Jun012011

Should You Participate in a Loyalty Program? A Response to Christopher Elliott’s article

Consumer advocate Christopher Elliott provides words for thought on the question of whether a consumer should participate in loyalty buying programs. His May 26 article, “Should you participate in a consumer loyalty program? 7 things to consider” lists seven things expert advice says you should consider when looking at loyalty programs. I find all of the advice pretty good and worth consideration, and since I am in the business of promoting hotel loyalty programs I feel I should respond to his article.

Like Christopher Elliott, I try to look at the big picture of being a consumer who wants fulfilling leisure time and/or a tolerable business life involving travel on hotels and planes. Without going broke!

Frequent traveler marketing targets the more affluent and all travel consumers are bombarded by the travel and financial industries “dream” advertising. The goal of marketing is to create buyers and there are plenty of us buying our dream vacation.

Christopher Elliott’s main argument is frequent flier and frequent guest programs are better for the company than the consumer. He points out that loyalty programs result in destructive consumer behavior in “a pointless effort to gain coveted elite status.”

Chris asked loyalty program experts for consumer advice before you jump into loyalty programs.

Priority Club 2011 Platinum card.

 

 

Expert advice on what you should know before jumping into the loyalty game

1.       Do the math

2.       Make sure it is the right company for you.

3.       Don’t let it control you.

4.       Make sure the program is listening to you.

5.       Don’t do it if it complicates your life.

6.       Read the privacy policy.

7.       If you are an infrequent customer, just say no.

 

Do the Math. – Loyalty Traveler response.

I have. Hotel loyalty programs work for my business and family travel situation.

Camping, couch-surfing, timeshare rental, or Priceline.com might be better for your situation.

As Loyalty Traveler I have published hundreds of articles over the past three years showing consumer math on a variety of hotel promotions and hotel loyalty program benefits in more than a dozen global hotel loyalty programs. I find plenty of situations where the loyalty math is rather rewarding.

I also have experienced the benefits of no tier, low tier, midtier and high tier in several major hotel loyalty programs to offer some anecdotal evidence as a frequent guest for elite status benefits and value.

Park Hyatt Chicago Nomi Restaurant complimentary breakfast on award stay as a Hyatt Gold Passport Diamond member.

Make sure it is the right company for you. – Loyalty Traveler response.

Comparison of different hotel loyalty programs is one of the best features of Loyalty Traveler. There are plenty of experts in Hilton HHonors and Marriott Rewards or any single hotel loyalty program. I try and show how programs stack up against each other in various aspects.

For my travel I find IHG, Hyatt and Starwood work better for me than Hilton or Marriott, but that certainly does not mean that these other two hotel loyalty programs are inferior. A change in travel pattern can result in a change in loyalty preference for the best fit.

Starwood is a great program for me with my proximity to San Francisco where there are numerous properties in the downtown area. Hilton was best for me when I had millions of frequent flyer miles I could transfer into HHonors hotel points. Best Western was the best choice one year when I frequently traveled to small town colleges across the USA. This year I am finding Wyndham, Choice and Best Western work well for my road travels around the western U.S.

Don’t let it control you. – Loyalty Traveler response.

I agree with the argument that loyalty programs can result in destructive consumer behavior in an effort to gain elite status. I had that experience with frequent flier programs. I am a former frequent flier addict.

My epiphany happened when flying over the Andes in June 2007 in Business Class on Air France from Buenos Aires to Santiago. The Delta Airlines roundtrip business class ticket from Buenos Aires to New York JFK cost under $600. The economy class Delta ticket from Washington, D.C. to Buenos Aires to start the Delta business class flight trip cost about $600. The 25,000 United miles I burned to get an economy class award ticket from California to Washington, D.C. probably cost about $600 to earn on some earlier United Airlines mileage run that put me closer to 1K elite status with Mileage Plus (and probably took me to Europe or Asia for a few days).

I was buying tickets to earn elite status to earn double redeemable miles to burn miles on award tickets to fly to the originating airport for a series of flights primarily for the purpose of earning more miles and elite status with a second airline. Buenos Aires just happened to be a great city with an incredibly low fare and the entire trip was built around earning elite status rather than spending time in Buenos Aires. Not that there is anything wrong with earning cheap elite, but ultimately I found myself not flying at all in the great recession year of 2008 and all my frequent flyer elite cards meant nothing as my status went unused and expired.  

Air France over the Andes EZE-SCL, June 2007

On the other hand, buying 1.0 liter bottles of Stella Artois from the Buenos Aires corner market for the equivalent of US $1 is an indelible memory. Oh, and the Presidential Suite at the Sheraton Libertador on a Cash & Points Starwood award stay was pretty cool too.

The 23 foot long bathroom hallway with sauna room and huge spa tub in Presidential Suite.

