Why Travel Loyalty Programs Are Losing Their Spark—and How to Fix Them

We’re digging into a hot topic from Phocuswright Europe: the state of travel loyalty programs, and why many of them are failing to inspire meaningful commitment.

The Problem with Points: Loyalty’s Currency Crisis

According to Mark Ross-Smith, CEO of Loyalty Status Co., travel brands are stuck in a rut—pouring energy into points and miles systems while overlooking the deeper motivator that keeps high-value guests coming back: status.

📉 What’s Not Working:

• Points are transactional—they accumulate slowly, expire frequently, and often lack emotional resonance

• Most loyalty programs are designed around accrual and redemption, not relationship-building

• Elite perks are underdeveloped, meaning top-tier members feel undervalued, despite their significant spend

Ross-Smith’s solution? Flip the model. Instead of building toward rewards, start with status—the sense of belonging, priority, and recognition that drives emotional loyalty. He argues that a status-first approach could:

• Attract younger travellers into loyalty programs earlier

• Encourage frequent engagement, not just big redemptions

• Strengthen the loyalty loop by focusing on how guests feel, not just what they earn

“Status is the gateway to long-term spend, not just the prize for it,” Ross-Smith noted during his keynote.

Loyalty Needs a Human-Centric Reboot

While Ross-Smith advocates for status, Robert Wesley, CEO of MeProtocol, sees a different core issue: the lack of customer-first thinking.

Wesley argues that many loyalty programs today function like internal arbitrage engines, designed more to control cost than to create guest value. This misalignment results in:

• Devalued rewards (think inflation-prone points)

• Friction-heavy redemption processes

• Programs that feel more like traps than perks

He believes the travel industry needs to shift from transactional loyalty to experience-based loyalty—and fast. In a market where switching costs are low, and consumer expectations are high, guests won’t stick around for vague promises or fine print.

💡 His vision for the future includes:

• Personalisation powered by AI to anticipate guest preferences

• Blockchain-backed transparency so guests can track, trade, and understand their rewards

• Loyalty that feels real-time, intuitive, and emotionally relevant

“We’re living in a hyper-competitive market,” Wesley said. “Loyalty must feel earned by the brand—not the guest.”

What STR Hosts Can Take from This Loyalty Debate

Even if you’re not running a full-blown rewards program, there’s value here for every host, manager, and STR operator:

✅ Focus on Recognition, Not Just Rewards

• Celebrate return guests with personal touches: hand-written notes, surprise upgrades, or early check-in

• Use guest data (responsibly) to anticipate preferences, not just react to problems

• Build a “status-light” system by rewarding behaviours like repeat visits, referrals, or off-season stays

✅ Simplify and Humanise Loyalty

• Avoid point-based systems that require spreadsheets to understand

• Instead, offer direct perks like free nights after X stays, local partnerships, or insider experiences

• Make rewards easy to redeem—no blackout dates, no hidden restrictions

✅ Use Tech to Elevate, Not Complicate

• Explore tools that support personalisation, even at small scale (automated guest notes, anniversary alerts)

• Consider joining or creating a local host collective with shared guest perks across properties

• Keep an eye on emerging tech (like AI-driven upselling or blockchain loyalty wallets) that can scale loyalty without heavy admin

Final Thought: Loyalty That Feels Human Wins Every Time

The future of travel loyalty isn’t about chasing points—it’s about building emotional equity. Whether it’s through status recognition, real-time perks, or genuinely personalised experiences, brands that put the guest first will win.

Your best guests already love your property. The question is: what will make them love it more—and come back again and again?