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Back in August, following Wyndham Rewards’ big win in the U.S. News & World Report’s hospitality category, Noah Brodsky, the brand’s SVP of worldwide loyalty and engagement, told Loyalty360 that “people are tired of programs that never actually result in any real rewards. They’re tired of being tricked. It’s why we hit the reset button last year and re-imagined Wyndham Rewards.”
That re-imagining of Wyndham Rewards has now earned it the best payback among leading hotel loyalty programs, according to the second annual Switchfly Hotel Reward Payback Survey.
During August 2016, IdeaWorksCompany conducted 1,305 reward queries for key hotel brands in six global frequent guest programs: Choice Privileges, Hilton HHonors, IHG Rewards, Marriott Rewards, Starwood SPG, and Wyndham Rewards.
For each query, the lowest reward price in points was recorded along with the corresponding room price in U.S. dollars. The value provided by points was adjusted to consider the different rates of point accrual for the programs. The result provides an average “reward payback” for each program as shown in the graph below. For example, the 9% rate for Marriott Rewards represents average reward value payback of $9.00 for every $100 spent on hotel room rates.
Here is the list of the average reward payback for each of the six hotel loyalty programs (Reward value returned for every dollar spent on hotel rates):
Wyndham Rewards (13.6%)
Marriott Rewards (9.0%)
Choice Privileges (8.5%)
Hilton HHonors (7.7%)
IHG Rewards (7.4%)
Starwood SPG (5.6%)
Wyndham Rewards returns an average of 13.6% from room night spending as reward stay value, which is a 143% higher return than the reward value provided by Starwood SPG, which was ranked last among the six hotel loyalty programs at 5.6% for reward payback.
“Travel companies must remember that even if their rewards members are not doing the complicated math necessary to know the exact value of a rewards program, they do know when a rewards program is providing value -- and when it isn’t,” said Daniel Farrar, CEO of Switchfly. “Across programs, elite members are reaping the greatest benefits, but those customers who aren’t elite members can still maximize their loyalty game by stacking rewards. For example, they can use a rewards credit card to book a flight through a third-party website that offers rewards on an airline where they earn frequent-flier miles. That’s an easy way for everyone to maximize the value of their rewards payback every time they book travel.”
Andrew Park, Customer Experience Director, InMoment, told Loyalty360 that companies view loyalty program as a means to collect customer data, incentivize repeat purchase, and create more effective marketing campaigns. But, he said, they often forget these programs are also part of the overall customer experience.
“If loyalty programs are hard to use or confusing to navigate or don’t deliver real value, customers can become disenchanted with the brand,” Park explained. “Companies must ensure that the program is built for the customer and not the other way around. This goes beyond the value of rewards points or the incentives given to return more frequently.”
Many companies are missing a great opportunity to build a loyal following, Park noted.
“When customers provide information to a loyalty program, they expect that information to be used in ways that will improve their experience and relationship with the brand,” he explained. “Best-in-class companies view the program as a way to turn average customers into brand loyalist, versus simply rewarding top spenders. They leverage loyalty information to create personalized, meaningful relationships that allow them to truly connect with customers, building both loyalty and advocacy.”
Chirpify CEO Chris Teso offered his assessment to Loyalty360.
“There is no doubt that people want a fair value in exchange for their loyalty,” Teso explained. “However, brands like Marriott are extending the definition of that value exchange to include rewarding loyal customers for their engagement and participation with the brand, not just ‘spend and get’. Increasingly, customers see the relationship holistically and will actually spend more with brands that offer points for activities, other than just nights spent on the property. With an engagement loyalty mindset, brands can expand the umbrella of their loyalty programs to reward customers for a myriad of activities that benefits the brand more than a single night’s stay – and can, in turn, embrace a number of personalized rewards that a guest might appreciate even more, such as a room upgrade or spa pass.”
According to the study, reward payback extremes ranged from 2.0% to 39.1%.
The best reward payback occurs when room rates are high and reward point levels are low.
The $39.1% reward payback is connected to a December 2016 stay at the Wyndham New Yorker. Booking a room for Dec. 10, 2016 costs $587 with a reward night price of 15,000 points. That combination, and the Wyndham Rewards base accrual rate of 10 points per dollar spent, delivers a very generous reward payback.
Carrie McIlveen, U.S. Director of Marketing, Metia, noted the “eye-popping” reward payback extremes noted in the study.
“Today’s savvy travelers have high expectations in regards to flexibility and significant returns on hotel loyalty rewards,” she told Loyalty360. “Frequent travelers become loyal to a given hotel brand primarily because of its loyalty programs. Other considerations to join are also based on personalization, customer experience, and overall value.”
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