Three weeks ago I suggested San Francisco Starwood Hotels had optimistically high hotel rates for the July 4 weekend. Rates today for this July 4 weekend have dropped to their lowest level for six of the seven San Francisco city hotels (Le Meridien had an incredible $109 rate last week).

AAA rates are at their lowest level of the past three weeks for all seven San Francisco Starwood Hotels just three days before the weekend.

Four of the seven Starwood hotels loaded their lowest rates of the month just today.

Last minute rate drops are the primary reason to avoid prepaid, nonrefundable room rates.

Update: July 1 – Rates dropped even more down to $129 today for the Westin St. Francis for tomorrow night. Westin Market Street dropped to $109. These are the lowest rates of the past month for these two hotels. Le Meridien dropped to $129 today for this weekend.

I am generally a last minute booker of hotel travel. Time and time again I read travel expert’s advice that the best rates or award availability are available to the hotel guests who book early. There is some truth in that, but I don’t accept the belief that you need to be the early bird to get the hotel of your choice on an award or the lowest room rates. I am overwhelmingly a last minute reservations kind of guy.

My cases in point are Hyatt Free Night awards and Starwood Hotel rates for San Francisco for the July 4 weekend.

Help! I have earned free nights but I can’t get a reservation!

I was reading FlyerTalk Tuesday morning and a Gold Passport member was complaining about the lack of award availability for free nights. I developed some concern as I had two free nights expiring June 30.

Could I find a room at short notice?

My free nights were leftover award nights from the January 31, 2010 end-date for the original Gold Passport Big Welcome promotion. These nights were extended from the original March 31 expiration date to June 30 at the request of this Diamond member. And now there are thousands more guests with free night credits from the current Big Welcome Back promotion.

I called up the Hyatt Gold Passport Diamond line.

     “Do you have any rooms available at the Carmel Highlands Inn?”

     “Yes, Mr. Garrido. You can use your free night award for any night except Saturday or Monday.”

     “What about Lake Tahoe? Is there any availability at that hotel?”

     “Lake Tahoe is wide open. You can book an award night for any night through June 30 at the Lake Tahoe resort.”

I redeemed my two nights without any problem.

The Starwood Last Minute Hotel Rates Case Test 

Two weeks ago I made a survey of 21 San Francisco Bay Area Starwood hotel rates for the July 4 weekend. This earlier survey compared 2010 rates to 2009 and revealed 16 of 21 hotels with higher rates for the 2010 holiday weekend. In my June 8 post I stated the higher rates, in several cases 25% to 50% higher than 2009 rates, were possibly the “ecstatically optimistic” hopes of hoteliers that tourists were coming back big time in 2010.

From my June 8 post – “For this same time period in 2010 as when I checked rates about four weeks before Fourth of July holiday in 2009, hotels in San Francisco city appear to be pushing the rate envelope. I’ll try and remember to check back in next week and see if the Starwood Hotels envelope is a little too stuffed for San Francisco tourism economy this summer. That will be indicated by a room rate price drop next week.” 

Here are the room rates for Starwood’s seven San Francisco city hotels today on June 24 for the July 4 weekend. This rate check is 16 days after my June 8 rate check and eight days before the start of the July 4 weekend.

5 of 7 Starwood hotels are a lower rate today than earlier this month. Only the St. Regis and Westin Market Street Hotels have increased rates. 3 of the 7 hotels also have lower AAA rates today than on June 8. Two other hotels (Palace and Westin St. Francis) have the same AAA rate today as on June 8.

San Francisco may not be typical for all major cities, but last minute rate drops is a pattern I frequently see with San Francisco hotel rates.

These rate surveys I periodically conduct are the primary reason I avoid nonrefundable, no changes rate offers. In my experience, the last minute booking often offers better rates or free night award availability.

And if you are sitting on free weekend nights earned from the current Starwood promotion… well, all seven of the San Francisco Starwood Hotels are available for free night awards Friday July 2 through Sunday night July 4.

A quick check of New York City shows every hotel except Westin Times Square is available for free night awards over July 4 weekend.

OffandAway.com launched in May 2010 as a new kind of hotel room bidding website. The only opaque aspect of this site is how much you will ultimately spend in an effort to win a hotel room bidding war. Unlike Priceline or Hotwire where you simply have to reach a bid level that the company finds acceptable to win your room at an undisclosed hotel, the OffandAway concept is based on bidding against others and the last person standing (bidding) wins the known hotel room package.

The OffandAway concept is simple. Buy bids at $1 per bid and bid for high value hotel rooms in places like Manhattan, California resorts and Miami South Beach. There are descriptions of the hotel room packages on the website and a calendar of available dates.

Here is a sample room offer for The Setai, South Beach Miami from yesterday -

“The Studio Suite at The Setai – South Beach Miami.  2 nights in a king suite over looking the Asian inspired courtyard.  Hotel genius, Adrian Zecha, and architect/designer Jean-Michel Gathy have come together to create an oasis in the premier South Beach location.”

This auction for The Setai started out as a 10 cent bid. Each subsequent bid raised the auction price by 10 cents. Remember each bid cost the bidder $1.

The final winning auction price was $103.

The winning bidder spent $23 in bids and ultimately paid $126 for two nights at The Setai. This is an incredible bargain — for the winner.

Mathematically though, the $103 final winning price means 1,030 bids were placed on this auction for two nights at The Setai. The winner placed $23 in bids and was competing against other bidders who collectively spent $1,007 in bids and did not win this auction for The Setai hotel.

Here is the step-by-step of how OffandAway.com sells hotel rooms.

1. Register on the website and buy bids for $1 each.

2. Find an auction. At the current time there are only two to four properties available for bidding at any one time.

3. The bidding war does not even begin until the time has run out on the auction. You could place a bid on the Bodega Bay Lodge for 30 cents, but that will be a wasted dollar since someone else will bid just before the auction ends. Each bid raises the auction price by 10 cents.

Every bid at the end of auction time extends the auction for another 30 seconds.

4. Here is The Setai auction after the Auction Time Left had expired and 15 minutes before someone actually won the auction.

5. Eventually nobody makes a bid during the 30 second window and there is an auction winner. I suspect many bidders drop out after running out of bid money. Perhaps the auction ends as competing bidders are trying to buy more bids from OffandAway.com.

6. The winner spent $23 in credits. The final auction price is $103. The winner pays $126 for two nights at The Setai. There were $1,030 in bids spent for this auction. The winner got a great deal. The losers gave OffandAway $1,000 for nothing. A portion of this money will be credited for other hotel rooms. In the end, OffandAway is the clear winner in this game.

7. Losers can apply their bids to another hotel room as a credit. The credit is not for another auction, but another hotel booking at your choice of thousands of hotels using OffandAway as an online trasvel agency, similar to booking through any online travel agency such as Expedia or Travelocity. If you spent $53 bidding for the Setai and did not win the auction, then you get 110% credit of $53 for another room. You can book a $90 Holiday Inn Express or a Hampton Inn or whatever and you get $58.30 in credit towards  the alternate booking.

You have to book the alternate room within a week of losing your bids in a specific auction. You can only apply your bids from one auction to booking an alternate room. If you lost bid money in three different auctions you can’t combine those bids. The bids from each auction can be applied as a credit for three other room bookings within the week of each auction loss.

Since your booking is through a third party online travel agency you will not be eligible for loyalty program points and benefits with your hotel loyalty program.

***

There are some good deals.

There were only 136 bids for this room auction. $136 in bids and the winner paid under $25. Great odds for this property and this was one that I actually considered trying.

