Publication Air Mail ran a story entitled “The Bonvoy Problem,” with the subheading being “Points programs are destroying the luxury-hotel experience. Can anything stop the freeloaders?”
While the thesis isn’t completely wrong (in terms points programs having an impact on the hotel experience, and also impacting economics), I consider this to be a very bad take, and the level of pretentiousness here is next level… let’s unpack.
In this post:
Are people redeeming points terrible freeloaders?
Okay, that’s not my take, but that’s essentially what’s being argued in this story. Let’s first go over the claims being made, and in the next section, I’ll share my take. The story starts with the following:
Several years ago, at a confidential meeting hosted by one of the world’s top hotel chains, a manager launched into a rant. He ran one of the chain’s flagship ultra-luxury properties and was facing a constant, unfixable problem: guests staying for free on points.
“These folks showed up with coolers full of their own food, and had everything removed from the mini-bar so they could put it in there,” he said. “Their sole goal was to stay in the hotel, and spend as little as possible, making sandwiches at the breakfast buffet”—included in the rate—“then stashing them in napkins for a poolside picnic lunch.” His tirade ended with a plea, recalls Henry Harteveldt, a travel-industry analyst at Atmosphere Research, who witnessed it: Could his exclusive property be exempted from the chain’s awards program, to protect the experience for paying guests? The corporate overlords’ answer was immediate: absolutely not.
The story argues that the bigger loyalty programs, which have hundreds of millions of members, are starting to look more like liabilities than loyalty engines. The argument is that the people redeeming points just “aren’t the same.” Per the story:
A senior luxury-hotel executive agreed. “It delivers, especially for a luxury hotel—in low season it’s exactly what you want.” But they acknowledged the downside. “Every luxury-hotel brand is trying to create a community of like-minded people, so it’s a challenge during high season. The people cashing in the points are just not the same.”
The story proposes a few potential solutions:
- Make redemptions far harder to attain, and the story mentions World of Hyatt’s recent announcement that top redemptions will increase in cost from 45,000 points per night to up to 75,000 points per night
- There’s also the claim that there’s a push across rewards programs to reserve elite benefits for those who spend a lot, citing Hilton Honors’ recent introduction of a new Diamond Reserve tier, with an $18,000 spending requirement
- The ultimate solution is to forgo points altogether, and it’s pointed out how some of the true top luxury brands out there, like Aman, Four Seasons, Mandarin Oriental, and Rosewood, all don’t have points programs
It’s kind of funny to look at the comments on Air Mail’s Instagram post about this, with a bunch of people saying “I couldn’t agree more.” Conveniently, those people are mostly travel agents, who of course don’t get a commission when people redeem points. I’d say they might not be unbiased here.
The argument against points programs is a bit backwards
Broadly speaking, I don’t completely disagree with the premise that association with a points program can impact the guest experience. A while back, I wrote about the concept of luxury hotel “points farms,” and before that, I wrote about mediocre hotels’ loyalty program delusions.
To me, the issue is that some hotels want it both ways. They want the bookings that come from being associated with a major loyalty program, but they also don’t want to dole out the perks, and view the members as freeloaders. That’s really not a very nice way to look at guests.
I won’t name names here, but I remember once meeting a hotel manager at a luxury property, and the topic of Bonvoy came up. I couldn’t believe how he spoke about the program — “Bonvoy members don’t know how to act, I wish we could get rid of them.” I was speechless, because to me, it kind of reflects the delusional arrogance of some in the hotel industry.
Here are the points I fundamentally disagree with in the story:
- The premise of claiming that guests redeeming points are staying for free is ignorant; points are literally always earned at an opportunity cost, whether the alternative is cash back through a credit card, or booking through some kind of online travel agency portal that could get you rewards
- Calling guests redeeming points freeloaders is even worse; this is literally what hotel groups market, so how can you hold it against guests when they redeem their points that the program awards them? Are people who redeem their Starbucks rewards for “free” drinks also freeloaders?
- It’s ridiculous to give one example of terrible behavior (wrapping up sandwiches from the breakfast buffet) and then to suggest that this is simply the norm among those redeeming points
- Ultimately hotel managers are working for the hotel owners, and if the hotel owners don’t think the economics of belonging to a group with a loyalty program maximizes their profitability, then they’re more than welcome to rebrand, and that’s fair enough
- Literally the only reason that people seek out properties belonging to Hilton, Marriott, etc., is because of the points programs; other than that, they’re essentially just online travel agencies, and let’s remember that the benefit of direct bookings is that the costs are way lower, given the high commissions that online travel agencies charge
- The story doesn’t seem to grasp that companies like Hilton and Marriott make much of their profits from their loyalty programs
As I view it, the issue is that many hotels associated with loyalty programs do choose to cut corners because they know they can get away with it, due to their loyal following, and people being on the points and status hamster wheel. But it seems unfair to blame guests for that.
