Study: Loyalty programs fall short of customer expectations
Members are more likely to stay at hotels where they have memberships
By Vishnu Rageev RJan 05, 2025
U.S. TRAVEL COMPANIES intensified their focus on loyalty programs during the post-COVID recovery to capitalize on industry momentum, despite frequent traveler dissatisfaction, according to a Morning Consult study. While increased personalization and expanded perks have been well-received, many travelers find the programs more complicated and less rewarding.
Morning Consult's report, “What Travelers Actually Want from Loyalty Programs,” found that U.S. travel loyalty program membership remained steady from 2021 to 2024. Millennials and high earners are the most frequent members, but no demographic group has shown significant growth.
The study, conducted with 4,450 U.S. adults on Oct. 10 to 11, alongside monthly surveys from October 2021 to March 2024 with about 2,200 adults each, revealed one key finding: loyalty program members are more likely to stay at hotels or fly with airlines where they hold memberships, compared to choosing other providers.
The report also noted a gap in higher-frequency hotel stays. Among loyalty program members, 17 percent stayed twice at member hotels—similar to non-member stays—but those staying five or more times were about twice as likely to choose member hotels.
The gap between loyalty and non-loyalty usage is more pronounced in air travel. Loyalty membership drives more bookings even at lower frequencies, likely reflecting less frequent flying compared to hotel stays and highlighting the stronger influence of loyalty programs in air travel.
Overall, loyalty program members perceive their rewards' value as slightly improved. However, older travelers, particularly Baby Boomers, are more likely to believe the value is decreasing, with Baby Boomers more than twice as likely to report this sentiment.
Points drive travel choices
Points and rewards influence travel decisions early in the purchase process, according to Morning Consult. About 60 percent of loyalty program members considered points and rewards when deciding when and where to travel in the past year, with 10 percent doing so four or more times.
Around 40 percent took a trip specifically because of their points or rewards, with younger travelers, especially Gen Z, leading this trend.
Active program members are more likely to follow this pattern across generations, the study found. Over half of program members consider their points before choosing a destination, creating partnership opportunities between tourism organizations and loyalty programs to boost destination volume.
Younger travelers are more likely than older ones to take trips solely to use their points, the study said. However, there is little generational difference in how points factor into the planning process, though Baby Boomers tend to delay considering redemption.
Loyalty is passé
Only 43 percent of loyalty program participants feel valued by their program. This share is slightly higher among active members—those who use the program at least once a year—and loyal members, who book exclusively with companies where they are members, but it still remains under 60 percent in both groups.
The study found that 15 percent of loyalty program members book exclusively with the company they are a member of. This behavior is consistent across subgroups, though power users make up a larger share of this segment.
A more revealing tier of loyalty includes travelers who prioritize brands where they are members but will switch if no availability exists. This group is nearly as loyal as the first, with decisions driven by the ability to travel with their preferred company rather than by price or amenities.
Another segment of travelers reported that program membership has no impact on their choice of travel company. This group tends to skew older and lower income.
Flexibility in programs
Consumers prioritize ease of use and flexibility in travel loyalty program benefits, the survey found. Over half of U.S. adults consider non-expiring points "very important," and nearly as many value easy-to-earn, easy-to-redeem points, along with the ability to cancel or reschedule bookings.
While rewards programs can drive bookings, members often leave points unused due to expiration or difficulty navigating the redemption process.
The more engaged a traveler is with a rewards program, the more likely they are to leave points unused. Over half of power users—those engaging every two to three months—report letting points expire or struggling to redeem them in the past year. These issues can be mitigated by offering non-expiring rewards and simplifying the redemption process.
Brands should note that high-income consumers, who are the most frequent travelers, are slightly more likely to perceive declining program value, the study said. On the other hand, the most active loyalty program members are more likely to feel their points are increasing in value, suggesting that high engagement leads to greater satisfaction.
While the overall order of importance has remained consistent, several features have gained significance since 2021. Non-financial incentives—such as flexibility like early boarding, late check-out, or access to member-only areas like lounges—have seen the largest increase in those rating them as "very important." Though these features remain lower on the priority list, their growing importance highlights areas brands should focus on in the coming years.
Reasons for non-participation
For adults not enrolled in travel loyalty programs, reasons for non-participation vary, with some generational differences, Morning Consult said. The most common reason, particularly among Baby Boomers, is infrequent travel. While understandable, travel brands may be missing an opportunity to engage less-frequent travelers by removing expiration dates or expanding earning structures.
