Marriott’s and American Airlines loyalty programs have made major changes and boy are the villagers mad – me included. But should we be?
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Marriott Cancels Award Charts, Goes “Dynamic”
In a bid to further devalue its terrible loyalty program, Marriott Bonvoy has outdone itself once again. Dynamic awards are meant to more closely relate to the cash price of an award stay much like Southwest Airlines directly relates the points required for any trip to the cost of that flight.
Marriott will have no problem being dynamic when prices are high, but is very unlikely to drop rates below a certain level when prices are low. They won’t mention any minimum redemption amounts in the terms and conditions when they finally release them (they haven’t indicated the amount that each Bonvoy point will be worth) when it launches in 2023.
This change makes planning for trips really problematic – how does one ever know how many points will be required for a trip? They won’t.
Another problem I predict, is the Southwest fare drop issue. When Southwest fares go on sale, travelers can refund their booked ticket only to rebook at the lower price, depositing the difference back into their loyalty accounts – a great benefit. But for highly volatile markets, bookings, cancellations, and rebookings will constantly change occupancy in busy hotels.
American Airlines Skyrockets Requirements For Status
Executive Platinums in 2022 will need to spend more than $18,000 to retain their status with American. Just a couple of years ago, it was $10,000 and included eight systemwide upgrades that guests could actually use. That’s now halved to four which have been tougher to use and now require nearly twice the spending than was originally rolled out.
Due to how the new Loyalty Points are earned, starting from zero and earning solely from flying would set back a new flyer to a staggering $27,000+ to achieve Executive Platinum status. That makes it essentially unattainable.
Some lauded the airline for its “innovation.”
“Frankly there’s just not been a lot of innovation in the U.S. airline loyalty space in several years, except for finding ways to require more of customers while giving them less. This is one of the more interesting things we’ve seen in awhile”. – ViewFromTheWing.com
But they aren’t really innovators as Spirit rolled out its new loyalty program and had some of the same features (incorporating credit card spend and ancillary charges) in its Free Spirit relaunch in October 2020. Regardless of its replication efforts, those who already frequent American Airlines’ other offerings (spending on their co-brand credit cards, using the shopping portal, etc.) will find a helping hand in achieving status via these methods.
Leadership at American Airlines group can highlight these changes as consumer-friendly and for many, that will be true. But for the most loyal-most active American Airlines flyers, it’s a substantial setback.
But What About These Hotels?
Hilton has used dynamic awards loosely based on an award chart. For example, a hotel that typically prices its award nights around 40,000 Honors points, might drop the rate to 32,000 points if the hotel is particularly empty, or double it to 80,000 per night if the hotel is oversold. Marriott is doing that to a more exact ratio, why is Marriott’s approach bad, but Hilton’s is accepted?
Hyatt also made a change, going to what I would call “semi-dynamic.” Before you scroll down to leave your comment (some have already headed there) let me explain. While a true dynamic chart would relate points to the dollar spent as Hilton does already, Hyatt has done that approximately. Hyatt enacted Standard, Peak, and Off-Peak awards reducing costs for those times when bookings are traditionally lower, and increasing when hotels are consistently busier. Busier hotels charge more, less busy hotels charge less – it’s the same thing but more predicatble.
IHG hates its elites so it was no surprise when they went fully dynamic, but is that really the standard that Marriott holds itself to?
And What About These Airlines?
American lagged behind United for 1K status requirements EQD at $15,000 annually instead of $17,000 at United. Delta offers Diamond status for spending $250,000/year on their co-branded credit cards; American is lower by 20%.
Almost all of the airlines had a waiver for earning entry-level status with credit card spend when new spending requirements were introduced. It’s all the same, right?
Why These Changes Still Feel Egregious
Other airlines have innovated in similar ways, Marriott is late to the party with dynamic pricing, so why do these announcements feel so egregious?
The timing is bad. The world still hasn’t fully re-opened, businesses are not traveling at the same rate and a number of very regular travelers have been sitting on the sidelines. To add “enhancements” or “simplifications” now is the epitome of poor form. This comes on the heels of huge government assistance and PPP loans where taxpayers (aka “guests”) saved those companies from certain death only to be met with yet another entirely predicatable cash grab.
Dynamic award charts have been shown to not actually be truly dynamic. They are dynamic when they relate to how full a flight is (charging more), but they tend to be less dynamic when they are empty. A full flight may have no limit to the number of miles required to secure a seat, rising with the unending price increases for the cash cost of the flight. However, when flights are as cheap as $16 one-way cross country as we saw earlier in the year, the rate never dropped below 5,000 miles. This will be the same for Marriott.
