Hotel loyalty/rewards programs seems to be an unsung gem. If you are deep in the NerdWallet game, you probably know the ins and outs of the hotel loyalty point game. You likely have your favorite, go-to hotel chain, and you might even have a credit card connected to it. But what about the rest of us? Let’s dive in and get a closer look at how to own the hotel loyalty system, and what it really looks like from a consumer perspective these days.
So what do hotel loyalty programs typically get you? According to Jill Gonzalez, a WalletHub analyst, “The best hotel rewards programs offer a wide range of perks, including points redeemable for free nights, member discounts, free room upgrades, express check-in, late check-out and free access to health clubs and spas.” Sign us up!
But how do you choose which hotels to join and which ones to be more loyal to, especially when there are so many and they all seem...well, the same! There are dozens of different top ranking lists out there, like Matador Network and Travel Awaits, that are great resources for analyzing the pros and cons of certain programs. Part of their analysis includes rating the hotels’ programs by the number of points earned per dollar spent, multiplied by the value of each point, divided by 100. For example, here is a breakdown from WalletHub:
To find the best hotel programs, WalletHub used the ten largest hotel chains in the US and assigned point values to five categories for a total of 100 points. The categories were geographic coverage for 15 points, rewards value for 25 points, earning policies for 15 points, redemption policies for 25 points, and various other features for 20 points. Each category was also broken down into subcategories. The analysis also used data from the US Bureau of Labor Statistics, household income data from the US Census Bureau, and the US Travel Association to create three consumer spending profiles for the light traveler, the moderate traveler, and the heavy traveler.
With all this said- who is winning here? Is it the hotel chains or the customers? According to Sung H. Ham, Assistant Professor of Marketing at Michigan State University, “Hotel chains benefit more from hotel rewards programs than consumers. In order to receive significant benefits from the hotel rewards programs, consumers will need to combine their rewards program with a hotel credit card or be a frequent business traveler. The current structure requires multiple stays to receive a free night or to be elevated to a premier tier of benefits. As a result, hotel chains can avoid rewarding the consumer unless the consumer has been loyal and committed over a significant period of transactions.”
On top of the hotels themselves, there’s a third party involved who’s also benefiting heavily - credit card companies. Oftentimes, in order to join a hotel program, you need a credit card connected to it. Some programs even have co-branded credit cards, which allow frequent guests to earn free nights on every purchase they make.
So it sounds like something is a little off here, right? Loyalty programs benefit the hotel, and also the credit card companies, but what about the consumer/guest? Let’s think about how we can benefit them first, instead.
Hotels are certainly leaders in the loyalty space. And even they have room for growth! We've researched the current gaps and make it super easy for brands, hospitality spaces, and other industries to level-up their loyalty game. Reach out if you're interested, we'd love to chat.
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