Paid check-in upgrades: what’s left for loyal Hilton Honors guests?

As of last week Hiltons hotels are proposing Gold and Diamond members of the Hilton Honor program paid upgrades when checking in online. A very bad news for them which confirms the bad turn that Hilton Honors takes.

Complimentary upgrades are among the most popular benefits in hotel loyalty programs, and Gold and Diamond guests in the Hilton Honors program were eligible for them under conditions appropriate to each status. But after testing this option on silver members, Hilton decided to propose them paid upgrades when checking in online.

They can then decide to upgrade for a fee that will be specified to them at check-in. The advantage is that it allows them to secure an upgrade before they arrive at the hotel, the disadvantage is that …..it’s not complimentary.

However, free upgrades will not disappear, but the inventory of available rooms will inevitably be reduced depending on the number of people who opt for a paid upgrade.

Even if it disappears in practice if the paid upgrades are a success? This is what we fear.

The relentless degradation of service at Hilton and profits at Hilton Honors

As we explained to you, hotels did not fare so badly during the pandemic (at least in the USA), some even taking advantage of the sanitary measures to improve their margins by cutting back on service.

According to SKIFT, in the U.S., hotels providing “full service” to their guests (upscale and midscale) saw their break-even point decrease from 47% to 30% occupancy and “low cost” and entry-level hotels providing reduced services from 43% to 36%.

And of course some hotels have taken a liking to it, notably Hilton, which has never hidden its desire to reduce service to improve its margins.

Its CEO stated at the time:

The work we’re doing right now in each of our brands is to make them higher margin businesses and create more labor efficiencies, particularly in housekeeping, food and beverage, and other areas. When we come out of the crisis, these activities will have a higher margin and be less labor intensive than before Covid.

This can be translated as: “we have increased our margins and finally we like it. Don’t expect a return to normalcy“.

The question was how far he intended to go, because reducing the service for normal customers can artificially create fake benefits for loyal customers. Well no, loyal customers will also be impacted.

In any case, we can see that a part of the hotel industry is taking the low-cost airline route.

Loyal customers or cash: Hilton has chosen

Hilton’s communication is clear: the only purpose of this is to create incremental revenue. Le risque est bien sûr de make the loyalty program less attractive and see the most loyal customers leave for the competition, but Hilton Honors being already naturally one of the most stingy programs in free upgrades, the reasoning must have been that the client would prefer a paid upgrade to no upgrade at all.

This makes sense, but it is risky because at some point the customer’s trade-off may no longer be “upgrade or no upgrade” but “what’s the point of being loyal to Hilton”.

However, customers could massively boycott these paid upgrades, but some are so keen on it that we hardly believe it. And what would Hilton do in this case? Give even fewer free upgrades to force people to pay? But in the end it’s killing the very principle of the loyalty program and therefore the program itself.

Bottom line

Hilton Honors Diamond and Gold guests will be offered paid upgrades which, if successful, will effectively decrease the number of rooms available for free upgrades.

Hilton, as expected, made the choice to focus on incremental revenue over recognition of its loyal customers.

It would be fun to see what would happen if these customers decided to boycott paid upgrades en masse. Hilton could lose on both sides.

Bertrand Duperrin
Bertrand Duperrinhttp://www.duperrin.com
Compulsive traveler, present in the French #avgeek community since the late 2000s and passionate about (long) travel since his youth, Bertrand Duperrin co-founded Travel Guys with Olivier Delestre in March 2015.
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