Like I said, it’s absolutely true that many top hotels don’t have points programs, and I do think that contributes to them often providing a better experience. But that’s simply because they don’t have any crutch to lean on, and the only way they can get guests is by offering an amazing experience.
If that’s what hotel owners want, by all means don’t join a major hotel group with a points program. But to suggest that the problem with Hilton or Marriott is the points program makes no sense, since that’s literally the main selling point. If hotel owners aren’t happy with the economics of that, they can of course rebrand.
Bottom line
A story argues that points programs are ruining luxury hotels, and that the “freeloaders” using points don’t act properly at hotels, and managers are fed up. While there’s definitely some truth to points programs impacting the kind of experience hotels offer, it’s not fair to blame the actual guests who buy into the programs for the decisions of hotel owners.
Hilton and Marriott shouldn’t abolish their loyalty programs — that’s one of the dumbest things I’ve ever heard. Instead, if hotels aren’t happy with the economics of belonging to a major program, they’re more than welcome to rebrand.
But this gets at the crux issue — so many hotel owners and managers want the business that these mega hotel groups offer, but don’t want the rewards aspect of it, when in reality, that’s what drives the business.
What’s your take on this story about luxury hotels and points?
In the loyalty program, we customers are the products for the hotels, while Chains are the seller.
Aspirational awards are what drive member engagement with a program. My general understanding of the math is that hotels are reimbursed cost when the room would otherwise be empty, and average room rate when occupancy suggests it would otherwise have gone to a guest paying cash. Therefore, these aren’t freeloaders at all, because the property is literally being paid what the points-spending guest is worth.
Ultimately, the bigger issue is that larger programs are...
Aspirational awards are what drive member engagement with a program. My general understanding of the math is that hotels are reimbursed cost when the room would otherwise be empty, and average room rate when occupancy suggests it would otherwise have gone to a guest paying cash. Therefore, these aren’t freeloaders at all, because the property is literally being paid what the points-spending guest is worth.
Ultimately, the bigger issue is that larger programs are going to have more guests earning more points, just because the hotels are everywhere. You don’t have to work hard to be loyal to Marriott, and that’s why Bonvoy sucks for just about everyone involved except Marriott corporate. SPG was a better program, because loyalists had to go out of their way to stay at properties and earn points, so there were fewer guests with elite status, better recognition of that status, and fewer points floating around to fund redemptions at those aspirational properties.
Certain types of people make sandwiches at Holiday Inn breakfast and take them away in napkins. It’s not limited to high-end properties.
I think the airline industry has shown exactly where the hotel loyalty industry can go.
Basic fares=just your hotel room. No other elite perks regardless of status.
Restrict reward seats for folks with co-branded credit card or certain amount of annual spend=reward nights at higher category hotels require co-branded CC or high annual spend.
It's already spelled out. It's just whether the big 3 hotel brands want to pull the trigger. They don't care...
I think the airline industry has shown exactly where the hotel loyalty industry can go.
Basic fares=just your hotel room. No other elite perks regardless of status.
Restrict reward seats for folks with co-branded credit card or certain amount of annual spend=reward nights at higher category hotels require co-branded CC or high annual spend.
It's already spelled out. It's just whether the big 3 hotel brands want to pull the trigger. They don't care about losing members. People are gonna stay at Marriott, Hilton and Hyatt regardless.
Are they? Other than one new year's eve when a friend was in town and I used the sofa bed at the local Delta so that we could go out until late, I can't even remember the last time I stayed in a Marriott hotel, and I don't think I have ever stayed at a Hyatt-affiliated property.
It's neither because I travel very little (maybe 40-50 nights per year on average, mostly for leisure)...
Are they? Other than one new year's eve when a friend was in town and I used the sofa bed at the local Delta so that we could go out until late, I can't even remember the last time I stayed in a Marriott hotel, and I don't think I have ever stayed at a Hyatt-affiliated property.
It's neither because I travel very little (maybe 40-50 nights per year on average, mostly for leisure) nor because I'm actively boycotting them, and I'm not even super loyal to one of their competitors (I've got ALL and GHA status but I don't exclusively stay in those chains).