Elite status is certainly not pointless if you have a plan and the ability to reap the benefits of elite.  My number #1 tip for hotel loyalty programs is earn elite status and anyone who has flown on an airline lately besides Southwest knows there is real economic value in elite status with baggage fee waivers.

But when you find yourself burning systemwide upgrades on a no-stay $1,000 mileage run to Asia or Australia primarily to earn the miles for elite status to earn more systemwide upgrades, then you might be overdoing it if you can’t find time to hang out for a few days in your foreign ticket destination.

The Quiet Man anecdote or I left my heart in County Donegal

My wife and I spent two summers in Irish B&Bs (B&Bs were US$50 to $60 vs. $100-$175 average hotel rate in 97/98). We noticed the prevalent travel pattern of Americans was to drive in at 9 to 10pm, have breakfast in the first hour of the morning and drive away again by 9am. Kelley and I didn’t rent a car and averaged 3 nights at a dozen or more B&Bs. There was a definite hypermobility travel pattern Americans exhibited that other nationalities did not show as a group.

Hiking in Ireland July 1998 - Kelley recalls this as the hike around Loch Blister

Make sure the program is listening to you. – Loyalty Traveler response.

I don’t really get the Mark Johnson Loyalty 360 statement “I think consumers want and need to have programs that encourage participation and create engagement that leads to loyalty.”

That is marketing speak to me.  I think a hotel loyalty program is listening to me when I get a response to my questions about the rules of the program or the hotel program shows a proactive attitude for program changes disclosure.

Big negatives for me with hotel loyalty programs are:

  • HHonors erasing account balances for account inactivity after 12 months. Most programs have terms stating account points will be deleted if there is no account activity after 12 or 18 months, but Hilton HHonors seems to be the main program that actually deletes points from member’s accounts. I think it is more like 24 months of inactivity before points are actually deleted.
  • Changes to reward night cost without giving members full disclosure of pending changes with an opportunity to redeem points at the lower level before reward increases occur. Marriott Rewards, Hilton HHonors, and Club Carlson all have made changes to their reward charts in the past two years without publishing  a complete list of hotels changing hotel category level before the reward levels for free nights increased.  

Hyatt Gold Passport introduced a new high category reward level last year with category 6 hotel rewards at 22,000 points, but also published all hotel reward category changes and gave members specific dates for making and adjusting hotel reservations under the most advantageous category cost.

Kelley and I lived with this view from the Amsterdam Hilton for about $25,000 worth of free nights through HHonors airline miles transfers.

 

Don’t do it if it complicates your life. – Loyalty Traveler response 

Another Loyalty Traveler personal anecdote.

Work: I did mileage runs for 9 years. Several of those years were while working as a public school teacher. Flying weekends to Europe to earn 12,500 elite status miles and 25,000 redeemable frequent flyer miles takes a toll, even in business or first class. Flying mileage runs between Thanksgiving and Christmas during the most hectic time of the school calendar affected my work in the classroom. Ask any teacher if they kick back for the weekends in early December.  I never even considered a late-August, early-September trip when teaching school.   

Relationships. I am married. Kelley did not particularly like my flying off to Singapore for three to seven days or spending the weekend in Paris or Amsterdam. She liked the business class upgrades and First Class award flights. I have great memories like walking inside Notre Dame cathedral and the fireworks in Singapore, but these are not shared memories; which we have thousands of in our years together. 

Loyalty program addiction can complicate your life. 

The beauty of hotel loyalty programs is you can have a shared experience in a hotel room with someone else for no additional cost. The airline seats for your flight to Australia will cost twice as much for the same shared experience.

Kelley with cockatoos in a park in Sydney, Australia

 

Read the privacy policy. – Loyalty Traveler response. 

Does anyone have electronic privacy in America?  

My primary complaint is the way companies use Facebook and Twitter to access anyone you know. All those Facebook sweepstakes provide hotel companies with files of marketing data. It is not that I am friendless in real life, well damn near, but I don’t accept my actual friends on Facebook because I don’t want every loyalty company to have that much personal information about me and my friends. I didn’t mind the days when I gave up my personal identity to anyone offering me a good deal, but these days you have to give up your entire social network to marketers.

San Francisco Loveolution Parade

 

If you’re an infrequent customer, just say no. – Loyalty Traveler response. 

My general advice is don’t bother with trying to earn elite status in a hotel loyalty program if you are staying less than 20 hotel nights in a year.  Go for the best hotel loyalty promotions like free night offers and use Priceline, vacation packages, auction sites and any deal you can find.

The loyalty elite game is truly the most beneficial for frequent travelers who can leverage good value deals with reasonable hotel rates and airline fares and who stay frequently enough to reap good value rewards. 

My parents are on a Priority Club high after just redeeming a free night earned last fall. They asked me about Priority Club’s current promotion and I told them to look at Marriott (2 stays for 1 free night at category 1 to category 4 hotel), Best Western (3 stays for 1 free night) and Starwood stays (3 stays for 1 free night).  