My reluctance though is the chance of hitting an auction like this for the New York Empire Hotel:

The winner here bid 191 times and won the auction in which there were 2,394 bids.

If you are lucky you can be off and away to a $1,000 hotel suite for $100 or so by placing about $30 or so in bets (bids). The gambling aspect is based on the fact that for every hotel suite winner who scores a $1,000 room for $100 and $30 in bets, there are dozens more betters (bidders) who spend $30, $50, or perhaps $75 or more in purchased credits and get nothing except an opportunity to apply the money you bet (bid) away as a credit on the purchase of another hotel room at the same prices you will find on Travelocity or Expedia.

The house always wins is the cardinal rule of gambling. OffandAway.com has hotel rooms for winners and lots of profits for the house based on the dreams and bids of numerous losers, @$1 a bid.

OffandAway.com will probably become a highly profitable website built on the hopes of gambler-travelers getting a high value hotel room for a fraction of the cost. Las Vegas was built on the dreams of the average gambler hitting the jackpot. Las Vegas is an architectural marvel built on house winnings.

Bottom Line: OffandAway is a clever concept for selling hotel rooms. I am not a gambler, so this site has little interest for me. The odds are too much of a long-shot for the typical player.

Hotels call it “revenue management” and we frequent guests call it the “room rate”. I started this article in response to a New York Times Practical Traveler article “Hotels: Fewer Deals but Low Rates” published this week. My initial reaction was to think 2010 actually has better hotel loyalty program promotion deals than last year. I realized Susan Stellin’s piece barely addressed loyalty programs until the last paragraph. And then only to give a general pitch for signing up to the hotel’s loyalty program for potential benefits.

Her focus was finding rate deals. Opaque sites and HotelChatter.com.

If Twitter is your idea of the best way to plan a hotel stay, then perhaps you need a better self-directed strategy for checking hotel rates and finding deals on your own. Sure there are good deals on Twitter. I found free rooms several times at the Westin Bonaventure during their Twitter campaign this past year, but using loyalty programs affords some of the best summer deals you can get in years.

My focus is actually finding the low rates on my own while planning to earn a high value loyalty program rebate with every hotel stay. For this article I use Starwood and San Francisco, but these tactics work for any hotel loyalty program and destination.

There are free night credits with two, three, or four stays with a variety of hotel loyalty programs for stays from June through August.

Since I couldn’t leave a comment about considering the rebate value on hotel stays this summer using free night hotel loyalty program promotions on the NYT piece (I did not see a comment section on the page), I decided to follow up on the article’s idea of finding low rates.

I looked locally at Starwood Hotels

• to see how rates look for this Fourth of July holiday weekend.
• I also analyzed 2010 rates to 2009 rates to see how the hotel rates changed in the San Francisco Bay Area for this Fourth of July holiday weekend compared to last year’s weekend rates.
• I also show how big a savings AAA rates are for hotels with 20% rate discounts potentially buying back the cost of your auto club membership with one weekend. (I just renewed AAA for $130).

 

Practical Advice for finding low rates while using hotel loyalty programs

Here are ways I check hotel rates when planning to earn lots of free nights through promotions like Starwood’s Stay 3 and earn one free night. I also check rates when planning a multiple night trip to see if there are good discounts on two or three night stays.

The table belows shows room rates for 21 San Francisco Bay Area hotels in the Starwood Hotels loyalty program.

Multi-night Discounts

• 9 of 21 hotels in the sample offer a rate break for a two or three night stay (Friday July 2, Saturday July 3, and Sunday July 4).
• Two of the 9 hotels only discount on a three night stay.
• Special offer rates on the hotel’s individual website or Starwood’s three nights for the price of two special rate were not searched for this article. Those would be the next rates to check.

It seems reasonable for a hotel to discount when guests stay multiple nights.

However, 5 of the 21 hotels actually charge a higher rate for a two or three night stay over the holiday weekend compared to the single night rate. Sheraton Sonoma revealed the highest multi-night boost with the three night, Fri-Mon weekend stay, costing $537 + tax compared to the individual nightly rate of just $468 + tax. The extra $69 for staying three nights is a 15% mark-up over the single night rate.

[lower rates for multi-night stays are coded in green]

[higher rates for multi-night stays are coded in yellow]

Finding AAA Rates on Starwood Hotels websites

Starwood Hotels website is a pain because you can’t do a search of AAA rates as a group of hotels. Every hotel has to be checked individually. That is a lot of wasted time for the frequent guest. Unfortunately the time is worthwhile to check AAA rates due to potentially high discounts, sometimes 20%+ off the lowest published rate visible when conducting a general rate search on Starwood sites.

The AAA rates for Friday July 2, 2010 shows 15 of 21 San Francisco Bay Area Starwood Hotels have lower rates using AAA. Five hotels have a lower published rate than AAA.

21 San Francisco Bay Area Starwood Hotels

• 5 hotels AAA savings 15% to 20%
• 4 hotels AAA savings 11% to 14%
• 6 hotels AAA savings 2% to 6%
• 1 hotel has same published rate as AAA rate
• 5 hotels lower published rate available than AAA rate, but generally prepaid, nonrefundable

 

As a consumer you should decide if it is worth two or three hours of your time to conduct a rate analysis. A few hours can save several hundred dollars as you stumble upon the right mix of lower rate hotel dates, AAA rates, loyalty program options, and hotel special offers at hotels.

Testing the Low Rates Claim for July 4, 2010

The problem with knowing if hotel rates are going up or down is you have to follow them closely and collect data. Hotels pay data collection businesses for rate information and analysis on their hotel competition’s rates.

As a consumer you can create your own hotel rate analysis.

I made a spreadsheet for room rates at San Francisco Starwood Hotels last year when I was hotel hopping for free nights during the two stays for one night promotion from May to July 2009. Last year’s room rate data collected on June 6, 2009 reveals year-to-year changes for this summer’s Fourth of July weekend at this set of Starwood Hotels in San Francisco.

In general rates are substantially higher for July 4, 2010 weekend than one year ago in San Francisco. Although some hotels in San Francisco like The Palace, Westin Market Street, and St. Regis (AAA rate)  are actually less than one year ago.

[lower rates for AAA rate compared to lowest published rate are coded in green]

[higher rates for AAA rate compared to lowest published rate are coded in yellow]

For this same time period in 2010 as when I checked rates about four weeks before Fourth of July holiday in 2009, hotels in San Francisco city appear to be pushing the rate envelope. I’ll try and remember to check back in next week and see if the Starwood Hotels envelope is a little too stuffed for San Francisco tourism economy this summer. That will be indicated by a room rate price drop next week.

A price increase could mean leisure travel is hopping again or hoteliers are ecstatically optimistic.

20,000 teachers in California are out of a job this month as the school year ends. I hope the tourists are coming from other places.

Results from an American Hotel & Lodging Association (AHLA) indicate nearly 40% of hotels are using flash selling like last minute website sales, or Twitter and Facebook specials. I saw some examples of flash selling with Hyatt and Starwood hotels in San Francisco for this weekend.

Here is the AH&LA poll survey question:

Poll: A recent report described that hotels, airlines, and other travel suppliers are increasingly finding success in flash selling, or offering last minute deals in the form of emails or other means to fill unsold capacity – and more customers are purchasing such deals. Is your hotel increasingly using flash selling and has this method improved the filling of unsold capacity?

Results:               

• 61% No flash selling tried;
• 26% Flash selling has boosted last minute sales;
• 13% Flash selling has not significantly boosted last minute sales.

I was finding all kinds of hotel deals on Twitter a few months ago, but then I hit follow on loads of people who were following me and the hotel deals now seem to be lost in the myriad of tweets on my page. I think I need to aggressively unfollow to filter my tweet follows back down to mostly hotels.

