Hilton Unveils Loyalty Program Updates That Borrow From the Airlines

If last year’s big hospitality buzzword was “lifestyle,” this year’s could very well be another word that starts with the letter L: “loyalty.”

At Hilton, loyalty could not be more crucial, especially this year. A year after launching the biggest marketing campaign in the company’s history, “Stop Clicking Around,” which promoted discounted Hilton Honors members-only rates for direct bookings, Hilton is debuting loyalty program updates designed to make its program even more appealing to travelers, whether they’re road warriors or leisure travelers.

Today, the company announced four major program updates to Hilton Honors, formerly known as Hilton HHonors. Each of the new features, said Mark Weinstein, Hilton’s senior vice president and global head of loyalty and partnerships, was designed to satisfy the needs of both “frequent travelers who want more ways to use their points” as well as “less frequent travelers who want to engage more with fewer points.”

A quick glance at the new features — including the ability to book travel using a combination of points and money, the opportunity to use points to purchase merchandise, and the ability to pool points — implies that Hilton took inspiration for these new program updates from the airlines. Weinstein, however, said that was not the case here.

“No, we took our inspiration from what our guests told us they wanted most out of their loyalty program,” he said. “Frequent travelers told us they want more flexibility with their points, and less frequent travelers have said they want more ways to use their points, and use them faster.” He also noted that Hilton has been researching these new features for the past two years.

“Now, more than ever, loyalty is at the core of our customer strategy,” Weinstein said. “We’re removing the friction out of travel and making it more fun and joyful along the way.”

Hilton is also dropping the additional “h” in Hilton HHonors. “Hopefully, this will minimize mispronunciation of Hilton Honors,” Weinstein said. “The extra ‘h’ stood for Hilton, and was an unnecessary marketing element of the program.” Additionally, the company itself will now be known simply as Hilton instead of Hilton Worldwide, with a new, more colorful and contemporary logo design.

Here’s a closer look at the new updates:

The Hilton Honors Points & Money slider lets members choose the number of points they want to apply toward a booking, and determines the cash cost of the difference.

Points & Money: Now when you book on Hilton.com or via the Hilton Honors app, members can use a “payment slider” to calculate how to pay for a hotel room using a mix of both Hilton Honors points and cash. The price of the room adjusts according to nightly rates and the minimum number of points needed for a booking is 5,000.

So, for example, if a room at a certain property requires 50,000 Hilton Honors points, a member can choose to use however many points he or she has and then pay any difference in cash.

This feature is similar to some airlines, which  may allow some passengers to pay for an airfare with a combination of loyalty program points and cash.

“This is another adoption from airline frequent flier programs,” said George Hobica, founder of Airfarewatchdog.com. “Again, if airlines are any indication, it’s usually not a great deal for consumers. But it does add some flexibility.”

Hilton said this feature is expected to launch at the end of February.

Points Pooling: Beginning this spring, Hilton will allow a Hilton Honors member to “pool” his or her points to use for travel with up to 10 family members or friends for free. Weinstein said there may be some restrictions on how pooling can be used but didn’t elaborate on the details.

Hobica said this feature was “definitely a plus for consumers” and noted that British Airways and JetBlue Airways, for example, allow their loyalty members to do the same to book flights. “This is super and very consumer-friendly,” he said. “They are taking a page out of the playbook from the airlines. I’m not sure why it took them [hotels] so long to do this.”

Amazon Shop with Points: Similar to how American Express, Chase, Citibank, and Discover card holders can use their credit card points to make purchases on Amazon.com, soon Hilton Honors members can use their Hilton Honors points to do the same.

Hilton will be the first travel company to work with Amazon in this capacity, and Weinstein said this feature is expected to launch in the summer of 2017.

Weinstein said the decision to partner with Amazon on this particular feature “seemed almost obvious” and that Amazon “became the most logical partner for our journey.”

Hobica said that while airline loyalty programs have enabled members to purchase merchandise for some time, he’s skeptical that this will prove to be a valuable deal for consumers in the long run. “This is usually a bad idea for consumers compared to using the points for their original purpose, if the airline version of this is any indication,” he said. “Consumers need to be careful before taking the bait, and compare prices for these items were they to buy them with cash. It’s usually just a way for the company to get points off their balance sheets.”

