I Don’t Understand What Hilton Is Doing With Its Loyalty Program

a group of huts on a dock over water

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Hilton has been putting through a number of changes to its Honors loyalty program recently and, having sat back and taken a look at what’s been happening, I’m not sure I understand what Hilton is up to. From where I’m sitting it would appear as if a large portion of the chain’s customers no longer have all that much incentive to make more stays at Hilton properties than they may otherwise have done….and isn’t that what the Honors program is supposed to encourage?

It’s important to remember that Loyalty programs were not introduced to reward customers (no matter what some may tell you), they were introduced to modify people’s behavior and to encourage travelers to make irrational decisions that ultimately benefit the entity (or entities) behind the loyalty program. With that in mind I’m not sure that the Hilton Honors program is fit for purpose….at least not from a US centric point of view.

The Hilton Honors program has four tiers (Member, Silver, Gold and Diamond) and Gold status has long been considered one of the better (best?) mid-tier hotel loyalty statuses out there…..but there’s never been much of an incentive for US-based travelers to actually earn Gold status.

Hilton Honors

Hilton Honors Gold status comes included with the Amex Platinum card ($550/year), the soon-to-be-retired old Hilton Amex Surpass card ($75/year) and also the soon-to-be-released new Hilton Honors American Express Surpass Card ($95/year) so there has never been any real need to rack up nights with Hilton if you wanted Hilton Gold status – it has always been cheaper to simply hold an appropriate credit card.

For a traveler like me it makes a lot of sense to have Gold status through a credit card, to enjoy the benefits of the status when I chose to stay at a Hilton property and not to have to worry about re-qualifying for status year after year. As long as I have a status that gives me the main benefits I value (breakfast and free internet) from one of my credit cards, there’s little incentive for me to throw more of my business in Hilton’s direction – isn’t that a significant failing of the Honors program?

a bed with white sheets and pillowsHilton London Canary Wharf

Still, I realise that I am only one type of traveler and there are others out there who choose to stay at Hilton properties on a frequent basis throughout the year…so what about them?

Well, they too could have Hilton Gold status for the cost of a credit card so there hasn’t really been any incentive for them to make any more stays than necessary either….unless they were booking so many stays/nights that it put them in reach of top-tier Diamond status.

I’ve never seen the great attraction of Hilton Diamond status but I know there are those who do….so let’s consider their situation.

Up until now if you wanted to hold Hilton Diamond status you had to either…

  • Make 30 stays at Hilton properties
  • Stay 60 nights at Hilton properties
  • Earn 120,000 Hilton Honors base points
  • Spend $40,000 on the Surpass credit card from Amex

Unless you manufacture spend $40,000 is a lot of money to put on a credit card (especially when you would probably be better off putting that spend on a more rewarding card) and the other 3 historic routes to Hilton Diamond status require a fair amount of commitment to the brand…so the Honors program would appear to be doing its work here.

a tall building with trees in the backgroundConrad Singapore

Historically, If you wanted Hilton Diamond status and you were within reach of it thanks to your normal travel patterns, the Honors program incentivized you to book a few more nights/stays (that you many not otherwise have booked) to earn that status. Potentially, the draw of Diamond status would have seen you give Hilton more money than you may otherwise have done.

But this isn’t going to be the case any more.

Later this month American Express will be releasing a new high-level credit card called the “Aspire” card. It will cost $450/year but, for that outlay, cardholders will get a raft of benefits including Hilton Diamond status.

a credit card with numbers and symbols

The main benefits as outlined by Amex are as follows:

  • 14X Hilton Honors Bonus Points at hotels and resorts in the Hilton portfolio worldwide
  • 7X Hilton Honors Bonus Points on flights booked directly with airlines or amextravel.com, car rentals booked directly from select car rental companies and at U.S. restaurants
  • 3X Hilton Honors Bonus Points on other purchases
  • Complimentary Hilton Honors Diamond status
  • One Weekend Night Reward at a hotel or resort in the Hilton portfolio with your new Card and each year of Card Membership
  • A second Weekend Night Reward at a hotel or resort in the Hilton portfolio after spending $60,000 in purchases on the Card in a calendar year
  • Unlimited Priority Pass™Lounge passes to ease the airport experience
  • $250 Airline incidental fee statement credit
  • $250 Hilton resort statement credit
  • $100 on-property credit at Waldorf Astoria Hotels & Resorts and Conrad Hotels & Resorts when booking the exclusive Aspire Card package
  • Access to 24/7 American Express concierge
  • No foreign transaction fees

a tall building on a beachHilton Hawaiian Village on Oahu – a good place to uae the $250 resort credit (image courtesy of Hilton)

Looking through that list it would appear that it’s possible to offset the whole $450 annual fee with the benefits being provided so, if you can use up the $250 Hilton resort statement credit and the $250 airline incidental credit you can effectively have Hilton Honors Diamond status for free.

With that in mind why would anyone now go out of their way to actually earn Hilton Diamond status? Why modify your behaviour or book extra nights/stays with Hilton to get Diamond status if you can pick up that status for nothing?

Yes, Hilton has just announced that it will be rewarding Honors members with 60,000 points for staying 60 nights a year (enough for Diamond status) but, considering those points are worth around $240, I can’t see that being a compelling reason to book more stays at Hilton properties.

If getting Hilton Diamond status is your end-game then the easiest and cheapest way to get there is by picking up the Aspire card.

Hilton Los Angeles AirportHilton Los Angeles Airport

Where This Leaves The Honors Program

As you can now pick up the top two tiers of Hilton status with credit cards I can’t see what incentive anyone has to put more business Hilton’s way than they would otherwise have done….and that’s a failing of the Honors program.

On top of that, the fact that we will soon all be able to have Hilton top-tier status for free (essentially) means that there’s going to be a large rise in the number of people entitled to the benefits that Diamond status offers….and that means that there will be a large rise in the number of travelers competing for the upgrades that some consider the major perk of the program. That can’t be a good thing.

If I was a Hilton Diamond status holder who earned his status the hard way (by actually staying at Hilton properties) I wouldn’t be very happy with Hilton right now. I’d probably be looking at the other major chains (the ones that don’t give away top-tier status) and seriously considering if my money would be better spent with them – that’s another failing of the Honors program.

a credit card and a card with a beach huts

Bottom Line

I can’t see this being sustainable for Hilton. If it’s not to lose a large number of existing customers who suddenly find themselves not receiving all the benefits they’ve been used to (due to increased competition from those with the Aspire credit card) one of two things will have to happen:

  • Hilton will either have to create a new higher tier in the Honors program (one that actually rewards customers for staying at Hilton properties and which can’t be had through a credit card) or
  • Hilton will have to add more stay-based incentives to the existing Diamond benefits to keep those who spend a large number of nights at Hilton properties happy.

It’s true to say that the issue of free Diamond status is currently confined to the US as that’s the only country where the Aspire credit card will be issued….but I suspect the US is where a very large percentage of Hilton’s customers come from so this isn’t a small issue.

Speaking for myself, I’ve never really felt the need or desire to work towards Hilton Diamond status but, thanks to recent developments, it would appear the need to work for those benefits no longer exists…..and that’s the biggest failing of the current Honors program.