Hyatt says it is adjusting to the new reality of reduced business travel but more leisure travel, though it seems to me Hyatt is just preparing us for a major devaluation next year. That would be a disastrous move for the hotel chain and shows a fundamental lack of understanding of loyalty by the Hyatt CEO.
A Warning To Hyatt CEO, Who Seems To Be Confused About Loyalty And Hinting About Massive Points Devaluation
Hyatt CEO Mark Hoplamazian told Skift that his hotel chain is pivoting from points to great experiences as a means to capture loyalty:
“We’ve decided that a more enduring way to actually capture loyalty is through great experiences, and that starts with leisure. So we’ve shifted the portfolio along a very deliberate position, which is we can drive true loyalty that’s experiential loyalty, more than it is the currency of the points and becoming a prisoner of the loyalty program. And that’s worked.”
What is true loyalty? Dollars spent? Nights stayed? I’m not sure what Hoplamazian even means by “experiential loyalty” but I will certainly stipulate that there are certain experiences, some tangible, some less so, that foster loyalty. Breakfast is big for me as a Globalist. It’s an experience that I bank on at a Hyatt. But I don’t think that is what Hoplamazian meant (more on that below).
There are certain memories that draw me back to properties over and over. Paris is full of great hotels, but I love the Park Hyatt Paris because it is where I had my honeymoon and because of my friendship with former GM Claudio Ceccherelli. I generally will not look elsewhere for a Paris hotel.
But I would have never gone there in the first place if not for the chance to earn or redeem Hyatt points there.
And if Hoplamazian means that experiences like hip bars or cafés inside hotels will replace the value of points, then I strongly disagree.
View From The Wing says it is a mistake to unbundle the customer as business versus leisure. That is true. Business travelers and leisure travelers may have different reasons for choosing Hyatt, but both are loyal to Hyatt because the elite status and points make going out of the way to stay in a Hyatt property worthwhile. That is the case for me: it is certainly not always convenient for me to choose Hyatt over Hilton or Marriott, but I make the effort because overall the points add up and the treatment of those with top-tier status tends to be far better than at other hotel chains.
Big Devaluation On Horizon?
“With roughly half of Hyatt’s business likely to come this year from leisure travelers, the company encourages guests to sign up for its loyalty program less for the points and more for perks, such as access to discounts on stays, “curated meditations” to help them relax, the ability to stream content from their favorite streaming services via Hyatt’s TVs, and so-called “milestone awards,” such as access to its “club lounges” at select properties that are separate from elite status and are available to everyone based on hitting certain targets for stays.”
Well, isn’t this elite status in a nutshell? Discounts, milestone awards, club lounge access? To argue those are more important than the points may be subjectively true for some, but I would wager not for most and objectively the points can hold more value, depending upon where you redeem them.
This makes me think that Hoplamazian is setting us up for a big World of Hyatt devaluation next year. The focus will be on elite benefits, with the cost for redemptions going way up. Hyatt pricing is still great compared to the competition (an imbalance that typically is closed over time), but it already has edged up over the last few years. However, I expect the new Sabre reservation system in 2024 will lead to much more variable pricing that will instantly eliminate the outsized value of certain redemptions.
Then in 2025 I expect the other shoe to drop, with status awarded based upon dollars spent or at least a combination of nights and dollars spent. Currently, you can earn top-tier status for 60 nights, regardless of how much you spend, which is why so many are making MGM mattress runs this month in Las Vegas.
All of this is a mistake…I spend a lot of money on Hyatt each year because I see relative value in the World of Hyatt program. Take that away and I will go full free agent and probably never look back. I’m still willing to play the game for those aspirational redemptions like the Ventana Big Sur or the aforementioned Park Hyatt Paris, but make those 125K/night instead of 45K per night and I’m out…and so will many others. With Hyatt’s more limited footprint, it really cannot afford this.
Points are still huge in the World of Hyatt program because redemptions are still attractive and a huge driver of loyalty for me. I care about amenities, sure, but I could not care less about “experiences” like curated mediation. I also like Regency Club Lounges and desks in my room, and I’m still in my 30s. Before Hyatt destroys its loyalty program, I hope it really understands what is actually driving loyalty right now. It’s not the yoga.