Hotel Loyalty Programs Are Dying: What’s Replacing Them?

FALLZ HOTELS™
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The Decline of Traditional Hotel Loyalty Programs

For decades, hotel loyalty programs have been a staple of the hospitality industry. Guests would rack up points, earn elite status, and redeem rewards for free nights and upgrades. But in 2025, this model is showing signs of fatigue. Many travelers feel disengaged, overwhelmed by complicated point structures, and unimpressed with rewards that rarely align with their preferences.

Recent industry reports indicate that loyalty program participation rates have plateaued, and some hotels are seeing declines in direct bookings despite offering traditional rewards. With more competitors in the market and evolving guest expectations, hotels can no longer rely on outdated loyalty strategies to retain customers.

Why Are Loyalty Programs Losing Their Appeal?

Several factors are contributing to the decline of traditional loyalty programs:

1. Points Devaluation – Many hotel brands have adjusted their point redemption structures, making it harder for guests to earn and redeem rewards at meaningful levels.
2. Lack of Immediate Value – Travelers increasingly prefer instant perks rather than long-term accumulation of points that may take years to convert into a meaningful reward.
3. Rigid Structures – Guests often find traditional loyalty programs inflexible, with blackout dates, limited redemption options, and complex tier structures.
4. Rise of Alternative Booking Channels – OTAs, Airbnb, and direct-to-consumer deals have made loyalty programs less influential in decision-making.
5. Changing Guest Preferences – Today’s travelers prioritize unique experiences, personalization, and value-driven stays over generic point-based rewards.

What’s Replacing Traditional Loyalty Programs?

As hotel brands move away from outdated loyalty models, newer, more engaging strategies are emerging to drive guest retention:

1. Direct Booking Incentives

Instead of long-term point accumulation, hotels are enticing guests with instant rewards for booking direct. These can include:

• Guaranteed best rates
• Complimentary breakfast or room upgrades
• Early check-in & late check-out
• Spa or F&B credits

Many travelers now see immediate benefits as more valuable than long-term loyalty points.

2. Subscription-Based Memberships

Some hotels are monetizing loyalty by offering paid memberships with premium perks. Marriott’s “Homes & Villas” and CitizenM’s “mycitizenM+” program provide members with exclusive discounts, flexible cancellations, and VIP services for a monthly or annual fee.

3. Personalized Stay Enhancements

AI-driven guest preference tracking is making customized perks more valuable than generic rewards. Hotels are leveraging data to offer:

• Room-type personalization
• Curated experiences based on past stays
• Personalized minibar or dining options

A traveler who frequently books spa treatments, for example, might receive a free massage instead of meaningless points.

4. Experiential Loyalty Perks

Luxury and boutique hotels are shifting toward experience-based rewards rather than transactional points. Examples include:

• Exclusive events or private dining experiences
• Adventure packages like guided hikes or yacht cruises
• VIP access to local cultural events

These experiences create emotional connections, making guests more likely to return.

5. Gamification & Engagement-Based Loyalty

Hotels are embracing gamification techniques to keep guests engaged between stays. Mobile apps now track:

• Stay streaks with bonus perks
• Social media engagement with hotels earning rewards
• Referral programs where guests earn discounts for inviting friends

This approach turns loyalty into an interactive experience rather than just a transactional program.

The Future of Hotel Loyalty

The days of earn-points-and-wait loyalty models are fading. The next generation of hotel loyalty is built on instant value, hyper-personalization, and exclusive experiences.

Hotels that embrace flexibility, guest-centric rewards, and subscription-based loyalty will attract and retain more high-value travelers, while those clinging to outdated models will struggle to keep pace.

Stay informed with FALLZ HOTELS™, your trusted source for hospitality investment insights.

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At FALLZ HOTELS™, we’re dedicated to keeping you informed about the latest developments in the dynamic global hospitality industry. As 2025 unfolds, we’ll continue to bring you expert insights, in-depth analyses, and updates on how hotels are evolving to meet the needs of hoteliers, investors, and stakeholders.

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