My take is that historically, hotels have been paying 10-15% commissions to the Expedias of the world.

At an earning rate of 10-30 points (before credit card contributions) per $, and 0.5c per point redemption value, the hotels' exposure was generally aligned to the value of the commissions to the OTAs with the high points for customers being useful marketing for the program (here's what you can get if you just sign up) and being funded out of money left on the table (people never bothering to redeem, or redeeming 40k points on an $80 property, etc.). This meant that these programs were essentially a way for chains to redirect commissions they'd mostly have to pay anyway to secure brand loyalty for themselves vs. travel agents, and potentially to charge a premium over the best value property in town (and by value, I mean the balance of quality vs. price rather than simply the cheapest).

Now with redemptions being closer to 0.3c/point or less, and earnings being no more than 20 points per dollar for diamonds (ignoring per property and 30+ night bonuses) you're seeing a maximum value of 6% back.

At that point, unless you're chasing status or have a real need to stay in a particular property, there's little benefit in brand loyalty to a chain versus shopping on value overall and getting cashback or discounts from travel agents, hotels.com's loyalty programs, etc.