The problem I find with Twitter is not enough hashtags, #, are used in tweets to allow good searches. For example, if all hotel deals were labeled #hotel, then it would be easy to search for deals. But with only 140 characters to write for a tweet, labeling with multiple hashtag terms takes up the strictly limited writing space.

Question for the twitterati – I would love to learn about some good resources for tutorials on using Twitter and Facebook. Anyone have sites to share?

Hotel Rates this week in San Francisco

I like the case study method for analyzing hotel rates. I spent the past week studying room rates for San Francisco this weekend. I was struck by the high rates I saw for San Francisco hotels this Friday and Saturday April 23-24 when I started looking last week. The rates were generally low with Hilton and IHG all week, but the rates were quite high for Starwood and Hyatt hotels.

I noticed huge discrepancies between rates displayed on Kayak.com and rates displayed on the hotel websites during the course of the week.

Last Sunday I spotted several lower rates on Kayak.com compared to the Hyatt and Starwood websites. I clicked on several of the lower rates listed on the Kayak.com search results. The rates generally were incorrect on Kayak.com and came out matching the hotel website when I followed through a booking on Orbitz or Expedia.

I happened to find a $45 discrepancy for the Westin Market Street San Francisco between EasyClickTravel.com and Starwood. I applied for a Best Rate Guarantee (BRG). I applied for the wrong night. I resubmitted a second BRG for a different night.

The odd discrepancy was the standard room, called traditional at the Westin Market Street was not showing up on Starwood’s site. A higher category Deluxe room was the lowest room category bookable through Starwood for most of this week. The EasyClickTravel.com room was a standard room.

The responses from Starwood’s Best Rate Guarantee representatives were interesting. My first submitted claim was rejected. The response stated my claim was invalid since EasyClickTravel.com did not have a Deluxe room available on its website and only the Deluxe room was listed on the Starwood site for $143 . The fact that EasyClickTravel.com had a lower $98 standard room did not matter since the lower category rooms were not being sold on Starwood’s sites.

No problem. I had submitted that BRG claim for the wrong date anyway.

But it does bring up a lingering question of logical consequences since I book so many rooms using Best Rate Guarantee claims.

If this were truly a rational reason for rejecting a BRG claim, then what keeps the hotel from moving their lowest room category inventory to online travel agencies and charging more on their own websites for higher category rooms? This seemed to be the case with the Westin Market Street this week when standard rooms were available through several online travel agency sites but not on Starwood’s sites.

Turned out to be a moot point.

Twenty minutes later I received a second email from a different Starwood Best Rate Guarantee specialist who approved the second submitted claim for the night I actually wanted. I got the $98 room and 2,000 points.

Then the hotel rates suddenly dropped yesterday for this Friday and Saturday.

Hyatt Regency San Francisco on Monday $200+; Thursday ($159 AAA with breakfast)

Grand Hyatt San Francisco on Monday $179; Thursday ($116 AAA)

Le Meridien San Francisco on Monday $199; Thursday $109 Starpicks prepaid rate

W San Francisco on Monday $219; Thursday $149 Starpicks prepaid rate

Westin Market Street $159 Monday; $114 Starpicks rate for the “traditional” room. Suddenly Westin Market has traditional rooms for sale after only offering Deluxe rooms all week.

The other interesting fact is the OTAs have not lowered their prices for the weekend.

Orbitz is charging $139 for Westin Market Street – Starwood is $114.

Expedia is charging $189 for W San Francisco – Starwood is $149.

Orbitz is charging $199 for Hyatt Regency San Francisco with a $25 Food & Beverage Credit– Hyatt is $169.15 (AAA with breakfast for two at hotel restaurant).

Orbitz is charging $199.01 for Le Meridien San Francisco – Starwood is $109.

There has been a growing clamor among big-chain hoteliers that online travel agencies like Expedia and Orbitz are playing too large a role in dictating room rates. I cited an article earlier this week arguing room bookings over the internet through third parties like Expedia, Orbitz, and dozens of other online travel agencies cost hotels about 8 times more than direct booking through hotel websites.

Hotel revenue is the largest proportion of OTA profits for the big companies like Expedia.

Too bad the San Francisco hotels waited so long to drop their rates this week. They would have taken in more money from me, but I already went for the bonus points of a Best Rate Guarantee due to the lower rates with the online travel agencies much of this week.

The point to take away from all this is keep an eye on hotel rates as you go for the free night promotions these next few months. Hotel revenue management tactics mean you will see highly dynamic room pricing. Getting the best room rate deal is really a matter of timing and luck.

When does a $1 breakfast cost $31?

When you are booking the Four Points by Sheraton “Breakfast for a Buck” room rate or perhaps in Las Vegas when you accompany your $1 breakfast with a table full of Keno cards.

Four Points by Sheraton, Starwood hotels mid-range hotel brand, has a promotional campaign hitting the hotel industry media outlets today.

MarketWatch.com – What’s a Dollar Buy These Days?

Hotel Check-In (USA Today) – Four Points by Sheraton Hotels offer $1 breakfasts this summer

“Four Points by Sheraton is launching an eye-opening “Breakfast for a Buck” package today, which gets you a delicious, hearty breakfast for just a dollar.”

Sounds great!

Unfortunately, the “Breakfast for a Buck” just isn’t true in the sense that most travelers would use when searching hotel rates. Breakfast for a Buck is $1 over the Best Available Rate, often written as the acronym BAR. The problem with promotions based on BAR is the Best Available Rate rarely means the lowest rate available when searching for hotel rooms.

There is actually a better promotional rate currently offered with AAA called the “Breakfast for Two Daily” rate with Starwood hotels rate code: AAABFS

This Starwood Hotels link shows participating properties for the AAA special rate offer.

Here is a comparison of the two special offers for the Four Points San Rafael in Marin County, California. Saturday, April 24 – Four Points San Rafael

“Breakfast for a Buck” rate = $110 night and includes one breakfast.

AAABFS rate = $102.65 night and includes breakfast for two.

AAA rate without breakfast is $81.75.

Who wouldn’t rather have two breakfasts for $7.35 less than one breakfast?

Here is my comment today at Barbara DeLollis’ Hotel Check-In column for USA Today regarding this breakfast offer.

The real deal!

Unfortunately this is one of those special offers that will likely cost you more than the value of the breakfast. 

First, the fine print for this offer states the “breakfast for a buck” only applies to one guest. The other guest pays regular breakfast rates. 

Second, the rates I checked showed a substantial premium for the “Breakfast for a Buck” room rate. I find AAA rates are generally the lowest rate about 50% of the time. 

Here are sample rates for Four Points hotels in San Francisco Bay Area for Saturday, April 24:

Breakfast for a Buck rate is coded “FPBPKG”. 

Four Points San Francisco Bay Bridge, Emeryville

FPBPKG rate = $100 or $112.07 after tax

AAA rate = $84.15 or $94.31 after tax.

Breakfast for a Buck actual cost = $17.76

Four Points San Francisco Airport

FPBPKG rate not available 

Four Points San Rafael

FPBPKG rate = $110 or $122.10 after tax

AAA rate = $81.75 or $90.74 after tax.

Breakfast for a Buck actual cost = $31.36 

Four Points San Jose Downtown

FPBPKG rate = $120 or $138.80 after tax

AAA rate = $101.15 or $117.31 after tax.

Breakfast for a Buck actual cost = $21.49

The real deal on the Breakfast for a Buck deal is that it is NO DEAL!

If the rates are going to be driven up for the Breakfast for a Buck deal, the least Four Points could do is offer breakfast for two adults on this rate.