Hyatt are completely absent from a lot of the places I visit and outrageously expensive in some others (e.g. Spain), while Marriott typically want to charge 5* prices for 3.5* hotels and I typically stay somewhere better for less money. I can only guess that they are able to get away with offering such poor value for money precisely because they get lots of trade due to a combination of brand recognition and the loyalty hamster wheel.
Basic fares == OTA or other promotional fares for hotel, it had been done for decades
I agree with the AirMail author. We just spent four nights at what was a very pleasant hotel for Hyatt Globalists pre-COVID. Now, it is overrun with rude, disgusting pigs. The Grand Lounge is anything but Grand. We won't return to this hotel. EVER.
And this is not the first such experience that we have had with formerly nice chain hotels. The quality of the guests at these hotels has dramatically declined and because people...
I agree with the AirMail author. We just spent four nights at what was a very pleasant hotel for Hyatt Globalists pre-COVID. Now, it is overrun with rude, disgusting pigs. The Grand Lounge is anything but Grand. We won't return to this hotel. EVER.
And this is not the first such experience that we have had with formerly nice chain hotels. The quality of the guests at these hotels has dramatically declined and because people are so greedy, the quality of anything offered as a "free" perk has also declined dramatically. We are going to stay home more often and when we do travel, try some non-chain (or small, off-the-radar) chain options along the way.
Ive been using Points/Miles for over 20 years and it has driven using Hotels in Brands that I normally wouldn't frequent if Points weren't in the consideration. That is exactly the point of loyalty programs.
The more devaluations that keep coming, the more I am considering going "free agent" because boutique and non loyalty hotels just try harder than a lot of loyalty brands. Booking through Amex Fine Hotels gets much more choice and...
Ive been using Points/Miles for over 20 years and it has driven using Hotels in Brands that I normally wouldn't frequent if Points weren't in the consideration. That is exactly the point of loyalty programs.
The more devaluations that keep coming, the more I am considering going "free agent" because boutique and non loyalty hotels just try harder than a lot of loyalty brands. Booking through Amex Fine Hotels gets much more choice and options now.
I also suspect that if the Loyalty "freeloaders" didn't visit these hotels, those hotels would have to discount much more or have trouble being as profitable as they are. The reality is those hotels are being paid for these stays which is important for them and at the same time, those hotels have pulled back so many benefits that they are truly "luxury factories" instead.
My message to all reward programs, airlines and hotels, is: regardless of how you restrict your reward availability, once you offer a reward, behave like it is one. We followed your rules and did spend some money to get there.
I like Marriott program because in Asia (and occasionally in Europe), they have many good hotels and decent attitude. I mostly travel out of the main season and getting room with points was never a problem. Similar for Hyatt.
I place full blame on the reward programs, in particular those that flood the market with credit card points, or give away top tier status simply by holding one of the brand’s credit cards. These actions does not build loyalty. Heads in beds builds loyalty. So, hotel managers: I’m do not piss and moan about the guest who redeems points at your property and then tries to maximize their reward by doing whatever they can...
I place full blame on the reward programs, in particular those that flood the market with credit card points, or give away top tier status simply by holding one of the brand’s credit cards. These actions does not build loyalty. Heads in beds builds loyalty. So, hotel managers: I’m do not piss and moan about the guest who redeems points at your property and then tries to maximize their reward by doing whatever they can to minimize any additional cost. Frankly, the system you belong to encourages them to do exactly this.
Last weekend, I redeemed three free nights at a luxury resort property and spent $3,000 on incidentals — roughly 50% of the cash price for the "free" room. I had a great experience and this was a "win win", but I learned of the property through the loyalty program and otherwise would have had no particular motivation to spend $3,000 there. There are thousands of other places vying for my attention.
My advice to fellow...
Last weekend, I redeemed three free nights at a luxury resort property and spent $3,000 on incidentals — roughly 50% of the cash price for the "free" room. I had a great experience and this was a "win win", but I learned of the property through the loyalty program and otherwise would have had no particular motivation to spend $3,000 there. There are thousands of other places vying for my attention.
My advice to fellow loyalty program members: before booking on points or for cash, check TripAdvisor, OMAAT reviews, FlyerTalk, and other sources to see how a specific property actually treats elite or other loyalty program members. If the recognition is poor, don't book that property at all. Vote with your feet. I tend to avoid Ritz Carlton, for example, for this reason even when paying cash.
If more members did this consistently, I suspect these hotel managers would sing a very different tune when their bookings plummet and the thousands in high-margin incidental revenue they took for granted suddenly disappear.
