The coronavirus crisis has caused all sorts of levels of panic where it concerns the travel industry. Reservations for flights and hotels have been canceled at a frenzied pace over the past few weeks and new bookings have been virtually non-existent. Just a couple of days ago we learned that United was flying with 84% of their seats empty, even with over half their fleet on the ground. On the subject of elite status, airlines and hotel chains have been largely quiet. My best guess is they’re trying to figure out exactly how bad the current crisis is and what they would need to spur business. At least one hotel chain has decided not to wait, taking the plunge in a big way.
Hilton Extending Elite Status
Nick from Frequent Miler has a great write-up on all the changes. Let’s start with the elite status updates, quoting from Nick’s article:
- If your 2019 status was expiring this month: For those who had status in 2019 (which was based on stays in 2018), status would ordinarily expire on March 31, 2020. However, Hilton is extending the expiration of that status (again, if you earned it in 2018 and it was set to expire this week) until March 31, 2021.
- If you have 2020 status: For those who earned status in 2019 (which ordinarily gives you status in 2020 up until March 31, 2021), Hilton is extending status until March 31, 2022.
- Points extension: Hilton is pausing the expiration of all points set to expire between now and December 31, 2020. In other words, points scheduled to expire any time in the rest of 2020 will expire on January 1, 2021.
- Weekend free night certificates: Hilton previously announced that certificates that were unexpired as of March 11, 2020 and all new certificates issued until August 20, 2020 will be extended until August 31, 2021 (the end of next summer). We posted about that here.
This strikes me as exceptionally generous. If you only had a few days of status left, Hilton is still giving you an extra full year of status. And, if you already had status through 2021, they’re extending that a full year as well. Hyatt and Marriott have been mostly mum on this topic (though Hyatt has announced a policy on non-refundable reservations we’ll discuss in a bit).
Why Is Hilton First?
One of the reasons I can see for Hilton acting before Hyatt is that Hyatt’s elite status has a number of status elements that can potentially cost them a lot of cash without much promise of revenue in return. Specifically top-tier Hyatt Globalist members earn suite upgrade awards that can be used on award reservations. Additionally, Hyatt has quite a few opportunities for elite members to earn free nights on their path to elite qualification. Those free nights and suite upgrade awards sit out there as additional liabilities to the points balance their members carry.
Hilton isn’t as generous when it comes to elite status. And, one of their most valuable elite benefits is one that they only have to deliver on when a guest is paying for a stay. Hilton tends to reward more points for spending in their hotels than other chains, especially when you count their lucrative promotions.
Marriott doesn’t award nearly the number of free nights or suite upgrades that Hyatt does (and their suite upgrade program severely underperforms). My best guess is that they believe they’re big enough that guests will return when the economy does. For now, they may not have any evidence that helping their elite members will lead to more loyalty from them. And, Marriott has also furloughed a significant portion of their corporate team. So, they may just not have the human resources to plot out the next phase of their loyalty program.
Hilton Adds Flexibility to Reservations
Hilton has taken the lead on reservation flexibility amongst their competitors:
- Existing Reservations. All reservations—even those described as “non-cancellable” (“Advanced Purchase”)—that are scheduled for arrival on or before June 30, 2020 can be changed or cancelled at no charge, up to 24 hours before your scheduled arrival day.
- New Reservations. Any reservations you make—even those described as “non-cancellable” (“Advanced Purchase”)—that are booked between today and June 30, 2020 for any future arrival date can be changed or cancelled at no charge, up to 24 hours before your scheduled arrival day.
As Nick notes, making all advance purchase reservations essentially fully flexible is a huge benefit. This means that the lowest rates offered at Hilton properties still allow you to cancel without penalty. This is great for speculative bookings at desirable properties that might have lowered rates to spur bookings. Hyatt hasn’t gone quite as far but is offering 10,000 points if you have to cancel a non-refundable booking. Again, Hilton’s policy takes the cake for now on maximum flexibility in favor of the customer.
The Final Two Pennies
Hilton definitely acted more quickly than I was expecting. I figured that airlines and hotel chains would wait until “shelter-in-place” orders disappeared in the United States. It’s a bold move for a large hotel chain. I don’t think there’s terrible amount of downside in the elite status extensions. There’s a cost to extending status, but mostly a soft cost. Many of the benefits don’t cost properties much at all to deliver. And, Hilton ultimately sets the price on award rooms. Without an award chart, it’s even easier to squeeze a few pennies here and there by raising award rates.
The cancelation policy did catch me by surprise. Those represent hard costs to Hilton properties. An advance purchase room is a guaranteed payment. It really speaks to the severity of the crisis that Hilton is willing to allow everyone to cancel for free and allow customers to make new bookings without obligation. It’s a big gamble, but one that might be necessary.
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