Beyond Points: Elevating Hotel Loyalty, Rewards, and Customer Insights

The following is one of the authors’ stories: Growing up with half of their family living in another country, they spent most of their childhood on planes traveling to visit them. Over time, one airline kept showing up on those trips. Not because they were tracking points or status, but because of the small things, handwritten notes from flight attendants, consistency of service, and familiarity.

Years later, they even met their partner on a flight, which made that connection feel part of a longer story and, in many ways, stronger over time. It never felt like just a company, but a community they were part of. Today, they still choose that airline whenever they can, even if it means taking a less convenient route or connecting through one of the busiest airports in the country. That is loyalty in its simplest form.

Now, with so many loyalty programs across hotels, airlines, and credit cards that have grown increasingly complex, we find ourselves thinking more about what actually creates that kind of connection. Loyalty has also become more flexible, even interchangeable, with brands willing to match status and make it easy to switch. Yet across the industry, loyalty programs have scaled rapidly. As Skift Research notes, that growth has often come at the expense of declining engagement, raising questions about whether more members actually lead to stronger loyalty.

What Guests Actually Want: The Data Behind the Shift

Deloitte’s 2024 Annual Report on Consumer Loyalty Expectations and Preferences surveyed more than 9,800 consumers across the United States, the United Kingdom, India, and Brazil, and the findings are worth sitting with. Financial rewards and program simplicity continue to top the list, with 86% of consumers rating both as “important” or “very important”. Four out of five say flexibility in earning and redeeming rewards is a deciding factor. These aren’t new preferences, and any program that chips away at them through point devaluations, confusing tier structures, or restricted redemptions is quietly losing members without knowing it.

The more pressing issue is personalization, and the gap between guests’ expectations and reality. While 73% of consumers say personalized experiences and rewards matter to them, only 60% feel satisfied, leaving a significant gap for brands to close. In the United States alone, the share of consumers who consider personalization important grew by 10 percentage points between 2022 and 2024. Guest expectations are moving in one direction while most programs are standing still. Gen Z and millennials are more than twice as likely to switch loyalty programs as older guests for better rewards, simpler structures, and more relevant benefits. Over 75% say a high-quality digital experience is essential to any program worth staying in. For brands still treating their app as secondary, that number is a signal they can’t afford to ignore.

Paid memberships tell a similar story, one the industry has been slower to take seriously than the data warrants. Seventy percent of surveyed consumers already belong to at least one paid loyalty program. Among those who don’t, nearly half say they’d sign up if the values were clear. The barrier is clarity more than willingness. Taken together, the picture isn’t of guests demanding more, it’s of guests wanting better and growing more willing to walk away when they don’t find it.

From Transactional to Experiential: The New Loyalty Currency

Loyalty in hospitality has traditionally been built around transactions. Points, upgrades, and free nights, along with rewarded frequency, created systems that measured how often a guest returned rather than how meaningful the experience felt. While these programs have scaled successfully, they have also become increasingly similar across brands.

What is starting to change is how loyalty is being created. It is no longer just about service or efficiency, but about offering something that feels distinct and memorable. Initiatives like Member Day, where guests are invited into corporate spaces such as headquarters, reflect this shift. Instead of interacting with the brand only through stays, members are given access to the people, culture, and decision-making behind it. This moves the relationship beyond transactions and into participation.

Airlines are also expanding their role beyond transportation. Delta Locals focuses on connecting travelers with local communities, turning travel into an opportunity to engage more deeply with a destination rather than simply moving between locations. At the same time, platforms like Airbnb have leaned into experiences as a core part of their value proposition, reinforcing the idea that what travelers remember is not just where they stay, but what they do.

The shift is not just in the type of reward, but in what holds value. Loyalty is increasingly tied to access, personalization, and a sense of belonging. Experiences create emotional value that is harder to replicate, especially in a landscape where status can be matched, and benefits are often interchangeable.

As loyalty programs continue to evolve, the focus moves away from how much a customer spends to how they experience the brand. In this model, rewards are no longer just incentives, but part of a broader effort to build lasting connections.

AI and the Intelligence Layer: Knowing Your Guest Before They Ask

If experiential loyalty is about creating meaningful moments, AI is becoming the layer that makes those moments possible at scale. The change is gradual, but it is already visible in how guest interactions are evolving. It is no longer just about reacting to guest needs but anticipating them.

In practice, this can look simple. A returning guest arrives and finds small details already in place, preferences remembered from a previous stay, from music to room setup, without needing to ask again. What once required manual effort is now increasingly supported by systems that can store, interpret, and act on guest data in the background.

Platforms like Booking.com are already moving in this direction. New tools such as Smart Messenger and Auto-Reply use AI to gather guest, property, and reservation data to respond in real time, often before a human agent steps in. These systems are not just faster; they are learning from past interactions, adapting responses, and personalizing communication in ways that feel increasingly seamless. The focus shifts from speed alone to relevance.

Simultaneously, a new category of “agentic AI” is emerging across the travel industry. Instead of simply recommending options, these tools can monitor prices, compare alternatives, and potentially book travel on behalf of the customer. In many ways, they act more like personal assistants than search engines, handling time-consuming decisions in the background. Major players, including Google and Expedia, are already investing heavily in these capabilities, and adoption is expected to accelerate over the next few years.

