The Loyalty Equation Is Broken. Here’s What Travel Merchants Need to Know.
Travel rewards programs were built on a simple promise: spend money with an airline or hotel, and the program would give you something back. That promise is unraveling fast, and the ripple effects are landing squarely in the laps of travel merchants and operators.
In recent coverage across USA Today, The Points Guy, and regional news outlets, a clear picture has emerged. Airlines and hotel chains are systematically devaluing their loyalty programs while simultaneously failing to protect those same programs from fraud. The result: a loyalty landscape that is harder to navigate, harder to protect, and increasingly disconnected from the value travelers were originally promised.
The Devaluation Machine
Point devaluations are not hypothetical. They are happening across every major loyalty program at a faster pace than at any point in the modern history of travel rewards.
According to data compiled by Cash Balancer, the average value of a Marriott Bonvoy point has dropped from 0.9 cents five years ago to approximately 0.65 cents today. Hilton Honors has followed a similar trajectory, falling from 0.5 cents to 0.45 cents per point. Delta SkyMiles has seen the steepest decline, losing roughly 15 percent of its value year-over-year in 2025 alone.
The mechanics are straightforward. Programs publish award charts showing how many points a stay or flight costs. When those charts go up, or when they are replaced entirely by “dynamic pricing” where points costs fluctuate with cash prices, the traveler gets less for the same spend. Programs almost never announce these changes as devaluations. The language used is “enhanced,” “improved,” or “more flexibility.” That word choice is a tell.
For travel merchants, this matters in concrete ways. When travelers believe their points are worth more than they are, they make booking decisions based on faulty math. They hold out for award nights they cannot find. They delay bookings while waiting for redemptions that no longer exist at the level they expected. The result is longer decision cycles, higher cart abandonment, and a customer base that is increasingly frustrated before they even arrive.
The Fraud Problem Is Getting Worse
While programs are extracting value from the supply side, fraudsters are attacking from the outside. Loyalty account takeovers are rising sharply in 2026, and the victims are not just travelers.
KCRA 3 reported in May on Linda Roth, a frequent traveler who discovered that nearly 200,000 American Airlines AAdvantage miles had been stolen from her account over a single weekend. The stolen miles were used to purchase gift cards. When Roth tried to report the theft, she found that American’s fraud department was closed on weekends. By the time she reached someone on Monday, she was told there was nothing the airline could do and that stolen miles would not be reinstated under current policy.
Clint Henderson of The Points Guy experienced a similar breach two years ago, when scammers drained his American Airlines account and used his miles to book rental cars in New York City. American Airlines valued the stolen 449,500 miles at $13,260. After filing a police report and navigating a cumbersome recovery process, Henderson eventually had his miles restored. But the experience highlighted a structural problem: fraud departments at major airlines operate on business-hours schedules that do not match the 24/7 reality of how loyalty theft actually occurs.
Experts note that hackers often obtain breached usernames and passwords from dark web markets, then use those credentials to access loyalty accounts and transfer points to gift cards or other bookings. The attacks happen on weekends precisely because fraud departments are not staffed. Travelers who have not enabled multifactor authentication on their loyalty accounts are especially vulnerable.
What This Means for Travel Merchants
The loyalty crisis creates direct operational pressure on travel merchants and operators. Consider the downstream effects.
When loyalty programs devalue, travelers who once booked award travel stop booking as frequently. They either pay cash or they travel less. Either outcome changes the customer mix that merchants see. Travelers who are actively burned by loyalty fraud may become distrustful of online travel platforms entirely, which can suppress bookings across the ecosystem.
More immediately, merchants who work with airline and hotel partners need to understand that their customers are increasingly frustrated with the programs those partners run. A hotel that sits inside a loyalty program whose points are being devalued may see its most loyal repeat customers drift away. The merchant bears that churn even if they had no role in causing it.
As travelers shift away from loyalty redemptions toward cash bookings, the payment flows change. Cash bookings carry different fraud risks and different processing economics than loyalty redemption bookings. Merchants who have built their revenue models around a certain mix of award and cash bookings may find that mix shifting in ways that affect margins.
What Operators Can Do
The smartest travel operators are treating loyalty programs as a line item in their competitive analysis, not just a marketing tool. Here is what that looks like in practice.
- Track program health the same way you track exchange rates. When Delta or Marriott changes their award chart, that is a data point for your business planning, not just a traveler complaint.
- Understand your customer’s loyalty exposure. If your repeat customers are heavily invested in a program that is actively devaluing, they may reduce travel frequency. You can see this in booking pattern shifts before it shows up in revenue reports.
- Educate your customers without lecturing them. A brief, honest conversation about award booking realities can build trust and differentiate your service from OTAs that have no incentive to manage traveler expectations.
- Watch for fraud fallout. As loyalty account takeovers make headlines, some travelers will become more cautious about storing payment credentials online. That caution can translate into higher friction at checkout if you are not prepared.
The loyalty equation is broken. It is not going to fix itself, and no airline or hotel chain is going to announce that fact plainly. Travel merchants and operators who understand the dynamics now will be better positioned to manage customer expectations, anticipate booking shifts, and build the kind of trust that loyalty programs themselves have stopped bothering to earn.
The travelers who figure out the game are already changing their behavior. The merchants who figure it out first will be the ones they book with.
