What does Citizens United have to do with World of Hyatt anyway?

One of the key innovations in linguistics is the idea that language doesn’t have any inherent or universal meaning. Individual words are “signifiers,” and the concept that they evoke is a “signified” – the link between the two is an agreed-upon cultural fact. (This signifier/signified duality was first identified by Ferdinand de Saussure in the late 19th century.) For example, when you say the word “cactus” with your voice, the fact that the person you’re talking to thinks of a spiky plant living in the desert is due to our culture basically agreeing that this is the case. However, while certain words are pretty solidly hard-coded into our understanding, the fact that the relationship between a word and what it evokes is essentially arbitrary leaves room for slippage between word and concept.

Ludwig Wittgenstein’s Philosophical Grammar includes an exhaustive analysis of what goes on between hearing something and the understanding of it, and also of what “understanding” something really entails. It’s a gripping read, perfect for your next 14-hour long haul flight, so I don’t want to give you any more spoilers. However, I’m bringing this up because, while “words can mean more than one thing” is not exactly a groundbreaking claim, I’m looking a little deeper into language in this post. Specifically, I’m thinking about this:

witt

With this in mind, I want to look at the word “loyalty” right now… Obviously the definition of loyalty as it concerns frequent flyer programs has been changing quite a bit lately, but the terminology is not changing with it. To wit: airlines still call them “miles,” even though a mile is not representative of any distance flown. And now miles are even further bifurcated into those that can be used for free flights and “elite qualifying miles,” which cannot be redeemed for flights, but which are proof of how loyal you are to an airline. In this way, your loyalty is now turned into a currency that can be earned or even in some cases purchased. Credit cards offer EQM bonuses for signing or for hitting spending targets, which means that it’s possible to become pretty loyal to an airline like Delta by signing up for a bunch of American Express cards and never actually setting foot on a Delta plane.

Of course, the person who earned 40,000 EQMs by signing up for Delta Platinum and Reserve cards isn’t actually loyal to Delta, and the elite status they earned is more akin to a stuffed elephant purchased with 100,000 ski-ball tickets than a recognition by Delta of how good of a customer this person is. Nevertheless, both the airlines and the frequent flyers still agree to roll all of this up and call it “loyalty.” Unfortunately, in doing so – by preserving the relationship between signifier and signified that was agreed upon a long time ago – an understanding divide emerges where flyers no longer understand what airlines mean by loyalty because the airlines don’t understand it either.

Well, that’s not exactly true… the airlines know exactly what they’re doing: they’re tweaking the loyalty program to make it less expensive to operate, thus improving their net profit. It’s not really a secret, but what interests me is that, to use Wittgenstein’s terminology, they “have nothing but the signs either.” It’s not just corporate doublespeak, like calling a devaluation and enhancement in an effort to make it go over smoother with the program’s members. It’s more that marketing departments have always used a particular vernacular, and that vernacular is not as capable of evolving alongside the loyalty program’s terms and conditions.

Hotel loyalty programs aren’t exactly analogous to airline frequent flyer programs, since there was never a corollary to distance-based earning. The closest thing was the stay requirement for elite status – that way, you could conceivably stay at an inexpensive Hyatt Place for one night 25 times a year and earn Hyatt Diamond status. This made hotel loyalty programs susceptible to gaming via mattress runs – not to the degree that you could game airline programs with mileage runs, but the opportunity was there. Hyatt has eliminated stay-based elite qualification in the new World of Hyatt program, which closes this loophole. In this way, it’s similar in effect to airlines moving to mileage earning based on revenue rather than distance.

This is on my mind today because of a comment left on the blog yesterday:

I’m in the same boat (as are a lot of people). I stay ~110 night/year in hotels globally, yet struggled every year to get 25 in a Hyatt because their footprint is so small. I often went out of my way, staying in less convenient places or paying more than I wanted to in order to re-qualify for Diamond each year. Apparently my loyalty was not that important to Hyatt, so I reluctantly did a Platinum challenge with Starwood and I’m switching (I will keep my Hilton Diamond which is my primary brand). I like Hyatt properties better, and the breakfast benefits are much better, but if Hyatt doesn’t value loyalty, they aren’t going to get it.