For my parents I will probably figure out how to get them 8 paid nights for $700 and 3 free nights. Their trips usually work out for nicer hotels at better value when I plan their hotel stays. 

The logic of paying $100 per night for two hotel nights at Marriott brand hotels and getting a free night for a future stay at a $200 per night Marriott hotel does not resonate for some travelers when looking at the alternative of two $60 hotel nights. 

Points, miles and free nights only have value at the moment they are redeemed and used.  Spending $120 now instead of $200 is probably the better choice if you are not sure you can use a free hotel night or whether you will get back that $80 premium to earn the free night with Marriott. 

It shocks me to think how many free hotel nights and airline miles I earned that went unused over the past 25 years. 

Conclusion 

Christopher Elliott concludes he is not too keen on loyalty programs. He thinks the intent is to turn you into a compulsive shopper.

I confess. Hotel loyalty programs have turned me into a compulsive hotel rate shopper, but it is not blind loyalty. I have approached this purchase point through experience and considerable analysis.

 My true addiction is travel and I have compulsively traveled and shopped travel since I was a teenager.

1977 phone call –

“Mom, I am in Arizona and I am going to Florida. No, I am not hitchhiking. I bought a $50 Greyhound ticket. Yes, all the way from California to Florida and I will call Aunt Betty in Tampa.”

I have couch-surfed with family and friends, I have camped for weeks at a time and I have tried B&Bs, timeshare and house rentals.

Hotels give me freedom to travel and get a self-contained room in a comfortable establishment with well-defined quality standards for different market segments from the economy brands to the luxury brands.

I like the comfort and privacy of hotels among the various accommodation options I have experienced. 

I am keen on hotel loyalty programs. With hundreds of hotel nights over the past decade, I think hotel loyalty programs have made me the most comfortable traveler I’ve been in 51 years of travel. And the price fits my budget.

Sleeping on a summer day at Le Meridien Den Haag

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

More articles by Ric Garrido »

Comments

  1. Ric,

    This is a great post and you do a great job explaining how hotel loyalty programs can provide real benefits.

    I recently got over 200,000 points and 2 free InterContinental nights through the Sweet Dilemma and Crack-the-Case promotions for only $70 of incremental spending!

    You’re right – Targeted loyalty is much more beneficial for the consumer than blind loyalty to any particular program!

  2. I gotta say, having just started my Hyatt Diamond Challenge, that unless something goes terribly wrong on a stay I’ll be working to renew my status with Hyatt. There are numerous suburban Chicago Hyatt Places to do mattress runs and the upside would be the redemptions at places like the Andaz hotels or the Park Hyatt Paris Vendrome (we have stays lined up at the Andaz London and Vendrome next year). After my first challenge stay at the Hyatt Regency McCormick that saw us upgraded to the Grand Suite on 33 (lakeside) I knew I was in love with being a Diamond Member. I’m going to do about $1000 spend to achieve Diamond through Feb 2013 (Diamond status + 8 confirmed suite upgrades + Breakfast + Lounge + WiFi + enough points for at least 2 category 6 award stays), and if I play my cards right I think it’ll take about $1000-1200 per year spend to maintain that status above and beyond normal travel. Based upon my wife’s reaction to walking in to the Grand Suite I think that she is more than happy with the $1000 spend 🙂

  3. I think I’m close to being controlled. I did a platinum challenge run on AA to London in April for under $3K +miles for 1st upgrade on way over then used HHonors points for two nites at the Waldorf Hilton – great location. I’m doing a weekend to Helsinki since it was only $2200 in business with free Hilton stay.
    Today I scored two one-way UA 1st class tickets to AMS to see the tulips & Floriade next April. (Now waiting for my British Airways Visa 100K miles to post so we can return home in Club World w/ stop in London. for the 2 Saver tickets (67.5K)I mashed up United and Continental since UA didn’t show mixed cabin availability from DCA to ORD but Contl did, I made resv w/ Contl RT (since Contl won’t allow ow until June 15) The resv came with a UA locator # so I called UA and ditched the return, combined UA and Contl miles to get the two 1st class ORD-AMS.
    And right now, I’m thinking of calling about the Chase Sapphire Preferred.

  4. I am 51 years old and my father was in the army when I was born at Fort Ord, California, a location I can see on Monterey Bay from my bedroom window in Monterey.

    My family moved every year until returning to this area in late 1975. I continued to move around a lot on my own since 1977 and with my wife since 1982.

    I began using loyalty programs to extend my travel budget in 1989. Honeymooned in London and Edinburgh and with free tickets earned on Pan Am promotion we went to the U.S. Virgin Islands on a second honeymoon trip.

    Had United and Westin elite status by 1991 or 1992?

    I have been traveling a long time.

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