I have a love-hate relationship with loyalty programs. Actually, scratch that. Mostly hate. Having sat on the franchisee side of the table, I know first-hand that these programs don’t benefit the hotel. They don’t benefit the traveler either. They benefit the brand. Full stop.
It’s just math. Unfortunately, hospitality isn’t exactly an industry of math people, which is why most of us remain happily delusional about the “magic” of loyalty. We like big numbers, so we celebrate stats like 675 million travelers enrolled in loyalty programs. Impressive, right? But let’s peel that onion. Most of those “members” are double- (or triple-) dipping, signed up for multiple programs at once, and rarely using them in any meaningful way. My husband is one of the rare exceptions – he treats his Bonvoy status like a cult membership. But most travelers are just chasing the path of least resistance.
For large chains, loyalty is brilliant. It locks guests into their ecosystem, provides endless streams of data, and inflates shareholder value. For the individual hotel, especially a franchise property, the story is very different. Every “free” night comes out of your pocket. Every redemption rate, every discount, every brand fee – it all chips away at profitability. The “loyalty” you’re buying is really just debt.
And that’s not even mentioning the loyalty programs run by OTAs. They’ve cracked the code on consumer behavior by structuring programs that keep travelers inside their walled gardens. Whether it’s Expedia Rewards, Hotels.com Rewards, or Booking’s Genius program, these “loyalty perks” come straight out of hotels’ margins. Guests are trained to believe they’re getting exclusive deals. Meanwhile, hotels are footing the bill. It’s a perfect trap: the OTA gets stickier, the consumer feels “loyal,” and the hotel loses.
Now, when it comes to smaller or midmarket brands, things get more interesting. Without the sheer size and global network effect of Marriott or Hilton, you actually have to try. You can’t just dangle points and expect guests to choose you over a million other options. You need creativity, emotional connection, perks that feel personal. That’s why I always admired what CitizenM did with their loyalty approach before they were swallowed into the Marriott machine (rest in peace, my old friend). They had to design something that genuinely made guests want to come back, despite having only a few dozen hotels worldwide.
And then there’s the future. Travel has changed: workations, bleisure, revenge travel, sustainability concerns. Guests don’t just want bottled water and late checkout anymore. They want loyalty that adapts to their lives, not the other way around. This is where AI could actually help. Instead of blasting out “earn 500 points” emails, imagine predicting when a guest is about to drift and proactively offering something that truly matters to them. That’s not just retention, it’s relevance.
At the end of the day, loyalty isn’t built on points, tiers, or branded credit cards. It’s built on service. Guests don’t come back because you handed them a bottle of water or bumped them into “silver status.” They come back because you made their stay effortless, memorable, and worth repeating. Hoteliers need to stop hiding behind loyalty programs that were designed to benefit the brand, not the property. And if you’re not part of a big franchise machine, that’s even more important, because your real loyalty program is the experience you deliver, every single time.