This is a common complaint about the new program, and I definitely get it. In moving to a system where only room nights count toward elite status, Hyatt is signaling that they aren’t interested in rewarding people who take multiple short trips in a year and go out of their way to stay at Hyatt properties. Instead, they want to limit Globalist status to those customers who take long trips or earn 100,000 base points (which would require $20,000 in spending). This effectively thins the ranks of those who can reach Globalist status to those who can afford to be big spenders at Hyatt.

In so doing (and by keeping in lock step with airline programs), Hyatt is emblematic of the growing capitalization of speech that seems more and more to separate the wealthy from everyone else. This is a fairly insidious trend, since it operates within the the language we already speak, mutating the understanding of what the term “speech” actually means. That’s how we end up with a Supreme Court decision like Citizens United – corporations spending money on politics has to be something, so within the law, it is codified as form of protected speech. That it sounds patently ridiculous to assert that a corporation spending money constitutes speaking is beside the point: because speech actualizes language (which Wittgenstein established cannot be explained), speech is similarly impossible to explain. That leaves a pretty wide opening for the definition of speech to be changed as it suits the sociopolitical climate, and we live in a sociopolitical climate in which wealthy interests seek to perpetuate themselves. Once ensconced in legal literature, this new concept of speech as spending capital can then infiltrate other aspects of our language besides just in the technical/legal sphere.

We’re seeing the same thing happen with loyalty. If you break it down, there are two types of loyalty recognized by the travel industry. The first is performative loyalty: going out of your way to patronize a hotel chain or airline either because it generates a benefit like elite status or simply just out of positive associations with the brand itself. The second is transactional loyalty – spending money. If demonstrating loyalty can be understood the same way as speech, what’s happening here is not simply a corporation doing something to improve its bottom line. Instead, the roots go deeper, into the vein of contemporary capitalism that seeks to reduce all human activity to transactional terms.

From a marketing perspective, I think this is insane, and it bums me out that the people who run these programs can’t see the forest for the trees. Here’s why: as far as a brand goes, hotel brands are incredibly flimsy. Most hotel properties aren’t even owned by the brand; they’re owned and operated by a hospitality company that licenses the hotel’s name and brand image. Hyatt spends millions marketing its brand in order to create positive associations among travelers that motivate travelers to stay at a Hyatt, and the loyalty program is part and parcel of that. Despite the fancy marketing campaign around World of Hyatt, it moves the brand away from the performatively loyal customer, who is the very customer who has been the most receptive to Hyatt’s brand marketing from the start. Instead, Hyatt woos a very wealthy group of transactionally loyal customers, but that transaction cuts both ways: they now have customers that expect a lot more from them than simply delivering on brand promises. Indeed, top tier status now includes additional benefits not offered to Diamond members of the old program; Hyatt has simply calculated that these will cost less to provide, since the number of customers receiving them is smaller.

However, they’re now in a position where they’re directly buying transactional loyalty by giving out perks, which means that as soon as they reduce those perks (or another chain offers even better perks), there’s no warm fuzzy brand image to fall back on. This is a slow process. Hyatt isn’t going out of business next year because of this. And I realize I’m singling out Hyatt, but this really applies to every corporation who has “enhanced” their loyalty program to reward transactional loyalty. Maybe Hyatt never goes out of business – I’m not arguing that they definitely will. It’s a disturbing trend, though, since it underlines how the wealthy are disproportionately rewarded for their economic contributions.

That last point is a really easy one to argue against: of course the wealthy should be disproportionately rewarded; their contributions are disproportionately higher. That tautology gets to the heart of what I’m saying, though: if a company can’t see the value in lower-dollar customers who for whatever reason are loyal to that company’s brand, it will only legitimize the progressive economic marginalization of everyone who isn’t super wealthy. In a lot of ways, this is the endgame of American capitalism: eventually all human activity will be measured and valued in terms of how much capital it transfers. Revenue-based loyalty programs are just a by-product of this, and they’re hardly the most significant or worrisome example. Still, I don’t think it’s reading too much into it to tie these trends in the travel industry to the economy and culture as a whole, and of course (as it always seems to be) the takeaway is that we’re all fucked.

7 thoughts on “What does Citizens United have to do with World of Hyatt anyway?”

