008 financial crisis, we saw airline and hotel loyalty programs step out with big promotions to reengage program members. For example, the former Hyatt Gold Passport loyalty program offered an insane deal with its "Faster Free Nights" promotion — after every two eligible stays you could earn a free night at Hyatt brand hotels worldwide, as well as a 2,000-point bonus for every second stay if you paid with a Mastercard.
Starwood's 2008 "You Choose" promo was also novel, allowing members to choose between double points, double stay credits, or milestone bonuses like a free weekend night after four stays or 25,000 points after 10 stays.
In recent years we haven't seen anything nearly as exciting, with many promos only offering rich rewards to those who stayed a massive amount during the promotion period. Now would be a great time to revive or create promotions with lower barriers to entry for both leisure and business travelers — especially considering business travel may never bounce back to pre-COVID levels. Wouldn't we all love to see IHG PointBreaks deals and Radisson/Club Carlson's free night for cardholders on award stays come back, too?
Additionally, we hope to see banks offer higher welcome bonuses on existing cobranded hotel cards, along with better (non-travel related) bonus categories and refreshed benefits for those who aren't traveling as often. It's also an ideal time for chains like Best Western, Choice and Wyndham to attract new customers and seek out better card-issuer partnerships, considering many travelers are focusing on road trips to smaller cities and towns where these brands predominate.
Related: The best hotel credit cards
Adjust elite-status qualification thresholds
With most chains extending members' current elite status through 2021 or even into early 2022, the pressure on travelers to earn elite-qualifying nights is off — for now.
But as travel starts to bounce back, hotel programs may be faced with a new reality — their most loyal customers, especially business travelers, likely won't stay nearly as much. With fewer stays it will be harder to attain the coveted top-tier hotel statuses that confer valuable perks like suite upgrades and free breakfast. Elite statuses like World of Hyatt Globalist (which requires 60 nights or 100,000 base points in a year) or Marriott Bonvoy Titanium (75 nights) may seem out of reach for many, and as a result, travelers could say "why bother" and turn to other brands simply based on lowest per-night cost rather than long-term benefit.
Choice and IHG have already announced reduced elite-qualification thresholds for 2020, but these types of adjustments will only be meaningful for those trying to qualify for elite status after this year. All hotel programs should revisit their elite status qualification requirements for 2021 and beyond.
Hotels might also consider offering easier or alternative ways to hit elite status, like reducing credit card spending thresholds to reach a higher elite tier or adding other incentives for spending on cobranded cards, including non-travel spending.
Make elite status more rewarding
Hotel loyalty programs have a unique opportunity here because they can offer added value to customers without taking away from other guests' experiences. Making low and mid-tier status more rewarding would appeal to the less-frequent traveler, including those that may see a reduction in their travel for the months and years to come.
A good example is free hotel breakfast. Currently, Hilton Honors is the only major chain to offer free breakfast to mid-tier status holders (Hilton Gold, in this case), which is included as a benefit on the Hilton Honors American Express Surpass® Card, Hilton Honors American Express Business Card, The Platinum Card® from American Express and The Business Platinum Card® from American Express (enrollment required). Other programs, like World of Hyatt and Marriott Bonvoy, only offer free breakfast to upper- or top-tier elites, and some, like IHG Rewards Club, don't include breakfast as an amenity for any elite tier.
Related: What is Hilton elite status worth?
It wouldn't take much to include a standard free breakfast for mid-tier elites across the board, and an upgraded breakfast (perhaps by including room service or deluxe options) for top-tier elites. And if hotels are concerned about the expense, perhaps offering a small points incentive (much like not using housekeeping) to those who decline the meal would offset the additional cost.
Making other elite-like perks attainable for infrequent travelers (like waiving resort fees for all program members) would develop loyalty as well. Evening snacks, more opportunities for room upgrades and "surprise and delight" perks like food and beverage credits are all strategies hotel programs should explore. It would be smart for programs to recognize the changing demographic of their average customer and align elite perks more toward leisure travelers. For instance, families would enjoy upgrades to suites with a separate room or a pizza and movie amenity.
The travel loyalty landscape has changed — and will keep changing — as the long-term effects of the coronavirus pandemic on travel remain to be seen. Hotel loyalty programs have already reacted swiftly with positive changes to cancellation policies and elite status expiration, and there's more to be done.
We'd love to see hotel programs take a more proactive approach to loyalty as people begin to travel again. From offering exciting promotions to reimagining paths to elite status, the opportunities are there to reengage old customers and create new ones.
For more on the future of loyalty post-coronavirus, check out these posts:
- Here's what airline loyalty programs might look like after coronavirus
- Here's what credit card rewards programs might look like after coronavirus
- TPG readers share their wish lists for travel loyalty program changes after coronavirus
For the rates and fees of the Marriott Bonvoy Brilliant American Express Card, please click here.
For the rates and fees of the Hilton Honors American Express Aspire Card, please click here.
For the rates and fees of the Hilton Honors American Express Surpass Card, please click here.
For the rates and fees of the Hilton Honors American Express Card, please click here.