Gen Z consumers are more likely than older generations to say they were unaware of loyalty program options or could not figure out how to open an account. To attract these young, potentially high-value consumers, brands should streamline the registration process and offer quick rewards for new members.
Hesitation to share personal data is consistent across generations, requiring travel brands to balance personalization with privacy.
The most common perceived benefit of joining loyalty programs is the ability to save money. However, fewer than half of loyalty program members—and less than 40 percent of adults overall—believe this benefit is realized, suggesting financial incentives may fall short for most consumers.
A recent MMGY Global study found Americans are planning more travel in 2025, with vacation budgets rising to $5,051, 4.1 trips per person, and nearly 80 percent of U.S. adults planning a vacation in the next year. A 2023 Shiny report found loyalty program members are twice as likely to tip as non-members.
Announcement of $100,000 H-1B visa fee triggers panic among Indian professionals.
The fee applies only to new petitions.
IT companies are reportedly reviewing staffing and travel.
THE TRUMP ADMINISTRATION’S announcement of a $100,000 fee for new H-1B visa petitions, effective Sept. 21, reportedly triggered panic among Indian H-1B holders. Many rushed to book last-minute flights, resulting in fully booked planes and higher fares.
The move caused anxiety among IT employees whose work depends on U.S. assignments, according to India Today.
However, the U.S. Citizenship and Immigration Services later clarified that the fee applies only to new petitions, not existing visa holders, providing some relief but not ending widespread uncertainty.
Airports and travel agents reported a surge in cancellations and rescheduling requests, while families of visa holders faced disruptions during the festive season.
Friday’s announcement sparked further confusion, culminating in chaotic scenes aboard an Emirates flight from San Francisco to Dubai, AeroTime reported. The plane was held on the tarmac for three hours as H-1B holders tried to determine if they could re-enter the U.S. The policy change created confusion over who would be affected.
India’s external affairs ministry said the fee could have humanitarian consequences “by disrupting families.” The Indian government said it “hopes these disruptions can be addressed by U.S. authorities” and emphasized that the exchange of skilled workers has “contributed enormously” to both nations, The Guardian reported.
H-1B visas are valid for three years and can be renewed for another three. The Trump administration says the increased fee helps U.S. companies stay competitive and create more jobs. However, Indian stakeholders raised concerns about its impact on the IT sector, citing potential disruptions to operations and project timelines. IT companies are reportedly reviewing staffing and travel while managing higher compliance requirements.
“Service exports have finally been dragged into the global trade and tech war,” Madhavi Arora, chief economist at Emkay Global Financial Services, wrote in a note on Sunday, according to CNN.
Arora also suggested the policy could have an unexpected upside for India, potentially bringing talent back home. While it could concentrate top professionals within India’s largest tech firms, it could also “catalyze India’s transformation into a more powerful global innovation and delivery hub.”
Meanwhile, U.S. Citizenship and Immigration Services data for fiscal 2025, show Amazon as the top H-1B recipient, securing about 10,000 visas.
The recent 50 percent tariff imposed by the Trump administration on India was also met with backlash from the country.
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The H-2B visa program protects U.S. jobs and wages, according to AHLA citing a study.
It allows hotels and resorts to meet travelers’ needs while supporting the economy.
It provides foreign workers for seasonal jobs when domestic workers are unavailable.
THE H-2B VISA program does not harm U.S. jobs or wages but increases pay and supports the labor force, according to an Edgeworth Economics study. Citing that study, the American Hotel & Lodging Association said the program enables hotels and resorts to meet travelers’ needs while supporting the workforce and economy.
The Edgeworth study for the H-2B Workforce Coalition found the program allows businesses to hire foreign workers for seasonal jobs when domestic workers are unavailable. It showed no evidence that increases in H-2B visas reduce U.S. employment or wages. Instead, each H-2B worker supports three to five local jobs and areas with more H-2B workers saw wages grow 1.6 percent faster.
“Areas that hired more H-2B workers under the higher visa cap saw greater job and wage growth among U.S. workers,” said Steve Bronars, partner at Edgeworth Economics, citing findings consistent with an earlier analysis by the U.S. Government Accountability Office.