 

Hotel Rate Quick Tutorial

Best Available Rate usually means a refundable reservation with a cancellation window from one or two days before arrival. Some hotels even allow day of arrival no-charge cancellations on the Best Available Rate.

There are commonly lower rates than BAR.

1. Prepaid, non-refundable rates
2. AAA auto club  
3. Senior rates.

Prepaid nonrefundable rates are generally a discount based on BAR. Prepaid rates can be significant savings but are a risky strategy since any changes to your plans means forfeiting the full price of the room nights.  Free night rates and percentage discount rates are generally based on BAR and often have restrictive cancellation policies.

AAA auto club rates are most frequently the lowest rate available or within a few dollars of nonrefundable prepaid rates. One of the great benefits of AAA is the cancellation policy is usually the same as for BAR rates. The annual cost of AAA membership is worth the money for frequent guests in hotel savings. I have seen high-end hotels drop over $100 per night just by booking AAA room rates. Most hotels offer 10 to 30% off using AAA rates.

Senior rates are variable. Sometimes they are lower than AAA, but generally not, and generally not as widely available. Different hotel chains have different age qualification requirements.

Four Points Promotions – Choose from four great deals (link)

Breakfast for a Buck is just one of four package deals being offered by Four Points.

Great Beer package rate includes two full breakfasts and one half-price beer sampler per hotel stay. Another not so great deal considering the high mark-up on BAR.

Family Friendly Fun package rate is probably the worst value of these four package offers. This rate includes a free buffet or child’s entrée for one child 12 or younger with an accompanying adult purchase of a buffet or entrée.

Drive In, Fly Out package rate. I can’t even give an opinion on this package rate since I could not locate the rate for either the San Francisco or Los Angeles Airport Four Points hotels at various times over the summer. In the past I have found the Four Points SFO parking rate gave me a night’s stay and 10 days of parking for just $50 more than the cost of parking alone at the airport lots.

Unfortunately, I have to say my opinion of these four great deals from Four Points is at least three of the four deals are total BS wrapped up for the undiscerning guest in a pretty webpage and PR.

“Hotels Compete for Loyal Guests,” is another example in a series of articles that highlight the loyalty wars of 2010. The article by Kelli B. Grant was published at SmartMoney.com this week and is a good basic read with a summary of some deals in six different hotel loyalty programs. They have all been covered on Loyalty Traveler blog. The aspect of the article I want to develop more fully is a method for comparing hotel loyalty program awards.

The hotel media is acting like this is the first year there has been competition for hotel loyalty program members. I see loyalty wars as a continual endeavor and there is really nothing remarkable about 2010 except for the fact that elite status is easier to get with several programs this year.

Best Western Rewards is currently offering instant elite to members of other programs. So what?

Hyatt has been giving away elite status for a year now and most programs will match your elite status with another hotel program.

My favorite line from the SmartMoney article is from Bjorn Hanson of New York University Tisch Center for Hospitality, “Before you switch loyalties, though, crunch the numbers on rewards to make sure you are getting the best deal.”

Great advice for a loyalty member, and I agree with this, but does anyone care to lay out a method for how to “crunch the numbers” on hotel awards in different hotel loyalty programs?

In the April 2010 issue of InsideFlyer I proposed a method for comparing hotel loyalty program awards. The InsideFlyer article is not easy reading, and I fault myself for not being a better writer, however, I wanted to show a way I think allows a frequent guest to “crunch the numbers” on hotel awards to compare hotel award value between programs. I think the method works for a basic comparison.

The rest of this post is a step by step explanation of the problems encountered when trying to compare hotel programs and award value between programs, followed by an example of how I compare award value for seven hotels in San Francisco. This article is also not an easy read, but useful if you are into calculating the value of hotel points.

 

Difficulties with calculating hotel award value across programs

There are several difficulties encountered when trying to crunch the numbers on hotel awards.

Here are a few of the variables:

Hotel loyalty programs have different rates for earning points.

• Carlson Hotels goldpoints plus gives 20 points per $1 for Radisson Hotel stays, 15 points per $ for Country Inn & Suites.
• Hilton HHonors members earn 15 points per $1 if earning preference is set for Points & Points, but only 10 points per $1 if earning Points & Miles.
• Gold Passport members earn 5 points per $1.
• Starwood Preferred Guest members earn 2 points per $1.
• Marriott Rewards and IHG Priority Club Rewards members earn 10 points per $1, except when staying at Marriott’s Residence Inn and TownePlace Suites, or IHG’s Candlewood Suites and Staybridge Suites.

Award Categories Are Difficult to Align Across Programs    

Hotel loyalty programs use different award levels for classifying hotel awards and the hotels are unevenly distributed across award levels for different programs.

Is a Hilton category 7 the same as a Starwood category 7 award?

A person on FlyerTalk made an analysis the other day equating these two award levels in a comparison of which program offered the best value. The Hilton San Francisco Fisherman’s Wharf (category 7) or Embassy Suites, Seaside, a few miles from my home in Monterey, California (category 7) are nowhere near the same hotel market segment as the Hotel Gritti Palace (SPG category 7) in Venice, Italy or the Mystique in Santorini, Greece (SPG Category 7).

Uneven Distribution of Hotels Among Award Categories

The distribution of hotels within a program’s award category levels is variable. Hilton has just 42 hotels of 3,500 hotels in category 1 for 7,500 points a night; a little over 1% of its properties. Marriott Rewards has 288 hotels in category 1 after the March 8, 2010 changes. Marriott has almost as many hotels as Hilton in its loyalty program, yet seven times the number of hotels in its category 1 award level.

You could argue that Hilton has higher quality properties justifying fewer hotels in category 1. I don’t buy that argument.

Elite Status impacts the rate you earn loyalty points

Elite status offers the potential for up to 50% more points, but earning elite status is dependent on your hotel travel pattern. Marriott only counts nights as the one route to elite status, while all the other programs offer an additional route to elite status. The rest (except for Priority Club) allow elite status qualification for fewer stays than nights. This is the more favorable route to elite for a frequent guest who typically only has one night stays. Hilton HHonors allows elite membership to be earned through spending. Priority Club counts total earned points for elite qualification and bonus points earned through promotions and partner activity count.

 

Crunching the Numbers the goldpoints plus way

Carlson’s goldpoints plus award calculator shows the commonly used method for comparing hotel loyalty programs. The number of hotel nights is multiplied by the average room rate and the total base points are calculated.

Example of loyalty program comparison at goldpoints plus www.dothemathsite.com.

The calculations shown are based on $3,750 in annual hotel spend.

The calculator accounts for elite status, but does not tell you what level elite status is being used. It appears each night is being counted as a separate stay.

Elite Status

goldpoints plus = Gold after 20 stays or 35 nights = 50% elite bonus

$3,750 x 20 points/$1 = 75,000 base points + 37,500 elite points = 112,500 points

Marriott Rewards = Silver after 10 nights= 20% elite bonus

$3,750 x 10 points/$1 = 37,500 base points + 7,500 elite points = 45,000 points

Hilton HHonors = Gold after 16 stays or 36 nights = 25% elite bonus

$3,750 x 10 points/$1 = 37,500 base points + 18,750 bonus points (Points & Points 50% bonus) + 9,375 elite points = 65,625 points

Priority Club Rewards = Gold after reaching 20,000 points or 15 nights = 10% elite bonus.

$3,750 x 10 points/$1 = 37,500 base points + 3,750 elite points = 41,250 points

Starwood Preferred Guest = Gold after 25 nights or Platinum with 25 stays.

