Hyatt announced that they are offering a fast track to World of Hyatt status to new and existing Hyatt credit card holders. However, this move seems to demonstrate a protracted series of over-corrections and it’s starting to wear on old elites and new alike. Here’s why their actions are problematic.
The Overreaction to Losing Starwood
I had posted a link to a report by CNBC that had confirmed (at the time) that Hyatt was in the final stages of acquiring the Starwood hotel brand (SPG) which had been up for sale for an extended amount of time. Matthew and I even disagreed on the topic as to whether or not it was good or bad for consumers at the time. It seemed all but ready to go and I was licking my chops.
Then it fell through.
Anbang Insurance group of China tried to buy the brand but ultimately SPG sold to Marriott for a worse offer than Hyatt’s original according to information I received from a source who had knowledge of the deal. Apparently the deal fell through as a result of a special stock class that the original Hyatt owners (Pritzker family) held and the rights associated therein.
Hyatt was clearly not happy about losing the deal, especially to an inferior offer and it makes sense as to why. SPG brands are typically premium. Look at their lineup of brands, none of them operate below a Hyatt Place category property and many of them operate well within the brand and the markets Hyatt has already defined. For example, W and Andaz both seek younger, well-heeled travelers that want a little attitude with their soaking tubs and rain showers. And then Aloft goes further to capture some market between W and Hyatt Place by finding those who still want something different, but don’t want to spend a lot of cash on it.
Adding SPG to the mix also would have nearly tripled the size of Hyatt from around 700 at the time to more than 2000 properties, nearly all premium brands and made it perhaps the most attractive offering available.
When it fell through, Hyatt overreacted for the first time in this strong of events. Hyatt offered a status match to SPG members who might not want to join the new Marriott family and were nervous about the transition. For a few days they were matching just about every major chain and status level before abruptly stopping because that was an emotional reaction to the loss of SPG and not a calculated decision clearly.
Hilton later matched pretty much everyone (including me) to their own program, Hilton Honors – I began my Hilton relationship on a serious level following this and have qualified for Diamond for now three years straight.
The Overreaction to the Flood of Elites
After so many were matched to status without any real qualifiers elite members, especially at the top, were far to numerous to sustain. Too many Diamond members meant too many benefits given out for not enough business in exchange. Of those benefits, hotels were giving away lounge access with free booze and food, breakfast in the restaurants, allowing members to occupy rooms until 4PM on any reservation and put to 28 days in suites if used to their maximum potential.
I can completely understand that Hyatt wasn’t getting true loyalty out of the incredible generosity they showed. However, it was Hyatt that blindly matched anyone who reached out. Hyatt was the one who chose not to add any qualifiers to the status. Had they issued an abbreviated status challenge where something has to be given from the customer before they get the benefit, they probably would have had less of those Diamonds in the program and more revenue from the offer.
That didn’t happen though and the costs were far too high for Hyatt to sustain and really wasn’t fair to individual franchisees. They had to thin the ranks.
Matthew broke the story on the death of Hyatt Gold Passport and the new World of Hyatt program on our shared site, PenAndPassport.com before Hyatt had a chance to announce the changes. Some at Hyatt, for the record, are still mad about this release though in fairness they should be mad at those who leaked – not those who published.
Anyway, they illegally terminated the program without offering six months notice as stated in their own terms and while there was a lawsuit filed, I don’t believe anything ever came of it. However, with the death of the program, they didn’t have to honor previous commitments and could start from scratch.
A lot of the elements were the same but the key difference for most loyalists came in elite qualifying stays/nights. Gold Passport allowed you to qualify on stays (25) or nights (50) in a calendar year. That was fair given the limited footprint of the properties and the generous benefits given at their mostly premium properties around the world. With only 700 hotels and lots of holes on the map, it felt fair to me. Last year I stayed 26 times with Hyatt for 46 nights so I wasn’t that far off from qualifying on nights and I did qualify on stays, I was mostly what Hyatt was looking for.