These tools are creating an intelligence layer across the travel journey. Brands are beginning to understand preferences, behaviors, and intent before the guest explicitly asks. In practice, this means less friction, more personalization, and faster decision-making.

But it also introduces a new tension. As AI takes on a more active role, trust becomes part of the experience. Guests may value convenience, but they still want control. As these systems become more embedded in the guest experience, knowing your guest is no longer enough. The real question is how that knowledge is used, and whether it enhances the experience or starts to feel intrusive.

The Competitive Threat: New Rivals Redefining the Rules

Hotel loyalty programs have long competed against one another. That dynamic is changing. Two categories of rivals are now reshaping the field in ways that incumbent programs cannot afford to ignore.

Airbnb is actively developing a loyalty or membership program, and by all indications, it will not look like anything the hotel industry has seen before. CEO Brian Chesky has made clear that a traditional points program is not his direction. He favors something closer to Amazon Prime, built around paid membership, instant perks, and genuine personalization. “So that every time you use us, we can learn about you, understand you, know you,” Chesky has said publicly. The stakes are significant. Airbnb already holds a deep foothold in experiences and alternative accommodations, and with HotelTonight now part of its ecosystem, it is moving into hotel bookings as well.

A senior analyst at Morningstar Research has described a loyalty program as critical for Airbnb “to support its strong network advantage and to address increasing loyalty competition.” For hotel operators who view Airbnb as a distribution partner, the risk runs deeper still: if Airbnb retains guest data and uses hotel stays as a gateway to drive trial of its home listings, independent properties gain reach but lose the relationship. That is a trade worth examining carefully before signing on.

Financial institutions represent an equally significant competitive pressure, one the industry has been slower to recognize. The Skift/Allianz Partners report finds that nearly 50% of U.S. travelers now carry a travel credit card, and 57% cite travel protection as a key factor in card selection. Banks and card issuers are no longer just rewards partners. They are becoming primary loyalty hubs in their own right, aggregating benefits, financing stays, and building emotional attachment to their own brand ecosystems. For hotels, this means that a guest’s loyalty may be claimed by their credit card long before it ever reaches the property.

Strategic Imperatives for Hotel Executives

The evidence across these sources points to a clear set of priorities for hotel executives seeking to compete not just with other hotel brands, but with the expanding ecosystem of rivals now entering the loyalty space.

The most fundamental imperative is to simplify and deliver visible value. The data are unambiguous: 86% of consumers rate financial rewards and ease of use as their top loyalty priorities. Every point devaluation, blackout date, or opaque tier requirement works against retention, especially among guests who have no shortage of alternatives. Clarity is not a weakness. It is a competitive advantage in a landscape where most programs are growing more complex.

The second imperative is to invest in experience architecture. The brands gaining ground are building around what guests want to do, not just where they want to sleep. Whether through curated outdoor travel platforms, member-only access to events and destinations, or immersive brand activations, loyalty is increasingly defined by how it expands a guest’s world rather than by how many points are accumulated in an account.

Deploying AI deliberately is equally important. The temptation to move quickly is understandable, but trust is harder to rebuild than it is to lose. Hotels should start with high-visibility, low-risk applications, such as personalized pre-arrival communication, real-time answers to loyalty program questions, and preference memory across stays, and build from there as guests grow comfortable with what the technology is doing on their behalf.

Designing for younger members has moved from optional to essential. Gen Z and millennials are more than twice as likely as older guests to switch loyalty programs for a better offer, and over 75% say a high-quality digital experience is a baseline requirement. Gamification, instant recognition, community-oriented features, and simplified earning structures are the mechanisms that make these guests feel the program was built for them rather than inherited from a previous generation of travelers.

Ecosystem partnerships with financial institutions, OTAs, and lifestyle brands offer real distribution and data benefits, but the terms matter enormously. The central question is who owns the guest relationship after the transaction. Hotels must approach these partnerships with clear direct-booking goals, ensuring that extended reach does not come at the cost of the data that enables personalization in the first place.

Finally, data governance should be treated as a loyalty feature, not a compliance obligation. Deloitte’s research shows that while more than half of American consumers are willing to share personal information for a better experience, transparency about how that data is used and the ability to opt out are their top conditions. Hotels that lead with this kind of honesty build the trust that makes personalization sustainable over time.

Conclusion: Loyalty as a Living Relationship

The story of hotel loyalty is not really about points. It never was. Points were always a proxy for something more important. It’s a signal that a brand recognized you, valued your return, and intended to make the next stay better than the last. What is shifting now is that the tools for delivering on that promise have grown far more capable, and the competition for that relationship far more intense.

The challenge for hotel executives is not finding the right technology or the right partner. It is committing to a coherent vision of what loyalty should feel like for each guest. That vision starts with the basics, but it does not stop there. It extends through experience, personalization, digital fluency, and data stewardship, which makes guests feel trusted rather than surveilled.

The era of loyalty defined by points balances and tier thresholds is giving way to something more nuanced and more valuable: a living, adaptive relationship between a brand and each individual guest. The brands that will win are those that treat loyalty not as a retention mechanic but as a long-term investment in genuinely knowing their guests and showing up for them, every time.

Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.