$3,750 x 2 points/$1 = 7,500 base points + 3,750 elite points = 11,250 points.

Note the dothemathsite.com calculator inconsistency for HHonors v. goldpoints plus.

Goldpoints plus is calculated using Gold status which requires 20 stays or 35 nights. Obviously the stays requirement is used for goldpoints plus in this example based on 25 hotel nights. But Hilton HHonors Gold is reached with 16 stays or 36 nights. The calculation shown for the dothemathsite.com result is based on nights for HHonors and results in just a Silver elite 15% bonus. Silver elite requires 4 stays or 10 nights.

Actually HHonors Gold elite should be used to be consistent in the comparison or the goldpoints plus points should also be based on Silver elite and only a 25% bonus for a total 93,750 goldpoints plus points rather than 112,500 points.

The inconsistency in the dothemathsite.com is a calculation error and not the main issue with this hotel loyalty program comparison method.

The real problem I see?  Using free nights earned as a basis for comparing hotel programs on the surface seems like a reasonable measure for comparing the value of different hotel loyalty programs, but I find this method has a couple of problems that are not so apparent.

First, the category 1 level comparison implies all category 1 levels are equivalent among the different programs. I have already explained how this is not the case between Hilton and Marriott.

Starwood Preferred Guest is another program with a pretty vacant list of category 1 hotel properties. There were around 75 Starwood hotels in category 1 in 2005 and today in 2010 there are just 29 hotels in category 1. As the number of hotels in Starwood has increased, the number of hotels available as category 1 hotel awards has decreased.

The second problem is with the mid category comparison.  The calculation explanation on DotheMathSite.com states the middle category is used for comparison.

The calculator bases Hilton awards on category 3 at 25,000 points. This does not account for the recent changes which makes category 4 the middle award level. Regardless of the Hilton category level used, there is no basis for comparing programs on each program’s defined middle category level. That just doesn’t align with real hotel award placement.

When the lights go down in the City

San Francisco is a good example for showing how this arbitrary alignment of hotel award categories is not grounded in the actual placement of hotels.

San Francisco Fisherman’s Wharf has hotels in all the major hotel chains. They are all fairly identical within a couple of blocks of each other, three or four stories, and none with anything particularly outstanding in their architectural features or amenities. They are all upscale hotels in the same hotel market segment with similar room rates most of the time.

Here are the actual hotel category placements for seven hotels in this area.

Radisson Fisherman’s Wharf = goldpoint plus category 4 = 40,000 points

Hilton Fisherman’s Wharf = HHonors category 7 = 50,000 points

Holiday Inn Fisherman’s Wharf = Priority Club tier 3 = 25,000 points

Holiday Inn Express Fisherman’s Wharf = Priority Club tier 3 = 25,000 points

Hyatt Fisherman’s Wharf = Gold Passport category 3 = 12,000 points

Marriott Courtyard Fisherman’s Wharf = Marriott Rewards category 5 = 25,000 points

Sheraton Fisherman’s Wharf = Starwood Preferred Guest category 4 = 10,000 points

My Award Value Analysis Method for Comparing Across Programs

The main issue to address is the need to adjust these awards requiring different number of points to a common scale to allow a value comparison.

Step 1. Determine the room rate which requires an actual hotel stay date. I pick Tuesday, March 23, 2010.

Step 2. Calculate award value for each hotel based on room rate divided by points needed for award night.

Step 3. Apply an adjustment factor to correlate the rate hotel points are earned to the award value to create a common scale for comparison. The award value adjustment factor is explained below.

This table shows the results of steps one and two.

Hotels at Fisherman’s Wharf, San Francisco	Tuesday 3-23-10 rate	Award Value Calculation	Award Value$ value/1,000 points
Radisson	$116	$116/40,000	$2.90/1,000 points
Hilton	$135	$135/50,000	2.70
Holiday Inn	$99	$99/25,000	3.96
Holiday Inn Express	$138	$138/25,000	5.52
Hyatt	$189	$189/12,000	15.75
Courtyard by Marriott	$179	$179/25,000	7.16
Sheraton	$149	$149/10,000	14.90
Note: The last column shows award value for each program, but these values must be adjusted to a common scale to compare award value between programs. $14.90 per 1,000 points in Starwood must be adjusted to correlate the rate of earning points to the value.

 

Step three is using an adjustment factor to place each hotel program on a similar scale. For example the Hilton HHonors member earning Points & Points is accumulating base points and bonus points at the rate of 15 points per US dollar. The Starwood Preferred Guest member earns points at the rate of 2 points per $1. Reaching 10,000 points for the Sheraton award night could require as much as $5,000 in hotel spend while the HHonors non-elite member would only need to spend $3,334 to earn 50,000 points.

Elite status bonus points, promotion bonus points, credit card transaction points, and partner activity points are additional variables for earning points that are significant factors in real travel.

But for now, this is the baby steps introduction to crunching the award numbers. This adjustment to award value to enable comparison between programs will only consider base points and elite bonus points similar to the calculations in the DotheMathSite.com analysis.

Hotel Award Adjustment Factors to place awards on similar scale of 10 base points/$1)

Hotel Award Value	Award Value  adjustment factor non-elite
Carlson gold points plus*(20 points/$1)	Multiply by 2.00
Hilton HHonors (Points & Points = 15 points/$1)	Multiply by 1.5
Hilton HHonors (Points & Miles = 10 points/$1)	No adjustment
Hyatt Gold Passport =5 points/$1	Divide by 2
IHG Priority Club* = 10 points/$1	No adjustment
Marriott Rewards* = 10 points/$1	No adjustment
Starwood Preferred Guest = 2 points per $1	Divide by 5

 

Adjusted Award Values for Hotels at Fisherman’s Wharf San Francisco

Hotels at Fisherman’s Wharf, San Francisco	Award Value$ value/1,000 points	Award Value Adjustment Factor	Adjusted Award Valuevalue/1,000 points
Radisson	$2.90/1,000 points	Multiply by 2	5.80
Hilton (Points & Miles)	2.70	No Adjustment         (Points & Miles)	2.70
Hilton (Points & Points)	2.70	Multiply by 1.5                 (Points & Points)	4.05
Holiday Inn	3.96	No adjustment	3.96
Holiday Inn Express	5.52	No adjustment	5.52
Hyatt	15.75	Divide by 2	7.88
Courtyard by Marriott	7.16	No adjustment	7.16
Sheraton	14.90	Divide by 5	2.98
Note: Award Values in the last column are adjusted values on a similar scale for each program.

 The gap between the programs closes up. You can see the Hilton Points & Points earner falls in the middle of the pack. Hyatt and Marriott are at the top, however, they are also the most expensive hotels for that night. Using points for these two hotels is great for an award night, but not so desirable if paying cash. If one program is consistently higher priced than another for same market segment hotels, then you may need to spend more money to stay all the hotel nights you need during the year.

Award values ranked by hotel and program:

1. Hyatt  7.88
2. Marriott  7.16
3. Radisson  5.80
4. Holiday Inn Express  5.52
5. Hilton (Points & Points)  4.05
6. Holiday Inn   3.96
7. Sheraton   2.98
8. Hilton (Points & Miles)  2.70

Holiday Inn Express ($138) and Hilton ($135) have similar prices and Holiday Inn Express comes out a significantly higher award value at 5.52 compared to Hilton’s 4.05.

And if you take Hilton HHonors Points & Miles, meaning your rate of earning Hilton points is reduced by one-third the base points, then award value for Hilton is the lowest of the lot.

While Starwood comes out low at 2.98 for a member without elite status, the impact of elite status on award value is quite apparent.