Ashley McNeil, AHLA’s vice president of federal government affairs and chair of the H-2B Workforce Coalition, said the new analysis underscores the H-2B program’s clear value to local communities.
“The hotel industry, which is still 200,000 workers short compared to pre-pandemic levels, relies on legal guest worker programs to augment our workforce, particularly to address seasonal demands,” McNeil said. “Access to the H-2B visa program has been critical in allowing hotels and resorts of all sizes to meet travelers’ needs, while supporting the local workforce and economy.”
The program has also helped businesses manage peak-season labor shortages, easing the workload for full-time employees. Landscaping accounts for nearly 40 percent of certified H-2B workers. Hotels and motels account for 8.67 percent, support activities for forestry 6.3 percent and seafood processing and packaging 5.65 percent.
“This study reaffirms what our members have long recognized: despite extensive recruitment efforts, there remains a critical shortage of U.S. workers willing or available to fill temporary positions that are currently being filled by H-2B workers,” said Arnulfo Hinojosa, COO of the Federation of Workers and Employers of America and vice chair of the H-2B Workforce Coalition. “H-2B workers allow seasonal businesses to operate at a higher capacity and create more U.S. jobs.”
Meanwhile, President Donald Trump recently signed a proclamation raising the H-1B visa fee to $100,000 annually, a move that could affect Indian professionals in the U.S.
The use of AI agents hotels must rethink customer loyalty, a FAU study finds.
The paper proposes strategies as AI becomes the main booking channel.
Researchers warn of ethical and privacy issues.
HOTELS MUST RETHINK how they build and maintain loyalty as artificial intelligence systems make travel decisions and bookings for consumers, according to a study by Florida Atlantic University. The rise of artificial intelligence agents will complicate hotel customer loyalty management.
“AI agents will be the new gatekeepers of loyalty,” said Anil Bilgihan, FAU College of Business professor of hospitality management. “The question is no longer just ‘How do we win a customer’s heart?’ but ‘How do we win the trust of the algorithms advising them?’ Hotels need to prepare for a future where a guest’s preferred brand may be decided before they even open their phone.”
As consumers use AI agents to search for hotels, check availability, compare prices, analyze reviews and make bookings, decision-making will shift to the algorithm, creating loyalty to the agent or its ecosystem rather than to the brand, the report said.
Bilgihan said AI is not influenced by traditional advertising and sorts options based on algorithmic criteria.
“Imagine a traveler asking their AI agent to book a hotel in Miami within a certain budget, with a pool and strong reviews,” he said. “If your hotel doesn’t appear in that recommendation set, you may never be considered. Hotels must design loyalty programs, digital visibility and service experiences that appeal to both human guests and the AI systems filtering choices on their behalf.”
The paper proposes a framework for hotels to rethink loyalty strategies as AI agents become the main channel for travel bookings. While emotional branding still matters for humans, marketers should focus on loyalty programs that engage both humans and AI systems, using customer data to tailor experiences, improve algorithmic visibility and design programs appealing to both, the study said.
Researchers also warned of ethical and privacy concerns, including algorithmic bias, limited consumer understanding of how AI agents work and challenges in brand visibility.
“At the end of the day, technology doesn’t replace the fundamentals,” Bilgihan said. “AI may shape how guests discover and book, but the foundation of loyalty will always be the experience once they arrive.”
The paper in the International Journal of Contemporary Hospitality Management was authored by Max Ostinelli, assistant professor of marketing; Ye Zhang, associate professor of hospitality management; Melanie Lorenz, associate professor of marketing and Bilgihan.
New York University’s State of Distribution 2025 found a gap between AI potential and hotel operational readiness, as teams are still developing training, systems and workflows. In May, India’s International Institute of Hotel Management (IIHM) Kolkata launched ‘NamAIste – IIHM HospitalityGPT,’ the first generative AI platform for the global hospitality industry.
More than 70 percent expect a RevPAR increase in Q4, according to HAMA survey.
Demand is the top concern, cited by 77.8 percent, up from 65 percent in spring.
Only 37 percent expect a U.S. recession in 2025, down from 49 percent earlier in the year.
MORE THAN 70 PERCENT of respondents to a Hospitality Asset Managers Association survey expect a 1 to 3 percent RevPAR increase in the fourth quarter. Demand is the top concern, cited by 77.8 percent of respondents, up from 65 percent in the spring survey.
