Loyalty Programs Creating Two Tiers of the Same Status

priority 1st and 2nd
Some loyalty programs are reserving certain elite benefits for people who earned status the hard way. Photo: Adobe Stock.

Traditionally, the only way to earn airline status was to actually fly. And the only way to earn hotel status was to stay at hotels. But as loyalty programs shift their focus away from miles flown or nights stayed, and more towards money spent, the lines have become blurred.

You can now earn elite status with programs such as American Airlines AAdvantage without ever leaving the ground. Many hotels also now give away elite status to people who’ve never actually stayed at their properties.

Overall, that’s a great thing as it makes status more accessible and means more people can benefit from the perks. But it also means that genuine, loyal travellers who’ve spent thousands on flights or hotels must now compete for the same elite benefits with people who haven’t “earned” their status the hard way. Some frequent travellers might feel that this is unfair.

It can also be expensive for airlines and hotels to provide elite benefits to more people. But at the same time, that elite status might be the reason travellers choose their brand over another.

As a result, we’re starting to see a trend where some airline and hotel loyalty programs effectively have two different “tiers” of the same elite status levels. The full suite of benefits is reserved for travellers who’ve earned their status through actual flights or nights.

American Airlines Loyalty Point Rewards

Since 2022, you can earn American Airlines status by simply earning AAdvantage miles. For each eligible AAdvantage mile that you earn, you’ll also earn a Loyalty Point which counts towards status attainment.

AAdvantage also has a range of extra Loyalty Point Rewards that you earn between tiers as you earn Loyalty Points. For example, once you earn 15,000 Loyalty Points in a year, you get five preferred seat coupons and priority privileges for a trip. And upon earning 100,000 Loyalty Points, you unlock benefits including Avis President’s Club status.

These extra Loyalty Point Rewards aren’t technically status benefits. You only get them by earning Loyalty Points. So if you obtain AAdvantage status through other means – such as the AAdvantage status challenge or a Hyatt promotion – you wouldn’t have access to them.

American Airlines Boeing 787 landing at Chicago O'Hare Airport
American Airlines Loyalty Point Rewards are tied to the number of miles you earn, not your status tier. Photo: Adobe Stock.

KrisFlyer Milestone Rewards

Singapore Airlines’ loyalty program also provides a series of additional KrisFlyer Milestone Rewards as members earn more Elite miles during the same calendar year. These rewards include bonus miles, discount vouchers, redemption discounts and upgrades that are confirmed in advance.

Clearly, members who earn KrisFlyer status from a promotion or credit card wouldn’t qualify.

Hotel loyalty program “milestone rewards”

This trend is a lot more noticeable with hotel loyalty programs.

Many credit cards offer hotel elite status as a benefit for cardholders. For example, if you have an American Express Platinum card, you’re automatically eligible for Hilton Honors Gold, Marriott Bonvoy Gold Elite and Radisson Rewards Premium status. These are valuable perks that can get you lots of extra benefits when staying at affiliated hotels.

Marriott Bonvoy also offers Annual Choice Benefits to members who earn 50 and 75 Elite Night Credits during the year. These are the same tier thresholds required to earn Platinum and Titanium status with Marriott Bonvoy. But by tying these benefits to nights stayed, rather than the status levels themselves, Marriott is ensuring that only people who earned their status through actual hotel stays will get these extra benefits.

World of Hyatt and IHG One Rewards also offer Milestone Rewards which are separate to the elite status tiers. For example, by staying 40 nights in a year in IHG hotels, you can choose to get both a confirmable suite upgrade and an annual lounge membership.

The image outlines a hotel rewards program where guests can unlock rewards every 10 nights they stay, up to 100 nights. At each 10-night milestone starting from 20 nights, guests can choose a reward, such as bonus points or food and beverage rewards. Higher milestones offer additional rewards like suite upgrades or annual lounge memberships. The rewards increase in value with more nights stayed, and certain milestones offer a choice of one out of several rewards. For instance, at 40 nights, options include 10,000 bonus points, food and beverage rewards, a suite upgrade, or an annual lounge membership.
IHG One Rewards Milestone Rewards.

The threshold for IHG One Rewards Platinum status is also 40 nights per year. But the Milestone Rewards are deliberately not tied directly to the status tiers because IHG only wants to give these rewards to people who actually stayed the 40 nights.

Many IHG Platinum members don’t have lounge access. That may seem illogical at first, but makes sense if you consider that many Platinum members would have got their status through a status match, status challenge or a US credit card.