When asked about the value of the points when applied to merchandise from Amazon versus when used to redeem for a hotel room, Weinstein said, “As always, members get the most value for their points when they redeem them in our hotels. However, being able to use points with Amazon gives them another way to get value from their points — millions of ways actually.”

Will Amazon eventually become a travel booking partner going forward? Weinstein said, “Right now we think of them as a complementary partner on travel. What the future has in store I’d leave that to Amazon to speculate. We’ll continue to find ways to work together. I do always think the best way to book a Hilton experience will be directly with us. That will always be the best way to book. The [Points & Money] slider, for example, is only available on our site and our app.”

Diamond Status Extension: Beginning this spring, if a Hilton Honors Diamond-level (the highest tier in the program) member needs to extend her status for one more year, knowing she won’t be traveling enough that year to earn Diamond-level status, she can do so for one year, one time, for any reason, no questions asked. The only requirement is that the member have Diamond status for at least three years and 250 nights, or has accumulated 500,000 points.

“We’re being much more human about travel and more empathetic about the travel journey of our customers,” Weinstein said. He pointed to some scenarios where a Diamond-level member would want to make this kind of a request as examples, such as a member going on maternity leave, or taking a new job that may not require as much travel.”

Hobica said he saw “no downside here” for consumers but did express concern about increased competition for award rooms if the number of elite members or members in general vying for award rooms increases, without a concurrent increase in the number of available award rooms.

“You can have all the points in the world but if the rooms aren’t available, it doesn’t matter,” Hobica explained. “The more people join a program, the more ways they have to spend, and it increases the pressure and competition for the number of free rooms.”

Asked whether it will be harder for Hilton Honors members to redeem their points for rooms, Weinstein said, “We will have the same number of rooms and the same number of properties — and now, it will be even easier for our members to take advantage of their hard-earned points.” A total of 7 million award nights were redeemed last year by Hilton Honors members.

Loyalty Is No. 1

Loyalty is increasingly becoming the backbone for every major hospitality company’s strategy. After all, it was one of the top reasons why Marriott bought Starwood Hotels & Resorts for $13.3 billion last year.

Now that Hilton is the second-largest hotel company behind Marriott, it makes perfect sense that it would want to beef up its loyalty program now, especially as Marriott contends with marrying its three separate programs — Marriott Rewards, Starwood Preferred Guest, and Ritz-Carlton Rewards.

Hilton isn’t the only hotel company paying close attention to its loyalty program these days, either. Late last year, Hyatt announced it would replace its Hyatt Gold Passport program with the new World of Hyatt program in March by crafting a program targeted toward “customers who are that high end of the travel space.”

Wyndham Hotel Group, too, has made moves recently in an effort to attract more members to its own Wyndham Rewards program including a failed attempt to woo elite SPG members back in October.

Nevertheless, what Wyndham and Hyatt are doing with their respective programs represent two different ends of the hotel loyalty spectrum. While Wyndham’s program is designed for the “everyday traveler” with simple tiers and redemption strategies and instant rewards, Hyatt’s new World of Hyatt program is geared toward the more upscale, luxury traveler or the road warrior with rewards for staying at a wide variety of brands and spending more on services like dining and spa treatments.

Bridging that growing points divide, or division between the road warrior and the leisure traveler is what Hilton is attempting to do here with its new program updates, and it’ll be interesting to see how travelers respond to the new features, and if even more sign up for Hilton Honors in the coming year.

“There are so many points out there for airlines and hotels chasing a static number of flights and rooms and seats and demand is up,” said Hobica. “Typically, when an airline or hotel makes any change to their programs, it’s usually to their benefit. I do think some of these things [from Hilton] are positive, but they will also increase demand for the number of free rooms. Whenever I try to use hotel points, especially during a popular period, it’s an astronomical number of points required — the same as it is with airlines. What hotels and airlines seem to be doing is making it easier to earn and spend points, but it’s also more expensive to use the points or get status now.”

Since launching “Stop Clicking Around” last year and debuting its discounted Hilton Honors member rates, Hilton has amassed 9 million new Hilton Honors members and downloads of the Hilton Honors app totaled 3.9 million. Weinstein also said that on any given night, more than 55 percent of Hilton’s occupied rooms are being booked by Hilton Honors members. To date, Hilton Honors has more than 60 million members.