Adjusting Award Value to Account for Elite Status

Members may earn as many as 50% more points per hotel dollar spend dependent on elite status.

	Hotel Award Value (adjusted to uniform scale of 10 base points/$1)	Low elite tier in program	Award Value program adjustment factor low elite	Award Value Calculation	Adjusted Award Value for Fisherman’s Wharf Hotels
Radisson$116	Carlson gold points plus*(20 points/$1)	Silver(25%)25 points	Multiply by2.50	$2.90 x 2.5	7.25
Hilton$135	Hilton HHonors (Points & Points = 15 points/$1)	Silver (15%)16.5 points	Multiply by 1.65	$2.70 x 1.65	4.46
Hilton$135	Hilton HHonors (Points & Miles = 10 points/$1)	Silver (15%)11.5	Multiply by 1.15	$2.70 x 1.15	3.11
Hyatt$189	Hyatt Gold Passport =5 points/$1	Platinum (15%)5.75	Divide by 1.74	$15.75 ÷1.74	9.05
Holiday Inn$99	IHG Priority Club* = 10 points/$1	Gold (10%)11	Multiply by 1.1	$3.96 x 1.1	4.36
Holiday Inn Express$138	IHG Priority Club* = 10 points/$1	Gold (10%)11	Multiply by 1.1	$5.52 x 1.1	6.07
Courtyard by Marriott$179	Marriott Rewards* = 10 points/$1	Silver (20%)12	Multiply by 1.2	$7.16 x 1.2	8.59
Sheraton$149	Starwood Preferred Guest = 2 points per $1	Gold (50%)3	Divide by 3.33	$14.90 ÷ 3.33	4.47

 

Throw in a low elite status and now the Starwood Preferred Guest has a higher award value at the Sheraton than the Holiday Inn and matches the award value for the Hilton Points & Points earner.

Here are the award values ranked for the Fisherman’s Wharf hotels and low level elite status:

1. Hyatt    9.05
2. Marriott Courtyard   8.59
3. Radisson   7.25
4. Holiday Inn Express   6.07
5. Sheraton   4.47
6. Hilton (P&P)   4.46
7. Holiday Inn    4.36
8. Hilton (P&M)  3.11

The award value ranking changes again when considering top elite status. This is primarily due to Starwood not increasing at all from low level elite as an effect of SPG Platinum status while Hyatt increases from 15% to 30% and the other programs all increase to a 50% elite bonus.  

	Hotel Award Value (adjusted to uniform scale of 10 base points/$1)	High elite tier in program	Award Value program adjustment factor top elite	Award Value Calculation	Adjusted Award Value for Fisherman’s Wharf Hotels
Radisson$116	Carlson gold points plus*(20 points/$1)	Gold(50%)30 points/$1	Multiply by3.0	$2.90 x 3	8.70
Hilton$135	Hilton HHonors (Points & Points = 15 points/$1)	Diamond (50%)20 points/$1	Multiply by 2.00	$2.70 x 2	5.40
Hilton$135	Hilton HHonors (Points & Miles = 10 points/$1)	Diamond (50%)15 points/$1	Multiply by 1.50	$2.70 x 1.50	4.05
Hyatt$189	Hyatt Gold Passport =5 points/$1	Diamond (30%)6.50 points/$1	Divide by 1.54	$15.75 ÷1.54	10.23
Holiday Inn$99	IHG Priority Club* = 10 points/$1	Platinum (50%)15 points/$1	Multiply by 1.5	$3.96 x 1.5	5.94
Holiday Inn Express$138	IHG Priority Club* = 10 points/$1	Platinum (50%)15 points/$1	Multiply by 1.5	$5.52 x 1.5	8.28
Courtyard by Marriott$179	Marriott Rewards* = 10 points/$1	Platinum (50%)15 points/$1	Multiply by 1.5	$7.16 x 1.5	10.74
Sheraton$149	Starwood Preferred Guest = 2 points per $1	Platinum (50%)3	Divide by 3.33	$14.90 ÷ 3.33	4.47

 

The rankings shift again when the elite bonus points of top-tier loyalty members are factored into the earning side of the award value equation. Courtyard now moves to the top and Priority Club leaps above Hilton. This is due to the fact that a Priority Club Platinum member is earning 50% more points at 15 points per $1 in hotel spend. The Hilton Points & Points member is only earning 33% more points at 20 points per $1 as a Diamond member, compared to 15 points per dollar for the HHonors member with no elite status.

Hotel award value rank for Fisherman’s Wharf for high elite loyalty members

 

1. Courtyard  by Marriott   10.74
2. Hyatt  10.23
3. Radisson   8.70
4. Holiday Inn Express   8.28
5. Holiday Inn  5.94
6. Hilton(Points & Points)  5.40
7. Sheraton   4.47
8. Hilton (Points & Miles)  4.05

 

The Missing Factor – Promotions, Promotions, Promotions!

Promotions are variable. My opinion from watching promotions across the different loyalty programs for several years is the promotion points earned with Starwood, Hyatt, and Priority Club make up a far higher percentage of total points earned during the course of a year of hotel travel than seen with Hilton or Marriott. Actually quantifying the promotion variable is difficult and the ability to earn promotion points is dependent on your travel pattern.

Ignoring promotions favors Hilton and goldpoints plus due to the higher level of base points earned per $1. In real travel promotion points and other bonus points from credit cards and partner activities are additional factors to be considered. Over the past couple of years Hilton HHonors has taken the lead with credit card earning while falling behind on promotion points earning compared to other programs.

So what’s my point?

The bottom line and the point of this post is to illustrate how “crunching the numbers” is actually quite a bit more involved than one might think when reading a simple statement from the SmartMoney.com, “Before you switch loyalties…crunch the numbers on rewards to make sure you are getting the best deal.”

I have thought about how to crunch the numbers to compare awards between programs. I present a method here that is far from perfect, but at least provides a simple starting point for comparing award values between hotel loyalty programs.  I think this method is more accurate and fair in its comparison of hotel award value between programs than I have seen in other analyses.

[Article correction April 12, 2010 - The original version of this article incorrectly listed Gold elite status as requiring 40 nights when it is 35 nights or 20 stays. This error did not affect any of the calculations or analysis.]

It seems bloggers all over are calculating the value of hotel points and airline miles with regard to Haiti donations – P.Ling in Uptake Blog, Gary Leff in View from the Wing, and Nicholas Kralev in the Washington Times.  

I am not going to debate the issue of cash or points for Haiti except to offer one hotel loyalty member consideration for the points v. cash debate. Saving points for a hotel stay and donating cash, with the exception of HHonors or Choice who give award stay elite qualification credit, disregards the traveler who struggles to reach sufficient hotel stays for elite status during the calendar year.  

For example, 4,000 Starpoints gives $100 to Red Cross ($50 from member donation and $50 from Starwood matching donation). $100 donated to Red Cross and using the 4,000 points for a hotel stay earns fewer or no points, no Starwood promotion credit, and no elite credit. The tax deduction for a cash donation might be a relevant consideration for some members.

 

$100 spent for a hotel stay gives the member elite credit for a paid stay and the opportunity to earn a substantial portion of those hotel points back through the paid stay.

 

Determining the Value of Hotel Points

I want to discuss the value of hotel points. There are so many variables to consider and many assumptions to make when trying to place a dollar value on hotel points. My interest is analyzing the value of hotel rooms a member can get for hotel points.

P. Ling in the Uptake.com travel industry blog cited several hotel points valuation analyses in this statement “If you think it’s too simplistic to peg each Hilton HHonors point at $0.0025 just because a donation of 10,000 Hilton HHonors points results in a $25 cash donation, I agree. So read this and this. The study for Starwood is here and the one for Marriott is here.”

