The great loyalty shake-up [On Greg’s mind]

March 2022 is promising to be a monumental month with regards to airline and hotel loyalty.  In March, American Airlines will complete their shift from offering elite status to flyers to rewarding elite status to customers.  Also in March, Marriott will drop award charts, leaving Hyatt and Radisson as the last major hotel chain award-chart hold-outs.  And Hyatt will celebrate that occasion by expanding their award chart with peak and off-peak (but more peak) award pricing and a painful category re-shuffling.  But, lest you think the hotel landscape is all doom and gloom, both Marriott and IHG will soon (?) allow us to top-off our free night certificates with points!  And, IHG is going much further by overhauling (for the better) their U.S. credit card benefits, and promises to overhaul their rewards program too (TBD as to how positive the latter will be, but I’m optimistic).

Alaska slides down a slippery slope

While March is the pivotal month, not all of the massive changes in the loyalty landscape are tied to March.  Tim’s recent post about Alaska Airlines’ horrible Malaysia Airlines award prices shook me.  Is Alaska’s vaunted Mileage Plan program heading towards the scrap pile? Here’s what Tim wrote in summary:

Each time Alaska rolls out a new One World award partner, I get shocked anew.  In less than a year, Mileage Plan has clearly fallen from being arguably the best domestic program for international travel.  While there are still terrific values to be had (although to currently hard to use destinations like Japan and Hong Kong), the continued pulverizing of the award chart seems to indicate that it’s only a matter of time before the remaining sweet spots are obliterated as well.

In other words, the latest salvo in Alaska’s downhill march happened recently, but the overall trend began much earlier.

Delta takes us on a roller coaster ride

While Alaska is seemingly headed in the wrong direction, Delta has made positive changes that will hopefully stick around long term, and hopefully spread to more programs.  In March of 2021 (of course it was in March!), Delta made award flights desirable for elite members.  They started by adding the ability to use upgrade certificates on award flights.  That was huge!  Next (but also in March 2021), they added the ability to earn elite status with award flights.  In 2021 and again in 2022, award flights earn Medallion Qualifying Miles (MQMs) and Medallion Qualifying Dollars (MQDs) towards elite status.  Delta hasn’t promised to keep this part past 2022, but I’m hoping they will.  Prior to these changes, elite members had a strong disincentive to book award flights (at least for themselves).  Now, we can freely spend our miles and earn status.  That’s a great combination that ought to be mimicked by other programs.

Lest you think that Delta is the angel in my thoughts, consider that they massively raised award prices when flying partner airlines.  It used to be the case that while Delta often charged exorbitant prices to fly business class on their own planes, it was fairly easy to get good value using Delta miles to fly business class on partner airlines.  Now, except in very rare circumstances, that’s no longer true.  At least we can drown our sorrows at Delta Sky Clubs by using miles to purchase top-shelf liquor, right?  Well, yes, but it will now cost more.  Previously we would get 2 cents per mile value that way, but now we’ll get 1.5 cents per mile.

Next, as if the award devaluations weren’t enough, Delta decided to devalue their Global Upgrade Certificates as of Feb 1, 2022.  See: Delta Downgrades Upgrades (but there’s good news too).

American Airlines jumps the rails

While Alaska and Delta have made changes within current loyalty paradigms, AA has jumped the rails.  Since the beginning of time (as marked by the beginning of airlines offering elite benefits to their best customers), airline loyalists earned elite status primarily by flying.  Yes, there have been shortcuts available through high credit card spend, status matches, and other miscellaneous means, but flying has been the primary thing that airlines had been trying to incentivize.  American Airlines is seemingly the first to acknowledge to the world that flyers are not necessarily their best customers.  AA probably makes more money from those who use AA branded credit cards, shop the AA eShopping Portal, book hotels through various mechanisms that earn AA miles (such as Rocketmiles and BookAAHotels.com), etc.  As a result, they’ve decoupled elite earnings from flying.  I mean, you can still earn status through flying, but you can do equally well with almost any kind of spend that results in earning AA miles.  See: AA’s Loyalty Point Pursuit game – Earn status w/out flying.

Hyatt doubles the pain, but deserves kudos anyway

We had plenty of warning that both category changes and peak and off-peak pricing were coming in march, but the combination of the two still stings.  Many favorite category 4 properties will soon be category 5 and therefore unbookable with category 1-4 free night certificates.  Worse, a number of the best Hyatt hotels will move from category 7 to 8.  Previously, category 8 was created only for special circumstances (certain SLH properties, and later, certain Destination Residences).  Now, though, the floodgates are open for any Hyatt brand to be assigned that category.  Not only does this make award prices much more expensive, but it also takes those properties out of reach of category 1-7 free night certificates.  Boo!

