Wyndham Fails to Make a Play for Starwood Loyalty Members

Editor’s Note: Shortly after announcing this promotion on the morning of Oct. 11, Wyndham cancelled it, citing widespread fraud.

It’s only been a little over two weeks since Marriott announced its decision to link its Marriott Rewards program to the Starwood Preferred Guest (SPG) hotel loyalty program and already, another hotel company is attempting to swoop in and lure SPG members away, although things didn’t go as they had planned.

On Oct. 11 from 12 noon to 11:49 p.m. Eastern Time, Wyndham Rewards had planned to allow SPG members to donate their Starpoints to charity and, in return, those SPG members would receive four times those points with Wyndham Rewards, including a status match. So, theoretically, if an SPG member had 100,000 Starpoints and decided to donate those points to charity, she would have received 400,000 Wyndham Rewards points in return. SPG Gold would have become Wyndham Rewards Platinum and SPG Platinum would have become Wyndham Rewards Diamond.

But that was not to be. Before the promotion officially began, Wyndham sent out a statement that said: “Today’s Wyndham Rewards trade up was offered in the spirit of generosity. Before the offer even began, there were obvious and significant examples of fraud. Much to our dismay and disappointment, we have to cancel this promotion.  We will, however, make a donation of 5 million Wyndham Rewards points to charity as the work they do on behalf of others is real magic.”

Here’s how it was supposed to work and why it was easy for fraud to take place: SPG members needed to donate their entire SPG point balance to a preferred, SPG approved charity and then send proof to Wyndham Rewards in the form of two screenshots to [email protected]. The first screenshot would have to show confirmation of point donation and the other would have to show their SPG account activity with a zero-point balance. There was no limit on how many points an SPG member can donate or earn and they would have received their Wyndham points within 10 days.

Obviously, screenshots aren’t the most fail-safe way to authenticate a transfer of points and that, we suspect, is why Wyndham pulled the plug on this bold, but perhaps not entirely thought-out plan.

Aiming for the 99 Percent

What drove Wyndham to launch this campaign? It was about seizing an opportunity to target what Wyndham refers to as the “everyday traveler.”

Noah Brodsky, Wyndham’s senior VP of worldwide loyalty and engagement, told Skift, “There are so many programs who cater to the 1 percenter of travelers. There are everyday travelers lost inside some of the other big programs. We want them to feel like they have a home and that program is Wyndham Rewards.”

He made a comparison between hotel loyalty programs and airline loyalty programs, noting that as airlines consolidate further, passengers who don’t always fly business or first class are getting “squeezed” and it’s increasingly becoming the same situation with hotels. “We want to help those people break free of those programs and find the right one.”

Although SPG’s program has historically appealed to frequent, elite travelers, Brodksy sees this promotion as an opportunity to lure away those travelers who are SPG members, but aren’t frequent or elite.

The Wyndham Rewards program has also seen plenty of momentum as of late in its efforts to appeal to travelers.

Just last week, it was named the top program in a survey conducted by IdeaWorks Company for Switchfly. That survey compared Wyndham Rewards to five other global hotel loyalty programs — SPG included — and found that Wyndham’s program gave customers an average reward payback of $13.60 for every $100 spent.

By comparison, SPG’s payback was only $5.60 and Marriott Rewards’ was $9. Wyndham rewarded customers, on average, 146 percent more than SPG, which was ranked last.

Earlier this year, it was also ranked No. 1 in U.S. News & World Report’s annual rankings of the best hotel loyalty programs, beating Marriott, who had previously been the top program since 2013, when the rankings were first released.

Wyndham’s high ranking in both reports was driven by its flat nightly redemption rate of 15,000 points with no blackout points for its more than 8,000 hotels worldwide. By comparison, the linking of SPG with Marriott Rewards applies to about 5,700 hotels worldwide, and there is no flat redemption rate. Earlier this year, Wyndham also added unique experiences to its program, similar to what Starwood offers with SPG Moments.

However, it’s fair to say Wyndham’s portfolio, while larger than the combined Marriott/Starwood, skews much more toward economy and midscale brands like Howard Johnson, Super 8, and Travelodge, for example. So even if this promotion had taken place, it’s somewhat doubtful whether that “1 percent” of travelers would have been convinced to exchange their Starpoints for Wyndham Rewards points.

This kind of ploy for loyalty members isn’t a new one, as we saw earlier this year when JetBlue Airways tried to lure away loyal Virgin America passengers, following news of an acquisition by Alaska Airlines. But offering to quadruple points is relatively generous for a travel loyalty program; the exchange ratio of Marriott Rewards points to Starpoints is 3 to 1.

This promotion probably isn’t the only one we’ll see in the months ahead, either, as Marriott and Starwood work together to integrate not only their loyalty programs but their entire global operations while rivals attempt to pick off dissatisfied customers. Let’s just hope that, next time, everything goes as planned.