 

The analyses cited by P.Ling for Hilton, Starwood, and Marriott reference articles by a website PlasticIQ that published hotel loyalty point value articles in September 2009. PlasticIQ employed more mathematical variables than I do in my analyses, but I do not think the PlasticIQ analysis adequately reflects real travel patterns for the vast majority of travelers and makes the calculations unncessarily complex.

 

Plastic IQ assigned the following hotel points value when redeemed for hotel stays:

Starwood Preferred Guest = $21.50/1,000 points

Marriott Rewards = $8.30/1,000 points

Hilton HHonors = $4.30/1,000 points

 

Hearts of the Gods blog gave a value for HHonors = $3.77/1,000 points

 

PlasticIQ created the hotel loyalty program analyses to assist credit card holders with choosing a card. Here are areas I find faulty in the PlasticIQ assumptions for hotel stay redemption used as a basis for determining the value of hotel points.

 

Plastic IQ assumptions for SPG

 

a.       20% of hotel stays will be 5 nights

b.      Most hotel stays will be 3 nights

c.       Hotel stays will be spread out among different category levels (Category 1 = 0% [due to few hotels in this category]; 15% hotel stays at Category 2; 25% at category 3; 25% at category 4, 25% at category 5; 5% at category 6, and 5% at category 7 hotels.)

 

These are major assumptions that will probably not correlate to the hotel points redemption pattern for 99%+ of travelers in my opinion.

 

The PlasticIQ analysis when applied to an individual SPG member requires a minimum 20 stays on points to complete this traveler profile. Since 20% of stays are five nights and others are average of 3 nights, the PlasticIQ scenario is based on a Starwood Preferred Guest member with over 700,000 points for free hotel night redemptions. That is a highly exclusive group of hotel loyalty program members.

 

The average Starwood Preferred Guest credit card member probably earns well shy of 50,000 Starpoints per year. Perhaps the SPG member earns another 50,000 points from hotel stays if the member is Platinum level elite with 30+ hotel stays per year and fulfills multiple promotion offers. 

 

Loyalty Traveler typically looks at one hotel stay redemption at a time. I write my blog for the traveler who is trying to place value on their points for that next vacation.

 

In the PlasticIQ HHonors analysis the value of hotel loyalty points is reduced 25% by the Priceline factor. The fact that a Priceline room might be available for less in the city I am staying is no relevance to me as a loyalty traveler. I am focused on hotel loyalty elite credit, promotion bonuses, and complimentary upgrades at hotels. Priceline tosses out all those considerations.

 

When in Amsterdam, I know the points value if I redeem 48,000 Starpoints for 5 nights at the Starwood’s Luxury Collection Hotel Pulitzer. I simply take the paid cost for five nights and divide that cost by 48,000 points to come up with a value for Starpoints.

 

I have bid my way to a cheaper stay at the Golden Tulip Amsterdam Art hotel in the past. Priceline can get me a room for $100 per night. But the Golden Tulip is not a hotel in the same league or location as the Pulitzer Hotel. So is there any reason to even factor in Priceline in a hotel points valuation? A traveler who devalues their points by comparing Priceline rates to hotel loyalty program redemption rates should probably not even bother with hotel loyalty programs.

In all fairness, I certainly turn to Priceline when the cost for my hotel loyalty is too high to pay for a hotel room and the points value is too low to justify spending my points. Given the choice between spending $100 per night through Priceline or 12,000 Starpoints per night depends on my travel purpose (business, transit, or leisure) and the necessity of being in a specific location. Priceline is an entirely separate transaction from the value I place on my hotel points. I don’t reduce the value of my points based on the option that I can get a different hotel in the same city for less money.

PlasticIQ uses an allocation of HHonors stays between VIP awards, Pointstretcher stays, Priceline deductions, cash value deductions, and estimated hotel rates. This is far too many variables with unnecessary complexity in reaching a points value. I am not saying the final result is inaccurate, but the hotel loyalty program member can’t replicate the PlasticIQ hotel points value analysis at home.

Loyalty Traveler has shown a simple way to calculate hotel points value for your next vacation and a qualitative chart to give you an idea of what you can realistically be looking for when trying to get the most value for hotel stays from your hotel points balance. Depending on where you travel, the chart numbers may need adjustment, but the overall process is a simple way to determine the value of your points.

My Loyalty Traveler analyses of hotel points valuation is subjective and the math is simple. Here are the valuations I have placed on hotel loyalty points in articles from the past few months.

 

Hilton $6-9/1,000 points
Hyatt $15-$20/1,000 points
IHG Priority Club $7-$10/1,000 points
Marriott Rewards $7-10/1,000 points
Starwood Preferred Guest $35-$50/1,000 points

 

Related Loyalty Traveler posts with qualitative tables for points redemption value:

Excellent value with SPG Cash & Points awards

Value of a Point for Starwood Free Nights

Hilton HHonors Redemption Guide 2010

 

 

Last October I created HHonors qualitative charts for hotel points value based on HHonors 7 category system now in place. In my analysis I gave a redemption value of $7.00 per 1,000 points as excellent. Based on recent analyses for San Francisco and New York I may have to lower this range. I will wait until I complete a couple of international city comparisons to see if Hilton HHonors members can realistically find redemption values of $9/1,000 points these days.

 

Loyalty program members have the choice when and where to use points. Anyone settling for redemption values under $5.00 per 1,000 HHonors points is not being selective about when and where to use points for free nights.

 

In my hotel points valuations for Loyalty Traveler I try to focus on what is potentially the high end of points redemption value. There is no requirement to spend your points for poor value hotel stays. My goal with Loyalty Traveler is to show what kind of value can be achieved with hotel points. The objective for the traveler collecting hotel points should be to earn points by spending low and redeem points for high value. When it comes to donating points to Haiti I tossed out consideration of this objective.

 

New York City and San Francisco are two cities where I did comparative redemption value across hotel chains. I picked a stay date and compared the actual hotel rates for different chains to the cost for a free night using points and came up with the following values available. The range shows the low value for one particular hotel stay redemption up to the high value for another specific hotel redemption choice.

 

Value of 1,000 points redeemed for a hotel

 

NYC:

Hyatt Gold Passport $19.21 to 20.83

Starwood Preferred Guest $14.40 to $34.92

Marriott Rewards $5.97 to $8.63

Hilton HHonors $4.30-$8.78

IHG Priority Club $7.00 to $17.00

 

San Francisco:

Marriott $3.17 to $13.90

Hilton HHonors $1.86 to $6.30

 

Just because a hotel has a high redemption value does not necessarily make it an excellent overall value. The hotel could be way overpriced for a paid stay. But when it comes down to any specific hotel where you want to stay, the simple choice becomes pay cash or pay with points.

 

The range of hotel points redemption values shown here indicates a need to be selective when redeeming points. Points have no value until they are redeemed for something tangible. Choosing an acceptable value to receive when spending your hotel points is a personal choice.

A reader’s comment the other day asked if I would give a simple points value for the different hotel chains. I quickly made an educated assessment off the top of my head.  

Hilton $6-9/1,000 points
Hyatt $15-$20/1,000 points
IHG Priority Club $7-$10/1,000 points
Marriott Rewards $7-10/1,000 points
Starwood Preferred Guest $35-$50/1,000 points

The comment had me thinking this past week about a method for making an accurate and precise calculation. I do not have the advanced mathematical tools to create a sophisticated analysis. Here is a great business idea for a fellow entrepreneur. Create computer programs that can evaluate high value redemptions for points and provide a list of hotels with great value for points.

