There’s a traditional way of thinking about points, whether it’s airline points or hotel points. And that’s that:
- The company pays for travel
- The traveler keeps the points
- It’s the kickback to the traveler that keeps them loyal, spending other peoples’ money
But for leisure travelers it is different. The points are a rebate on your own spending. You’ll take a lower rate up front, versus a business traveler who might even stretch and spend more for a rate that includes bonus points, or who tries to maximize spending their per diem on property to earn points in the program.
So with leisure travel, the thinking goes, points matter less. But that’s an antiquated notion, because of the prominence that co-brand credit card partners (and other partners) have taken on – buying points from the travel business, and rewarding the customer for other activity outside of the hotel or plane.
Anyone who seeks to conclude that points no longer matter (“guests rarely say in focus groups that they opt for its brand because of the points”) miss the point.
- Points may be table stakes
- But de-emphasizing points makes you less rewarding than competitors and costs business
Hyatt’s CEO says that experiences now matter, with leisure, more than points.
“We’ve decided that a more enduring way to actually capture loyalty is through great experiences, and that starts with leisure,” Hoplamazian said. “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.”
This may be true in part. Hyatt has certainly acquired more leisure properties such as its deal for Apple Leisure Group giving them a big presence in all-inclusives. That taps the leisure market.
And nearly every loyalty has two components baked into one:
- Reward: that’s the points or rebate
- Recognition: better treatment for elite guests and sometimes even just for being a member
Different consumers are motivated more by one facet versus the other. Leisure customers may be less motivated by points as a rebate for hotel stays, but may be more motivated by points for credit card spend. Recognize – elite benefits – matter in differing amounts to different guests. Perhaps a club lounge matters for a business traveler while a free breakfast in restaurant is more valuable to a leisure traveler. A confirmed suite may matter more on a leisure stay (when it isn’t just you in the room!) but may also be what motivates the business stay.
Business travel is down, but it’s a mistake still to unbundle the customer as business versus leisure. Business travelers travel for leisure too, and it’s those leisure stays that are often most important to the business traveler – abuse them all you want, but not when it matters most when they’re traveling with their family.
So what is Hyatt doing differently, with more leisure travelers and fewer business travelers than pre-pandemic? They say they’ve shifted but they are really doing… the same things, other than adding leisure-focused hotels to their portfolio.
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.
They try to get guests to sign up for he loyalty program, and then they offer guests better treatment for staying incrementally more nights. There hasn’t been as much of a shift as some people like to claim.
