Hotel reward programs are losing their grip on guest loyalty

Hotels may need stronger value, pricing and experience strategies beyond traditional rewards

Recent research from Phocuswright suggests that while travel loyalty programs remain widely used, they no longer guarantee consistent brand loyalty. Travelers increasingly prioritize value, flexibility and overall fit when choosing where to stay, often booking outside their preferred brands despite loyalty memberships. Points and perks still influence decisions, but they rarely compensate for weak pricing, limited availability or inconsistent guest experiences. For hoteliers, the findings highlight the growing importance of delivering clear value and reliable experiences rather than relying solely on loyalty incentives.

Key takeaways

• Participation does not equal loyalty: Many guests belong to loyalty programs but still book alternative hotels when pricing, location or availability better match their needs.
• Guests actively optimize rewards: Travelers strategically use points, credit cards and status tactics, meaning loyalty engagement does not always reflect true brand preference.
• Value and experience lead decisions: Fair pricing, reliability, convenience and overall guest experience consistently outrank loyalty benefits in booking choices.
• Economic pressure drives redemption: Guests increasingly use points to offset travel costs, making flexible redemption options more relevant for hotel competitiveness.
• Younger travelers favor variety: Gen Z and millennials often seek new hotel experiences rather than repeat stays, even when loyalty benefits exist.
• Operational excellence builds loyalty: Consistent service quality, transparent pricing and dependable experiences remain the strongest drivers of repeat bookings.

Source: Phocuswright

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