My Loyalty Traveler corollary applies for this analysis:

“Points only have potential value until they are redeemed.”

Location is the key component of any program assessment when comparing one hotel chain to another. You have a good idea of the value of Starpoints or HHonors points if those are the points currency you frequently work with for your hotel stays. When it comes to comparing hotel programs and the value of points, then location comes into play along with other factors.

1.       Location – the objective variable. Look at the hotels in a particular city and compare points cost to rates for specific dates. That is what I have done for this assessment and in tribute to the Colbert Show I have titled this piece “Better Know a City”.

2.       Potential to earn points in the hotel loyalty program. This is the subjective variable and is related to the promotions offered, hotel stay pattern, elite status, and credit card earning.

My subjective evaluation of points earning ranking:

a.       IHG Priority Club

b.      Starwood/Hyatt

c.       Hilton/Marriott

Better Know a City – New York City

NYC is the most expensive hotel city in the US and therefore the hotel categories are also high for the different chains.

I picked a 3-night stay for Monday through Wednesday nights, April 5-8, 2010.

This is a date far enough in the future that awards were available 49 of 50 hotels in the city of New York and rates have probably not been discounted yet. Hotels typically begin heavy discounting within a few weeks of a stay date when occupancy is too low.

As will be seen from this analysis, the typically high hotel category placement for New York City hotels gives IHG Priority Club a competitive advantage in a hotel loyalty program comparison.

Priority Club bases the cost of a free night on hotel brand rather than hotel category. For this reason the cost in points for a free night at the Candlewood Suites in New York City is the same 15,000 points as a free night at the Candlewood Suites in Flowood, Mississippi.

Here are some observations on free night award searches across hotel loyalty programs:

 

1.       Starwood Hotels is the easiest program to check award availability compared to cash price. The initial search results for a location show the cash room rate, free night availability, and Cash & Points, if available. The search results also show the hotel category level for points. A member must be logged in as a member to check award availability with the other hotel chains.

 

2.       Hilton and Marriott require a check of the hotel’s homepage to see Hotel Category level. Hyatt requires a check of hotel category through Gold Passport award chart links.

 

 

3.       Marriott Rewards design is a mess. Has it always been this way?

I searched New York, New York and up to 92 hotels were displayed. I saw no function on the webpage to narrow this list down to just NYC downtown hotels.

 

Hilton and Starwood both offer a function to limit the geographic search to within a few miles of the location desired. Marriott Rewards did not even show a New York City hotel on page 1 of the search results.

 

I ended up searching by Category. The problem here is only one category could be searched at a time. I had to check Category 8, then Category 7, then Category 6, each time starting the search from scratch with New York City and filtering the 90+ hotel list down to the desired hotels so I would see only NYC listings.

 

New York City Results:

 

 

Hyatt Gold Passport  

Redemption value $20.02 for 2 hotels;

range $19.21 to $20.83

The best deal is Grand Hyatt New York, a Category 4 hotel at 15,000 points per night.

 

 

Starwood Preferred Guest  

Redemption value $22.14 per 1,000 points for 9 hotels;

range $14.40 – $34.92

Starwood Preferred Guest in New York City

 

SPG typically is a poor value for points when redeeming high category hotel properties. An unexpected result in this study was the relatively good redemption value for the Category 7, St. Regis New York. At $845 per night or 30,000 points, the points value of $28.16/1,000 points actually came out as one of the best deals for the SPG member in New York City. But seriously, $845 per night? That is some Wall Street level cash to spend for a hotel night.

 

4 of 9 Starwood hotels had a redemption value of less than $20 per 1,000 points.  That is a poor value and far below the $40 to $50 per 1,000 points a member can easily receive in many locations. I’d spend cash and save my points for another day.

 

Hilton HHonors  

Redemption value $6.68 per 1,000 points (17 hotels);

range $4.91-10.98 based on 2009 category levels.

 

If all these properties move up one category in 2010, then the

2010 redemption value = $5.62 per 1,000 points

range will be $3.98-$8.78.

 

The Waldorf=Astoria was the only New York City hotel not available as an award among the 50 hotels searched across the different hotel chains. The hotel was available for Sunday night April 4 at 40,000 points (50,000 points as of January 15, 2010.)

Doubletree Guest Suites Times Square was the only hotel to have a redemption value over $10/1,000 points, however, this hotel was by far the most expensive Hilton brand property in the city for the April dates at $439 per night for this Category 6 hotel. The Waldorf Towers was only $399 for the same dates.

 

Marriott Rewards

Redemption value = $7.54/1,000 points;

range $5.97 to $8.63  (11 hotels)

 

Marriott Rewards in New York City

 

 

 

InterContinental Hotels Group Priority Club

Redemption value = $9.96/1,000 points;

range $7.00 to $17.00  (10 hotels)

IHG Priority Club in New York City

 

Conclusion: My initial off-the-top-of-my-head estimates of points redemption value were within the range I found for New York City with the exception of Starwood Preferred Guest where the value was significantly lower than I estimated.

In my defense, SPG has poor redemption value at most high category hotels. I have repeatedly made this criticism of the program on Loyalty traveler blog. The St. Regis New York at $845 per night is an exception to the rule. This is actually a good use of 30,000 points for a SPG category 7 hotel.

I have never actually redeemed points for any hotel higher than a category 5 in the Starwood hotel chain. My analyses generally conclude a member is better off paying the big bucks for a high category hotel and saving your points for higher value hotel stays at Category 2 to 4 hotels and Cash & Points stays.

As someone who has burned several hundred thousand Starpoints, I typically get around $50 per 1,000 points with my free night redemptions. Cash & Points is usually the high value deal. Unfortunately, there were few offers of Cash & Points rates for the New York City Starwood Hotels so far in advance of the April date.

Priority Club and Hyatt Gold Passport show high value points redemption opportunities. Points & Cash rates with Priority Club provides even higher value for your points at these hotels.

Hilton and Marriott both showed redemption values in the lower range I initially estimated. Hilton, Marriott, and SPG offer better value when you have a 4 or 5 night stay and receive a discount on points.

IHG Priority Club and Hyatt Gold Passport are easily the winners for best value in the Better Know a City for your hotel points stays in New York.

Bad news first:  This was not a good deal for 2 of the 4 hotels I checked tonight in the San Francisco Bay Area.

The Offer: Get a $20 prepaid MasterCard per stay at any Hyatt Place or Hyatt Summerfield Suites for a hotel stay including at least one night on a Monday, Tuesday, Wednesday, or Thursday between September 21 and November 25, 2009.

Hyatt Place promotion link: http://www.hyatt.com/hyatt/place/specials/giftCard.jsp

Hyatt Summerfield Suites promotion link: http://www.hyatt.com/hyatt/summerfield/specials/giftCard.jsp

The GFTCRD rate did not show in my searches of Hyatt rates unless the promotional code is entered. The links provided in this post prefill the special rate offer code.

Terms: Must pay Hyatt Daily Rate and use promotion code offer “GFTCRD”. The Hyatt Daily rate is generally a higher rate than the Hyatt.com prepaid, nonrefundable rate or the AAA rate. Only one gift card may be earned per stay regardless of number of rooms booked, but multiple gift cards can be earned for separate stays during the promotional period. The offer says it is not combinable with other promotions, although I doubt this offer would disqualify the Gold Passport member for free nights,  double elite credit, or airline miles.

Loyalty Traveler Promotion Value Key = Variable 1 to 2 out of 5 keys depending on rate differences.

 This deal is no deal unless you can find rates where the promotional rate is not $15 to $20+ more than other available rates.