HAMA’s “Fall 2025 Industry Outlook Survey” found that two-thirds of respondents are pursuing acquisitions, 80 percent plan renovations in the coming year and 57 percent are making or planning changes to brand affiliation or management strategies.
“With hopes high for a stronger fourth quarter, hotel asset managers continue to maintain an optimistic outlook,” said Chad Sorensen, HAMA president. “More than 70 percent of our members expect RevPAR to increase 1 to 3 percent and two-thirds are pursuing acquisitions. With 80 percent planning renovations in the coming year, we see an engaged community focused on performance.”
Conducted among 81 HAMA members, about one-third of the association, the survey reports expectations for revenue growth, property investments and acquisitions.
However, the top three most concerning issues were demand, ADR growth and tariffs, HAMA said.
RevPAR growth forecast
Looking into 2026, 72.8 percent expect 1 to 3 percent growth, 18.5 percent expect 4 to 6 percent, 7.4 percent anticipate flat results and 1.2 percent project a decline. Full-year RevPAR projections versus budget are more mixed: 49 percent expect 1 to 3 percent growth, 17 percent expect flat results, 12 percent expect 4 to 6 percent growth, 2 percent expect 7 percent or more and 19 percent expect declines.
Hotel asset managers note several market pressures, the report said. Other concerns include ADR growth at 51.9 percent, tariffs at 34.6 percent, wage increases at 33.3 percent and potential Federal Reserve rate changes at 32.1 percent. Management company performance at 25.9 percent, immigration and labor trends, union activity and insurance costs were also mentioned.
“The industry is at its highest level of concern around maintaining or increasing rates,” Sorensen said. “There’s pressure to build on the P&L going into 2026.”
Performance projections
Confidence in the broader economy has increased since spring, the survey found. Only 37 percent of respondents expect a U.S. recession in 2025, down from 49 percent earlier in the year.
When asked about properties exceeding gross operating profit forecasts, 59 percent of managers expect 0 to 25 percent of their hotels to surpass targets, 25 percent expect 26 to 50 percent, 10 percent expect 51 to 75 percent and 6 percent expect 76 to 100 percent. Additionally, 20 percent reported returning hotels to lenders or entering forced sales since the spring survey.
Peachtree launched new DST with 131,040‑square foot industrial facility in Mansfield, Texas.
The property was acquired at $180 per square foot.
Peachtree completed $320M in debt-free transactions across multiple markets since 2022.
PEACHTREE GROUP LAUNCHED its latest Delaware Statutory Trust with the acquisition of a newly built 131,040-square-foot industrial facility in Mansfield, Texas. The company has completed about $320 million in debt-free transactions since launching its DST program in 2022, according to its statement.
The rear-load building, completed in 2025, features 36-foot clear heights, a three-acre outdoor storage yard and room for future expansion. The property was acquired for $180 per square foot, below market comparables, and is fully leased to Ferguson, a distributor for professional contractors in North America, Peachtree said in a statement.
“In today's higher-rate environment, where tighter credit and volatile valuations challenge traditional ownership, DSTs have emerged as a compelling alternative,” said Greg Friedman, Peachtree’s managing principal and CEO. “They deliver attractive cash flows backed by institutional-quality assets, while also offering tax advantages, professional management and diversification.”
Ferguson signed a 10-year corporate lease beginning in March, with 3 percent annual rent escalations, two five-year extension options and limited landlord obligations, the statement said. With investment-grade credit ratings from S&P BBB+ and Moody’s Baa1, the tenant supports the trust’s income stability and risk profile.
Peachtree’s DSTs, Opportunity Zones and REIT structures form a platform aimed at tax efficiency, compounding benefits and risk-adjusted returns, supported by Peachtree’s integrated asset management.
“Expanding into the industrial sector is a step toward building a diversified DST platform that can perform across cycles,” said Tim Witt, Peachtree’s president of 1031 Exchange and DST Products. “DSTs turn a looming tax bill into compounding wealth, keeping money in commercial real estate, but their true strength is pairing tax efficiency with investments that stand on their own merits.”
Atlanta-based Peachtree is led by Friedman; managing principal and CFO Jatin Desai and principal Mitul Patel. In July, Peachtree added the 128-key SpringHill Suites Phoenix West Avondale in Arizona as its ninth Delaware Statutory Trust offering since launching the program in 2022.