How Hotels Are Dealing with Royalty Programs & Points That Were Not Used by Guests During the Pandem
Updated: Dec 18, 2020
With US and Europe hotel occupancy rate at its lowest, hospitality companies have to adapt their policies to fit this unprecedented time of COVID-19 pandemic. Hotels have acted so their loyalty programmes can remain at a satisfactory level for customers. Brands find their ways to help guests with existing bookings and elite status. Most major hotel chains have already extended the elite status expiration, implemented flexible cancellation policies, and offer other incentives to keep travellers engaged with their brands.
On 25th March 2020, Hilton was the first brand to announce elite status extensions and paused points expiration for all members. Below are detailed examples of how Hilton and IHG, which are some of the leading hotel loyalty programmes, are adapting to the current crisis and providing flexibility to their best valuable customers.
2019 Status Extension. All members whose 2019 status was scheduled to be downgraded on March 31, 2020—whether it's Diamond, Gold or Silver—will automatically receive an extension through March 31, 2021.
Status Extension: All Elite members will now keep their current Status through March 31, 2022, even those who were scheduled to downgrade in 2021.
2021 Status: Starting January 1, members can earn Status with half the nights, stays or Base Points required in 2021. And as a reminder, all the members' 2020 nights will rollover to next year, giving them a head start to upgrade their Status faster in 2021.
Milestone Bonus: Members can earn Milestone Bonuses in half the nights. They can rack up 10,000 Points for every 10 nights they stay, starting at 20 nights (instead of 40) in 2021.
Points Extension. We will pause the expiration of all Points scheduled to expire between now and December 31, 2021.
Gift Membership: Diamond members who stay 30 nights (previously 60 nights) in 2021 will be able to give the gift of Gold status to a family member or friend. If they stay 60 nights, the gift of Gold will be upgraded to Diamond (previously 100 nights).
All members' program status earned in 2019 will be extended through January 2022.
For Spire Elite members this includes the Choice benefit of 25,000 bonus points or gifting of Platinum Elite status to someone each year.
IHG Rewards is reducing the Elite membership criteria required (nights or points) this year by 25% or more.
IHG is extending the expiration date of anniversary certificates that are set to expire in 2020. Certificates expiring from 1 March 2020 can now be used through 31 December 2020.
Certificates issued in 2020 will have an 18-month redemption time period.
Intercontinental Ambassador status and free weekend night certificates have been extended by 6 months.
Source: Forbes 2020 — Photo: Farazad Group Ltd.
According to Akamai, Loyalty programs in the Hospitality and Travel industry have evolved with one goal in mind "Keep a brand's most valuable customers hooked in to return as quickly as possible by adding more value to their travel and non-travel experiences". Loyalty programmes are particularly important, where they will play a crucial role in driving the Hospitality and Travel industry back to pre-pandemic levels (2019).
Loyalty programs are likely to offer bonus points for new bookings after the travel restrictions end, which has the benefit of raising new earnings and future redemptions, encouraged by higher account balances. Also, increase the accrual rate of points or decrease redemption requirements for existing members, or offer sign-up bonuses to new members, which can be used to encourage future redemption activity. One example is the American Express and Marriott Bonvoy collaboration, which offers 125,000 points to its approved new cardholder members.
Hotels across the world have had little choice but to be flexible in order to support their businesses during the pandemic. The ones who will survive are those who can come up with strategies to maintain or increase the new and existing customers and to overcome the period of low occupancy/demand. This is now even harder especially with the guests' increased expectation in terms of safety and hygiene including cleanliness of hotels.
According to an HVS article from September 2020, we are heading to recovery where occupancy, ADR and RevPar are forecasted to be back to 2019 Levels by 2024. Therefore, in the meantime, hotel brands will need to ensure their brand value.
As mentioned above, they will have to work harder and smarter to maintain brand names and operating efficiencies. Graham Dodd, Managing Director, Development-UK & Ireland at Hilton mentioned that "Hotel brands will need to ensure that the engine rooms of their distribution and loyalty programs produce an even greater level of new and repeat business, in particular targeted at the domestic market in the short-term, whilst also applying pressure to the OTAs to address the balance of fees payable."
Another point was raised by Tammy Lucas, Vice President of Marketing for Best Western Hotels & Resorts. He mentioned in his interview on how Best Western Continues to Build Loyalty Post-Pandemic by extending the Elite status. He said "Our Best Western Rewards® program remains one of the top ranked loyalty programs in the industry, and we are grateful that our BWR members remain loyal to us. In recognition of this loyalty and understanding the impact that this crisis would have on our BWR members, we wanted to show them just how much we care, so we were the first brand to announce that we were extending their Elite Status until 2022".
In conclusion, many hospitality businesses were hit hard by the coronavirus pandemic as restrictions are forcing pubs, restaurants and hotels to a close and lead to a massive drop in occupancy. The increased focus on customer service, particularly to loyal brand customers is the essential factor to keep connected with loyalty customers. Most of the hotel chains agreed to let customers keep their existing elite status programs through the end of 2021, and they are frequently communicating with guests. Moreover, they have reduced the number of points needed to reach elite status and extended the legality of expiring points to keep their business going, in the hope that occupancy rate will rise again soon, and their regular travellers will return. I personally am optimistic that we will rise from an interesting year of limited to no travels, border restrictions and move forward with more travelling than even before without the current restrictions in 2021. Happy Holidays and a very Happy 2021!