The club lounge at Intercontinental Tashkent
The club lounge at Intercontinental Tashkent. Photo: Matt Graham.

With more and more loyalty programs offering new pathways to status that don’t require actual flying or hotel nights, this trend makes sense. If you want the full suite of benefits, you need to earn them the hard way. This seems fair.

Could this trend come to Australia?

There are already a few ways to earn Qantas or Velocity status credits without flying.

For example, it’s now possible to earn small amounts of Velocity status credits by shopping at Coles or spending on an Amex Velocity Platinum credit card. There’s also a current promotion where you can earn 200 Velocity status credits with a credit card sign-up. Plus, you can choose Qantas status credits as a reward for achieving Green Tier.

But to earn Gold or higher status with Qantas or Virgin, you would still need to earn the vast majority of status credits from flying. Both airlines also require tiered frequent flyers to take a minimum number of Qantas or Virgin Australia flights each membership year. So, neither Qantas nor Velocity Frequent Flyer have adopted two-tiered status rewards… at least, not yet.

But this is something we could see more of in the future as more loyalty programs look to reward members for the overall value they bring to the company.

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 90 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.
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QF Points Club and PC+ (in particular) probably should rate a mention:
a. PC+ comes with complementary QANTAS Club membership - so approaching QF SG status, without the OWS benefits.
b. 100 SC rollover, and
c. SC earn on QF CR flights that help attain/retain QF FF status.

Pulling the thread of the article, will we eventually see PC provide an alternate route to PS, SG or higher status levels?

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I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

By contrast, in the US forums I frequent, they love it. I regularly see people who are top tier in American, Delta, Hyatt, Hilton, IHG & Marriott simultaneously even though they only travel 2-4 weeks per year as a result of shopping portals and credit card spend. Why do they do it? Partly because it is a fun game — people like to brag about how they have more elite nights than nights in the membership year. Partly because it is easy if you know the right techniques. And partly because it means they get to travel well for those few weeks a year they do get off work.

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Pulling the thread of the article, will we eventually see PC provide an alternate route to PS, SG or higher status levels?

Maybe, but PC/ PC+ vs. Gold is a good example of multiple tiers already in place. You get a benefit with PC+ (or QP paid) but it doesn't go as far as SG on lounge access, let alone other benefits. I would think Qantas already have the balance largely right on this one (for their purposes).

I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

To be fair the article says "Overall, that’s a great thing as it makes status more accessible and means more people can benefit from the perks" which is not an unreasonable argument. The 2 tiers seems a necessary step and here to stay.
I would also argue that increased access generally leads to a better product with time. There was a time I recall that you could only get lounge access with paid membership or flying F/J. Now Qantas has 2 levels of lounges at some domestic ports. How many here who don't like non frequent flyers getting lounge access are only accessing the QF lounge on SG? I am sure they wouldn't want to go back to the previous arrangement.
Airlines will need to keep offering something better to the actual frequent flyers and that has to be a good thing.

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Before the spend or after the spend

Point in time vs over a period of time

Loyalty v Choice
Initial Offer to First time buyers?
Incentive v Reward v Appreciation and Recognition

We all know of the Australia tax (for being loyal to the cause we will charge you more up-front and then “trickle-down” post spending rewards (in effect giving you a non-cash discount) to redeem on anything from us (golden handcuffs)

And then there’s attraction carrots (credit card churning comes to mind) to get you to sign up

Then there’s potential retention Strategies - sharing the spoils of the profits

And potential maintenance strategies ( keep you in the game
Previously known as JASA (RIP) with the current strategy Double Status credits or triple points for example of 50% bonus on Top-up points

And there’s retention strategies like comp’d status membership or extra points to stay (like with AMEX)
Bizarrely if you’d like to keep your status please spend 80,000 - 120,000 points to do so - they should be gifting me points to stay but there you go (supply and demand) like a riveting video game that keeps you coming back for more and more

UNTIL
You discover the ease of earning is not quite the same as the complex web of redeeming and no, I don’t want another toaster even if it’s fancy light green one like my mother has)

UNTIL
you self-fund after quitting that job that was providing all that “free to you” travel (in our case, status credits but zero FF points) AND professional allowances to keep our CPD Upto date. (Negatively geared just like a rental property = perfecto)