„ Literally the only reason that people seek out properties belonging to Hilton, Marriott, etc., is because of the points programs“
I disagree: it’s not like all guests are participating at a hotel program. There are guests that choose to stay at a Chain Hotel because of brand recognition (they saw an ad and recognize the name or they know that the hotel will meet some minimum requirement etc.)
We own a number of hotels across brands, mostly Marriott and Hyatt, and across the spectrum from a Hyatt Place to a resort Ritz.
Marriott provided 40% of our bookings and Hyatt about 25% across properties. The programs definitely bring in guests.
That being said, the average spend is about 60% less per week per guest that uses points. They’re also 65% of the complaints and manager escalations. We’ve also noticed that our...
We own a number of hotels across brands, mostly Marriott and Hyatt, and across the spectrum from a Hyatt Place to a resort Ritz.
Marriott provided 40% of our bookings and Hyatt about 25% across properties. The programs definitely bring in guests.
That being said, the average spend is about 60% less per week per guest that uses points. They’re also 65% of the complaints and manager escalations. We’ve also noticed that our long time cash paying guests have stopped coming during the high season as they’ve commented that the quality of the guests has become a Carnival cruise and spending 2k a night whilst around these folks doesn’t work for them.
There is little doubt the both the programs help hotel owners but also the points crowd is an expensive and frustrating customer. We’ve reduced staffing as we don’t see a need to have the same level of service as before.
Would appreciate if you would directly contact Ben to show him your numbers so he can verify you and what you are saying.
Not sure though if you’re allowed to do that.
Our investors won’t let us share financial results with bloggers but these numbers are shared with the appropriate brands.
It’s a tough balance. At the non resort properties, points are an incredible means of filling the rooms. The problems exist entirely at the higher end resorts.
The choices are either become a points factory or reduce services. Our portfolio is aggressively moving towards LSH for this reason.
It’s also why you’re seeing...
Our investors won’t let us share financial results with bloggers but these numbers are shared with the appropriate brands.
It’s a tough balance. At the non resort properties, points are an incredible means of filling the rooms. The problems exist entirely at the higher end resorts.
The choices are either become a points factory or reduce services. Our portfolio is aggressively moving towards LSH for this reason.
It’s also why you’re seeing more high end luxury brands, non points, explode in recent years. In a K shaped economy there is tremendous demand for
luxury but not via the same channels as the past.
Would appreciate if you would directly contact Ben to show him your numbers so he can verify you and what you are saying.
Not sure though if you’re allowed to do that.
Would love to know the hotels with these managers bitching about points users, so I can make sure not to give them my business in the future. I usually pay cash rates for hotels but the attitude is enough to know that I want to see them fail.
It's amazing how much loyalty programs drive business. I'm going on a biz. trip in a few days, and one of my work colleagues said "I'm a Marriott person, so we need to stay at a Marriott so I can get points."
Two things jumped out at me:
1. How sad that this person is enamoured with Bonvoy, and
2. I was reminded that I just don't pay attention anymore to hotel status...
It's amazing how much loyalty programs drive business. I'm going on a biz. trip in a few days, and one of my work colleagues said "I'm a Marriott person, so we need to stay at a Marriott so I can get points."
Two things jumped out at me:
1. How sad that this person is enamoured with Bonvoy, and
2. I was reminded that I just don't pay attention anymore to hotel status or points. While it used to really matter for me, I'm at the point now where I simply don't care; when I choose where to stay, it's pretty much the non-points properties - Pen, MO, FS, etc. and book with my agent that can book MO Fans, Virtuoso, etc. etc. etc. And if it's a chain, same thing (Hyatt Privé and the like). I still *get* points I've earned, and I do use them, but the programs no longer matter to me. I guess I'm just too old now.
I don't know if I would say they are "ruining" luxury hotels and I can certainly understand why people would leverage the points game to enjoy experiences that would be typically out of their budgets. That being said, it's gotten pretty crazy whether we are talking about luxury hotels or premium seating on flights. As I've gotten little older and reached a level of financial wealth, I've started to actually appreciate devaluations and/or programs that...
I don't know if I would say they are "ruining" luxury hotels and I can certainly understand why people would leverage the points game to enjoy experiences that would be typically out of their budgets. That being said, it's gotten pretty crazy whether we are talking about luxury hotels or premium seating on flights. As I've gotten little older and reached a level of financial wealth, I've started to actually appreciate devaluations and/or programs that greatly restrict reward space.