Amenity Creep? Why Hotel Owners Should be Careful What They Wish For

The Americas Lodging Investment Summit recently took place in Los Angeles. One of the issues discussed was “amenity creep”. As one speaker put it “We have to ask ourselves not just ‘What do the guests actually need?’ but equally ‘What are they willing to pay for?'”

To a certain extent, this is understandable. Hotel chains promise elite benefits to loyalty program members, but in most cases don’t actually pay for those benefits – the franchisee hotel owner does. And despite hotel chain promises of “loyal guests”, many leisure travellers only stay just the one time. So, a hotel owner might be giving away a room upgrade and free breakfast, only to never see that specific guest again.

During the pandemic, the balance of power has been shifting from the hotel chains towards the actual hotel owners.  We see this with Marriott condoning all sorts of dubious behavior by hotels. Hilton Honors is little better – with its replacement of complimentary breakfast with a food / beverage credit clearly driven by hotel owners wishing to reduce expenses.

The Erosion of Benefits AND the Value of Points

As a regular hotel guest with elite status at 4 major hotel chains, I place a great deal of value on elite benefits. I also have a very good feel for the value of the points I earn with each paid stay. The combination of these two elements means that I will occasionally make sub-optimal hotel choices in order to stay at one of my preferred hotel chains. The overall outcome is still worthwhile, however. Especially when redeeming my points on a beachfront paradise hotel somewhere…

But if I travel in the United States, I know not to expect much of a room upgrade – and the executive lounge is probably closed or barely stocked. Although Hyatt still delivers on its breakfast benefit, I now must avoid most Hilton Honors hotels and many Marriott Bonvoy brands.

And when it comes to the value of the points, IHG, Hilton and Marriott have all made the leap to “dynamic pricing”. Hyatt isn’t far behind with its peak/off-peak change and the Category 8 devaluation. This makes it rather difficult to find good opportunities to spend points well.

Squeezed on Both Sides

So hotel owners want to reduce my benefits – both “elite” benefits and more standard services such as housekeeping.  And hotel chains want to reduce the value of my points. All the while… hotel room rates certainly aren’t going down.

Even though hotel chains and hotel owners might be not have their interests aligned at the moment, I have no doubt that they agree on one thing – they want guests to book direct instead of via an Online Travel Agency! It doesn’t really matter how many free breakfasts a hotel must give away. Paying a 20+% commission to an OTA is more expensive!

Enter Loyalty Points…

If there is something that frequent travelers value as much as (or even more than) hotel chain elite status, it is AIRLINE elite status. And as I wrote recently, you can now earn AAdvantage elite status by strategically booking your hotel stays.

So…  status-conscious travellers now have another choice.  We can book via BookAAHotels or Rocketmiles and earn miles and, more importantly, elite status credit / Loyalty Points.

So, if the hotel owner wants to see what I’m willing to pay for, they might find that I’m paying for it at somebody else’s independent hotel or via an Online Travel Agency with its large commissions. Be careful what you wish for…

Comments

  1. Byron says

    Very good and well written article. I could not agree more. As a retiree we now use those points I earned the hard way while working. It is my wife that suffers the most in this world of devaluation. She stayed at home with the kids and ate lonely meals while I travelled. I think I have about 4 years in a Marriott of some sort. So when the lounge is closed, or the packaged breakfast, it is my wife that they are now slapping and I do not like that. We are now burning those Hilton and Marriott points and focus more on Hyatt. I think Hilton is racing to the bottom and Marriott not far behind. Hyatt sees this too.

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