UNTIL
life time Platinum is so out of reach that why bother

“Using predictive analytics, the system is able to differentiate discounts across customers, leading to higher sales and retention without increasing costs. Customers are ranked according to their likelihood to buy. Based on that ranking, the business is able to determine which discounts would obtain the optimal response from each customer and offer minimal discounts through email or mailed postcards to customers who were already deemed likely to buy and offer larger discounts for customers who were less likely to buy. This drove incremental margin from customers who were already motivated to buy and incremental revenue from customers who previously felt no incentive to buy.”
That’s the loyalty side of the business. I think airlines have a way to go to really personalise offers

And then the epiphany
AFF can offer you far more tips, tricks and features than any airline loyalty program which has morphed off into the lala land of “share of wallet” across all categories

Phew because of AFF, many spent $2,500 - $3,600 on WP status
Instead of the “slow-burn” way of around at least $15,000 (if not considerably more)

This savings in its own way is reward enough with no thanks to the actual Loyalty program itself We learnt the rules, we adopted an adventurous exploratory approach, we scooped up discounted fares at the right time when DSC came our way (and even got DSC Barcaldine - Longreach FLEXI fares to put into credit to use later on to keep racking up them DSCs to keep status going for another year or two) or flying offshore with a nested ticket to Asian capitals to skewer that Australia tax to pieces

So What’s the Q airline response ?

A long running 35% discount on inflated price domestic J Fares
Well, it’s a start but almost always does the bank win.
The only fair price on dynamically priced fares that appear anywhere close to the cost of running the business are on the LCC Where there’s no loyalty offering

Fair priced Fares ?
Dream On!

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I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

By contrast, in the US forums I frequent, they love it.

True, I’m also not a fan personally. The article briefly mentions this- my main gripe is that it devalues the actual benefits if every Tom, Dick and Harry gets status just by means of having the right credit card.

Case in point- both Marriott and Hilton Gold is near worthless these days. Which is a main reason I’m a Hyatt loyalist, ensuring I manage to clock in my 60 nights a year- Hyatt has far fewer “fake” top status members, especially outside of the US. And as a result, pretty much every stay I end up in a way better room category than booked, often even a suite.

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Just yesterday I got an online survey from QF about the company and their loyalty offerings. Lot of the loyalty part seemed to be testing ideas on non-flying status. It also asked about my satisfaction on ease and value of redemptions.

In the free text fields, I pointed out that giving benefits to every man and dog with a credit card dilutes the value and reasons to be loyal. There needs to be a clear differentiator between the purchased vs earned status.

Redemptions? Not interested in toasters, domestic flight redemptions are ok, international too rare and unpredictable to offer value. I also suggested they consider guaranteed int'l upgrades (subject to availability) similar to domestic Y->J upgrades.

Because printing money through the FF programs seems to be a lot easier compared to running a hotel or flying planes, it's understandable that the companies seek to maximise that revenue. The more 'low cost, high perceived value' benefits they attach to it, the more appeal and revenue. It works for them only too well.

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As an afterthought, I wouldn't be surprised if we see a hotel chain to offload heir properties to a completely separate operator. What was the hotel chain, is now merely a marketing & booking & "loyalty" company which purchases capacity from suitable property operators.

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As an afterthought, I wouldn't be surprised if we see a hotel chain to offload heir properties to a completely separate operator. What was the hotel chain, is now merely a marketing & booking & "loyalty" company which purchases capacity from suitable property operators.

That's not too far away from the current model of the chain being the "brand" and the hotels being operated as franchises - e.g. Hilton, with >95% of their properties being franchised (source). It's a contributor to some of the inconsistent treatment elites get at different properties.

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That's not too far away from the current model of the chain being the "brand" and the hotels being operated as franchises - e.g. Hilton, with >95% of their properties being franchised (source). It's a contributor to some of the inconsistent treatment elites get at different properties.

Conversely allows a hotel chain to readily expand into markets eg DTs appearing in Oz overnight through a combo of rebadging and operators in new builds. Before that, HH was a bit of an overpriced proposition domestically.

But overall, not unique to Hilton.

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Loyalty Programs Creating Two Tiers of the Same Status is an article written by the AFF editorial team:

You can leave a comment or discuss this topic below.

Air Canada's Aeroplan has affiliated credit cards, and (amongst several things they offer to holders of these cards that non-holders don't get) in a queue for an upgrade, someone with one of these CCs will rank in front of someone else with the same FF status but no affiliated CC - and that's even if the latter has million-mile status, attained only by actually flying on AC services. I hate this, and an AC employee has told me they don't like it much either.

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