All that said, I still give kudos to Hyatt for keeping award charts at all.  First Hilton dropped them, then IHG.  Now Marriott is ditching them in March.  I like award charts because they create an upper bound for how much a property can cost in points.  No matter how expensive a property becomes for cash, as long as they have standard rooms available, they should still be bookable for a reasonable number of points.

Marriott giveth and taketh away

Marriott was first in announcing the intention to allow members to add points to free night certificates in order to book award nights.  Even though this will be limited to 15,000 points per night that can be tacked on, this is a huge development.  Until now, it has been extremely frustrating finding that places we wanted to stay with our 35K free night certificates were priced at 40K on the nights we wanted to go.  Similarly, properties where we wanted to spend our 50K free night certificates often cost 60K.  Sometime in “early 2022”, that will no longer be a barrier to anyone with a decent supply of Marriott points.  We’ll be able to tack on some points and stay where we want.  Maybe…

Marriott also announced that they would abandon award charts in March 2022.  How much will our favorite hotels cost in points?  Nobody knows.  Award prices will be more closely tied to cash prices.  So… maybe we’ll be able to use our free night certificates, but only if the hotels of interest have reasonable award prices.  We’ll see.

For more, see: Marriott to drop award chart, add free night “top off”, extend free nights / status.

Hilton takes away Uncle Sam’s breakfast

For many years and among major chains, Hilton offered the easiest path to free breakfast… by far.  Hilton’s Gold Elite status has long been super easy to get: simply sign up for a $95 per year Hilton credit card, or activate your Amex Platinum card’s Hilton Gold perk.  And, until 2021, the best Gold status perk was easy to describe: get free breakfast at nearly any Hilton hotel worldwide (We didn’t need a “will I get free breakfast?” chart as is needed with Marriott).

Now, Gold status still means free breakfast when outside of the United States.  Within the U.S., we instead get a food & beverage credit that will rarely be enough for free breakfast.  Some will love this change, and others will hate hit.  Regardless, it complicates Hilton’s Gold status value proposition.  I don’t know why Hilton decided to mess with their one loyalty perk advantage over their competitors.

IHG makes its move

IHG is making huge positive changes to their Premier Card and they’re adding a new Premier Business Card.  Starting March 24th, both cards will offer much higher point earnings, the ability to top-up 40K free night certificates with no cap, $50 per year in United TravelBank credit, and more.  These are seriously exciting enhancements for a card that will continue to cost less than $100 (the annual fee will increase from $89 to $99).

Also coming in March is IHG’s new rewards program.  So far, they’ve only announced a few planned changes, but more is coming soon.  And, based on the positive credit card changes, I’m optimistic about IHG’s other changes.  We’ll see!

For more, see: I’m excited about… IHG?!

The big picture

The loyalty landscape is changing in a big way.  Simplifications that we used to believe will soon be lost: “Alaska offers the most valuable airline miles;” “The IHG card is good to keep for the free night, but not worth spending on;” “Hilton Gold status gives you free breakfast everywhere…”  Those statements were true enough before, but not necessarily so going forward.

While there are some trends I dislike (such as the loss of award charts), there are changes happening that I hope will become trends:

• Elite status for customers rather than only for flyers.  It’s not often that I’ve wanted other airlines to copy American Airlines, but I think they have the right approach here.
• Award flights become first class citizens.  Delta is currently allowing members to accumulate elite earnings on award flights and to upgrade those flights with upgrade certificates.  This is an awesome direction that should have happened years ago.  I hope that other airlines copy this.
• More flexible free night certificates.  Both IHG and Marriott have promised to make their free night certificates more flexible by letting us add points to them to book higher priced hotels.  I’d love to see Hyatt do something similar.  For example, let us use a cat 1-4 cert at a category 5 property for 5,000 extra points, and let us use a cat 107 cert at a category 8 property for 10,000 extra points.  And Hilton should either stop limiting their free nights to weekends (as they did during the pandemic and for any issued this year) or provide some other way to make the certificates easier to use.  And Radisson should expand their “U.S. only” restriction to at least all of the Radisson Americas properties.

Will any of these developments become trends?  Probably not, but we can hope…

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