These changes are not new, the programs are not innovative. However, they feel, at a minimum, gauche, if not outright distasteful. Marriott is finding new ways to squeeze every last drop from its customers in the name of loyalty and American should just exclude new members from its top ranks – it would feel more honest. These changes may have been inevitable, but now seems like a bad time to implement them.
What do you think? Are these changes ill-timed?
Nice job unpacking all this and appreciate your conclusions. With respect to Marriott to me their changes are not a surprise and we should expect more of the same. My argument here is Marriott’s does not need to lure travelers with a beneficial loyalty program. It has a very large market share of the hotel business in much of the geography along with a commanding presence in corporate contracts. That gives them the ability to dictate terms as your choices – especially for business travelers – are more limited. Yes, Hilton, Hyatt, and IHG are competitors, but they can’t match Marriott’s market share overall. And, while we may not want to admit it Marriott does a good job of providing a somewhat consistent product across its brand. That is the case now with the limited services they are providing which are going to be permanent.
I do feel many travelers still don’t understand that Marriott’s customer ultimately is the hotel owners. Marriott sells the owners their brand and other services. These owners have been hurt badly during COVID and we should expect Marriott (as well as Hyatt and Hilton) to do more to support their owner customers. There is no real reason now for them to care what the points crowd thinks about these changes. It is just a bit of noise. You can move to another brand, but you will be back at some point. And like me if you travel as a corporate employee you will be in a Marriott like it or not.
Excellent points Mike. I agree 100% with what you wrote = the reality of the business world is their objective is to make money for the owners. Period. We consumers are lucky when a company does things that are extra beneficial to us, but the world as we know it is changing in every industry. The financial engineers are figuring out ways to squeeze more profit at the expense of the customers – this is happening in all industries where financial engineers are involved in optimizing the return for owners/investors and also to get the executives maximum compensation. For example: Look at what is going on at Disney. The era of wonderful/real loyalty programs is over. The golden era for low budget traveling using points and miles has passed unfortunately. I’m glad I was able to take advantage of it while I could.
Until the next recession…
Unless you belonged to Starwood before it was acquired by Marriott. Service is now awful and rewards program is a shell of itself. Guess we’ll use our Costco card and forget about our Bonvoy American Express card.
This is clearly opportunism at its finest. It’s clear the contempt these companies have for their “most valued”
Lest not we forget we get less for our loyalty with each passing year.
I plan to do away with all loyalty card and credit cards. I’m loyal to myself. I’ll feel free to stay at exactly or fly the exact airline/hotel that suits me.
We talked about this recently- the Accor programme is as dynamic as it gets. You can spend your points on an Ibis in Indonesia or a Sofitel in Spain and know exactly how much you wil get for them every time. The downside is the lack of gamification in redemptions, although one can often leverage promotions to boost earnings.
From a consumer perspective, the hotel market is significantly more straightforward than the airline one- spending a night in a budget hotel will almost invariably feel a lot better than doing so in the best economy class in the world, and upgrading to a better hotel or a higher room type rarely costs 400-500% more than the price of a bog standard Holiday Inn Express etc.
I appreciate this can be painful for those who have to travel for work, use specific hotels chosen by their employers, and end up amassing points that have uncertain, or even dubious, value. On the other hand, those who visit a variety of places and can choose where to stay should consider whether chasing hotel elite status is worth it for their specific interests and travel patterns.
Were UA to have the exact same qualifications as AA going forward, I think I would have a much easier chance re-qualifying for 1K with that plan than I will under whatever re-inflated PQP number they demand for next year (guessing 16K w/segments and 20K w/o segments).
You said “instead of $17,000 at United.” Did you mean to say 18000? There are so many numbers and I’m so confused… IIRC they went up to 24k the year covid hit right?
I feel like Marriott already had dynamic pricing as it was always more than the standard rates anytime I looked up trips. Now they are all in with it. Def a big hit. I think losing 5th night free is the part I’m most disappointed in.
I think American Airlines goal is to make status really hard to earn. With these changes I think a lot of people will eventually lose status. Though they gave it out like candy this year to get people on the loyalty points hamster wheel next year. I’ve been either EXP and PP the last 6 years. This year I will likely not even get to gold. I don’t see myself trying to attain status for airlines. I typically will pay for first class on a transcon and for shorter flight on single aisles no one is getting upgraded except for a few CK’s. So I just don’t see the benefit of having status anymore. There are no real perks. If you hit the spend requirements on AA for EXP I am guessing you pay for 1st class and won’t rely on upgrades. So the perks just aren’t there anymore. One works stays has been devalued with all the lounges that have closed and how few flights are offered internationally now.
Curious if people are going for status with AA what specific perks are getting them to go for it.
The only one that matters: Upgrades!
I’ll hit the AA EXP goal next year no problem with a bit of credit card spend. I ditched Marriott for Hyatt this year, but really I’ll stay wherever it makes the most sense now.