With the new world of Hyatt program they kicked me and others to the curb. They dropped the stays qualifier and moved not only to counting just total nights stayed but increasing it from 50 nights to 60. In theory, this would eliminate anyone who was not serious about the program, but it also eliminated people like me. I stayed at Hyatt hotels whenever possible but due to their limited footprint, there just wasn’t enough opportunity to frequent their hotels 50 nights per year.
Just as the program overreacted to their SPG disappointment by swerving to the ultra generous side, the new qualifications swerved the car back in the other direction and went far too to reduce the number of elites. This was now an over-correction and their second short-sighted program decision to expand or thin the elite ranks.
The Status Fast Track Overcorrections
A few weeks ago some folks on the forums had reported that the brand had offered fast tracks to elite status through some corporate channels. This is common and almost all brands do this from time-to-time including the big carriers like American, Delta and United as they try to woo big customers, as well as Hilton and Marriott.
Then news came out that Hyatt credit card holders (either new or existing) would have the opportunity to complete a status challenge offering either Explorist for 10 nights (not stays) and Globalist for 20 nights (not stays) to be completed between September 1st through December 31st, 2017 – four full months. Previously booked stays during the period will count which doesn’t help them capture new revenue opportunities only, they are giving away something to those who will already be in their properties.
Hyatt staff members have also confirmed that all of the benefits that are associated with status are given during the challenge which again is overly generous. Now anyone who either applies for the credit card or already has the credit card can accept the “quick qualification” and start doing the same thing they just reinvented the program to stop – eating breakfast, drinking free booze, and using suite upgrades.
They were just losing too many elites clearly. People are voting with their dollars and with their feet. Brad at Travel Codex discussed his qualification challenges and he is constantly traveling to major international cities, if 60 nights is tough for him to achieve, it’s tough for anybody. Matthew and I both hemmed and hawed over whether we would re-qualify and I even mattress ran early in the year to re-qualify under the old rules because 60 nights seemed unlikely to me. Gary speculated on their rose-colored glasses about the success of the World of Hyatt program after hearing their Q2 earnings call – and he was right. Their actions prove his hypothesis.
Their third overreaction and second over-correction now swerving back to the too-generous side of the equation is the multiple fast tracks to anybody with $75 for the credit card fee.
Speculation on their Next Moves
Some in the World of Hyatt Facebook group (it’s a closed group, you have to request entry) have suggested that they believe Hyatt will receive yet another influx of opportunistic, unqualified top tier elites and will reduce the benefits in reaction to the increased numbers and costs.
I respectfully disagree with that sentiment solely because I don’t think they are going to win droves of customers through this effort. I think uptake of the offer will be fairly limited and those who had previously given up on Hyatt that might take up the offer may also be turned off that they have to apply for a credit card to do it.
Not only that, but these are not the guests that Hyatt is looking for. They want big market, high spending, road warriors and those kind of folks are not looking for status shelter this late in the year and if they were they aren’t getting a Hyatt credit card simply for the privilege of a challenge.
Instead, I think it will be too hard for Hyatt to compete with a footprint less than 15% the size of Marriott/SPG with more elite qualification requirements than SPG which matches over to Marriott anyway. Hilton and IHG are closer to 80% larger than Hyatt using some rough math with similar requirements (though I don’t think any amount of change will ever have Hyatt competing with IHG for members).
As a result, I foresee elite-specific promotional campaigns that amount to “double elite qualifying nights” or “stay credits are back” but at a higher required amount than the 25 stays from before. Only time will tell, but I doubt they will be able to walk back their higher requirements and thus, those that no longer trust the program won’t again in the future.
I am still a Globalist and already re-qualified for next year, but without some changes in requirements I won’t be focusing on the program in 2018 for 2019 re-qualification. I think the fact that they are running these challenges reflect that I won’t be alone in seeking solace elsewhere.
Do you welcome this sort of challenge? Do you find it innovative or desperate as Matthew has suggested?