Hoteliers sue Choice and Wyndham over hotel loyalty programs

hotel loyalty programsAre hotel companies illegally taking loyalty fees from hotels, where guests who don’t know they’ve been enrolled in a hotel’s loyalty program are staying? That’s the question under discussion after franchisees filed class-action lawsuits against two major hotel brands.

The suits, filed in U.S. District Court in Orlando last month, allege that Wyndham Worldwide Inc. and Choice Hotels International Inc. have “inflated the ranks of their loyalty programs and are collecting fees from hotels when those guests stay at franchise properties,” according to a story in the Orlando Sentinel. The story goes on to say lawyers for the hoteliers have asked for more than $260 million in damages from Wyndham, and more than $225 million from Choice.

Here’s the issue:Franchisees say the hotel companies are ‘auto-enrolling’ guests who book online into hotel loyalty programs, unless the guest opts out at the time of booking. Then, the hotel is matching personal data (emails addresses, home addresses, etc.) to the guest to reward points (not hotel membership numbers), which franchisees say results in hotels collecting program fees of up to 5 percent of gross room sales generated by guests “who may or may not have stayed at their property because of the loyalty program, and who may not have known they were entitled to benefits.”

“The real purpose of a rewards program is that you build customer loyalty,” David Wood, an attorney for the franchisees, told the Sentinel. “In that event, the hotel franchisee would benefit. But under proactive matching, that doesn’t happen.”

Wood also goes on to say that charging the extra fee for the loyalty programs is against the franchise contracts of both companies and is a violation of Florida’s Deceptive and Unfair Trade Practices Act.

Readers: What do you think? If it costs you nothing, do you care if the hotel auto-enrolls you into their loyalty program?