  1. “That’s how we end up with a Supreme Court decision like Citizens United – corporations spending money on politics has to be something, so within the law, it is codified as form of protected speech. ”

    A few points about Citizens United that are underappreciated.

    1. The Supreme Court isn’t saying that ‘money is speech’ they recognize that you need money in order to engage in expressive things, freedom of religion requires spending money to build a church, money isn’t a lawyer but you have to be able to spend money in order to exercise your right to counsel. As (liberal) Justice Breyer says, the first amendment is involved “not because money is speech (it is not) but because it enables speech.”

    2. The government’s position in Citizens United was that any role of a corporation in spreading expressive conduct could be regulated or banned, that means Barnes & Noble selling books or Disney distributing a movie. But the idea that corporation’s can have protected speech is just saying that individuals coming together in a group don’t lose their rights. Corporations have the rights that people have when we assemble.

    3. This doesn’t originate with Citizens United, in US case law it dates at least to Trustees of Dartmouth College v. Woodward – 17 U.S. 518 (1819) however in commonlaw it goes back much farther.

    Citizens United has become a misunderstood bogeyman, but it was very much decided correctly, and overturning it would be really dangerous.

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  2. This is an amazing analysis and captures something I hadn’t been able to put in words. It seems like Hyatt is indeed taking a cue from airlines by moving to transactional loyalty, but it seems like they’ve forgotten that the hub model locks people in to airlines. The hotel space is far more competitive and – as you mention – sooner or later someone is going to offer better perks.

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  3. I’m so glad that I went back and read this. I really, really enjoyed your analysis. And I agree with your takeaway. However, I’m a little surprised that you think this is “insane” from a marketing perspective. I guess I consider myself someone whose loyalty does not correlate with revenue. Not to be self-hating but: why would they want me? To tell my other card-churning friends that the Hyatt card is worth signing up for and cancelling every two years? I mean, I, like others in this space, am kind of a loyalty whore. Like with Club Carlson. When that card came out, along with all the promotions, it was GAME ON! Since they devalued the b1g1 award night feature of the card, you think I’d be caught dead at the Radisson, other than to burn residual points?
    I don’t think the pendulum is going to swing back either. Not unless there was competition that differentiated its program and did well at it. But given the rampant consolidation with hotels and airlines, that competition just doesn’t exist.

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    1. I agree with you regarding churners. What’s insane to me is brands (whether in the travel sphere or otherwise) deciding they don’t care about low-dollar yet loyal customers *in general*… I certainly don’t expect Hyatt to give a crap about me; I’m moreso looking at it as a paradigm shift in how companies value the impact of their brand on consumers. People who don’t spend much money with Hyatt but are loyal to them for the one or two trips a year they do take have way less reason to be loyal to Hyatt than a Globalist, which means that their organic engagement with the brand is the strongest of all. For Hyatt to disregard that (or, more accurately, to adjust their loyalty program away from that customer) trades authentically loyal customers for wealthy ones. I don’t see that as a sustainable platform for a brand unless the big chains all merge into one megachain that can thumb its nose at whoever it wants because it owns the market.

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      1. Oh well yeah I agree with you in the, like, normative sense, like how it should be. But I’m not sure if it’s unsustainable… As you brought up and Sirtheta expanded upon, there are very very few markets where we actually have a “choice” of airlines. (Which is why I LOL everytime a flight attendant does the spiel and claims that we had a real choice whether or not to fly that particular common carrier). And we’re getting closer and closer to the that reality with hotels too, I’m afraid! SPG + Marriott… Kimpton + IHG… With all the diminished capacity created by closing redundancies, there will be only few neighborhoods in few cities where you really have a choice. I assume that they did the math and figure the people who travel once / twice per year are marginal in terms of profit, and are just as likely to use Priceline or whatever anyway,

        I mean, eventually I think there will be some catastrophic event or market shift that will reverse this trend. Maybe if there was a Trust Buster in the Whitehouse! I just hope it’s not because something terrible happens.

        Here’s another thought that’s related to your sort of income-inequality determinism: I’m afraid that the same thing will happen to the next generation with regard to education. Poorer folks will go to their shitty charter schools and shittier, decimated, public schools and then if they’re lucky, graduate and take classes online and the wealthy will attend elite schools and netwoork and schmooze and perpetuate the cycle).

        Thanks for indulging my rambling 🙂

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