Long Lines, Full Lounges, No Upgrades – Did Loyalty Programs Push The Envelope Too Much By Continuing To Extend Status?

When the pandemic hit it was clear the travel industry would be severely disrupted and 2020, as well as the first half of 2021, was very light on travel but the tide appears to have turned as evident by the frustrating experiences of many status customers.

Pretty much all programs have extended the validity of tier status several times (many until 2023) and even run several promotions to make it easier to obtain elite status during the last two years.

We’re now starting to see the effects of these decisions with swelling numbers of elite members and the inability of the travel providers to keep up with them.

Travelers these days are complaining that the benefits they used to get from their elite status aren’t as effective anymore as before and there are multiple reasons for that.

The travel industry has recovered, especially after the vaccines have been made widely available and opened the doors of most common travel activities yet again.

For example, cruising was the first victim of the travel industry that got hit and shut down for over a year before the first ships started sailing again in July of this year. Cruising moves lots of hotel rooms ashore as well as many travelers prefer to stay at their ports one or more nights prior/after the cruise. The same goes for the big amusement parks such as Disneyland and Disney World.

But even in the cities where business travel is picking up again and hotels are now feeling the heat of their loyalty programs decision to keep expanding the reigns of new top-tier elite members without purging others who didn’t even qualify.

LoyaltyLobby has conducted a limited review and both hotel managers and guests alike are complaining about long lines at elite desks, full or closed lounges as well as the inability to get a suite upgrade which is one of the most desired benefits of hotel programs top level.

Add to this the staff shortage in the hospitality industry and you have a perfect storm. As many properties can’t find enough workers to service their rooms and operations overall they have taken the extraordinary step to close part of the hotel and seal off whole floors/wings which automatically leads to a shortage of premium rooms members could be upgraded to under normal circumstances.

This has turned into ugly scenes at the front desk as many companies such as Marriott have actively promoted cheap rates during the height of the pandemic with a status campaign. Marriott called it “Road to Platinum” and for example in Thailand you were able to clock in enough nights to reach the level for less than US$1000. Naturally, people who believed the advertisement are now demanding these benefits when returning to the hotels only to find that many lounges are still closed and suites are not available.

There is almost always a disagreement between the marketing side of a company and the operational side that has to deal with the actual customers. The marketing department (including the loyalty programs) wants to give as many free things as possible to get the customer numbers up. These numbers aren’t looking as pretty anymore when they create havoc once the customer is showing up to receive his service and can’t get what was promised. A hotel has only so many suites they can upgrade people to and an airline only has a very limited number of premium seats for the same purpose.

One popular Marriott branded hotel in Bangkok (which shall remain anonymous) has actually lost several staff members as they were unwilling to engage in constant arguments with guests and due to the popularity of social media groups for hospitality workers has a hard time finding new staff as it has gained a reputation for being a difficult work environment. Trained hospitality workers have become a sought-after commodity who can now afford to be picky where they work so why pick a place where daily arguments with loyalty elites are making your day miserable?

Airlines got themselves into a similar situation as many if not most programs have extended membership tiers, causing the number of elite members to go up as the old memberships don’t expire even after not flying much while new customers who do qualify under the established (in some cases reduced) requirements add more pressure.

The result? Elite check-in and boarding lines that are often longer than those of Economy Class and Upgrade Lists 100+ pax deep. This summer I saw one flight that had 97 people on the upgrade list which is insanity. By the time First Class was full, one person got upgraded. Try calling the American Airlines Executive Platinum line these days, wait times of ~20-30 minutes are the new normal. In the past, it was under a minute.

Rental car agencies are a special breed but their main issue is they reduced their fleet when the pandemic hit, resulting in low demand, and now can’t (or won’t) upgrade it fast enough. This has resulted in obscene rental car prices in many markets. While most agencies do maintain a loyalty program it has proven to be less of an issue, although I noticed that with Hertz the quality of the cars I’m able to get as Presidents Circle has gone down a lot. Hertz having gone through bankruptcy could be the deciding factor though.

Conclusion

It really doesn’t do these companies any good to continue throwing free status at people while then being unable to deliver the benefits. People will get upset even when they got their status for free and especially if they have actually qualified by recent business. These travel industry players have really gone off the deep end here and I believe it’s time for the programs to start letting elite tiers expire again which is likely a rather unpopular opinion among customers. Of course many have already extended even into 2023 which means 2022 will be a real mess.

The argument I often hear is “if they don’t extend they’ll lose customers” and that’s not entirely true. Yes, some will jump ship and buy other services but where would they go? Especially in the airline industry what drives most ticket sales is price and I’ve seen people who hate American Airlines or United with a passion still flying them because they say the pricing is still hard to beat.

Consumer loyalty has become a science and there are always some customers moving back and forth but in the end, it will balance itself out among the big players. Them pushing each other to extend status, again and again, is madness. It’s also unfair to those customers who are actively spending money to then compete over an upgrade with someone of the same tier level who maybe had two flights/stays last year. From a business perspective, it’s more dangerous to frustrate active customers than to continue pampering old ones without limitation.