InsideFlyer has a free web access article on Hotel Loyalty Elite Comparisons across more than 25 loyalty programs.  February’s issue features part one of the article and March will feature part two as the cover story. I am not the writer of this article, although I did provide some comments for the rough draft. This article motivated me to expand my loyalty program coverage as I recognized some great benefits in programs I rarely evaluate. I encourage you to look over the charts and information in the Hotel Loyalty Elite Comparisons.

I have been writing a monthly column for Randy Petersen’s InsideFlyer magazine for nearly two years. My column is always original content that has not appeared on this Loyalty Traveler blog. My monthly column is also a free web access feature of InsideFlyer. I have links to all my InsideFlyer columns on the Ric Garrido page of my blog.  

Categorically speaking, I am predicting two steps up and one step back.

I am sharing my latest InsideFlyer column at the end of this post. The start of the 2011 year saw the return of Starwood Preferred Guest peak season hotel reward dates for category 5, 6 and 7 hotels after a two year absence. My column addresses the return of SPG peak season awards.

February and March are the months when we typically see hotel categories adjusted for the calendar year. Considering Marriott and Hilton raised category levels in 2010 for many of their upper end hotels in the midst of a two year recession does not bode well for this year’s hotel reward category changes.

Starwood made no attempt to lower hotel reward category levels last year; a move to be expected after several consecutive years of rapid rises from 2003 to 2008 attributed to rising average room rates. For some reason when room rates plummeted in 2009, the SPG hotel award category assignments did not follow suit. Granted there was an overall downward movement in SPG category assignment in 2009, but that was a small concession from SPG not repeated again in 2010. Here is my March 2010 article on Hilton HHonors hotel category shift and my April 2010 InsideFlyer column regarding hotel category assignments for 2010 with particular focus on SPG.

So what do the next two months have in store for hotel category shift?

Yesterday, the Washington Post ran an article citing positive economic indicators as a sign that hotel rates will climb in 2011. Higher rates are anticipated to rise disproportionately for business travelers relative to leisure travelers.

What I think this means is the leisure traveler is going to be screwed if needing a city center hotel during midweek business days or weekend conventions. We find ourselves back in 2007 mode where business travelers are gouged and leisure travelers are shut out with high prices for big city midweek hotels.

Fortunately there will still be opportunities for the flexible traveler who goes where the deals are located. And loyalty programs become even more vital in stretching your hotel dollars.

 

February 2011 InsideFlyer magazine Loyalty Traveler column:

Scaling Peaks of High Category Hotel Awards

SPG reinstituted peak season dates for Starwood Preferred Guest hotel rewards at 65 percent of its category 5, 6 and 7 hotels for 2011 and 2012. Over 100 Starwood hotels have peak season dates. Some hotels like the category 5 Westin Verasa Napa and Four Points Manhattan Chelsea have four months of 2011 peak season dates at 16,000 points per night.

Peak season dates master list: https://spgpromos.com/highseason

Earning Free Award Nights

SPG is an outlier among hotel programs for the amount of hotel spend needed for a free night at a high category hotel–even without peak season rates. SPG altered its hotel award structure over the past decade, adding category 6 and category 7 hotel award levels. A similar pattern of new higher category awards played out across the hotel loyalty world in the past few years including Marriott category 8, Hyatt category 6, Hilton category 7 and Priority Club tiers for Holiday Inn and InterContinental brands.

The structure for earning points is the most stable aspect of hotel loyalty schemes. Base points are loyalty points earned per dollar of hotel spend before any promotion or elite bonuses. The base points earn rate for SPG is 2 points/$1. Hyatt uses 5 points/$1. The standard for most major hotel programs is 10 points/$1.

Scaling High Category Awards

An interesting pattern emerges when base points earned per dollar are correlated to the cost of award nights at various category levels in different hotel programs. The amount of hotel spend needed to earn sufficient points for a free night at the highest award levels is similar across hotel programs–except Starwood Hotels.

Marriott Rewards highest category 8 hotel nights are 40,000 points. Earning 40,000 base points requires $4,000 in hotel spend. Priority Club top-tier InterContinental Hotels at 40,000 points take $4,000 in base spend. Lower earning brands at 5 points/$1 are ignored in this analysis. Hyatt Gold Passport category 6 awards at 22,000 points per night equate to $4,400. Hilton HHonors category 7 hotels at 50,000 points range from $3,334 in hotel spend for Points & Points earners to $5,000 for Points & Miles earners.

In contrast, earning 12,000 base points for a SPG category 5 standard hotel award requires $6,000 in spend or $8,000 for peak season nights. Starwood Preferred Guest is an outlier in this award pattern at the category 5 level, let alone SPG category 6 and 7 awards requiring 20,000 and 30,000 points for a standard free night. This correlates to $10,000 or $15,000 in hotel base spend.

HHonors and Marriott Rewards also have higher cost award nights for some Waldorf Astoria and Ritz-Carlton properties.

A Competitive Set Comparison of Marriott and Starwood

A debatable argument is SPG program high category hotels are higher quality hotels than other chains.

Hotels in a specific location and similar hotel market segment are in the same competitive set. Hotels in different chains but the same competitive set tend to have room rates on any given day within about 10 percent of each other.

St. Regis New York and Ritz-Carlton Central Park are two New York City luxury hotels in the same competitive set. Both hotels had an identical room rate of $895 per night for June 7, 2011 when I checked.

St. Regis New York is a category 7 SPG award hotel at 30,000 points for a standard free night. SPG members need $15,000 in hotel spend to earn 30,000 base points. Ritz-Carlton New York Central Park is the highest tier 5 hotel award at 70,000 points for a free night. Marriott Rewards members need $7,000 in hotel spend to earn 70,000 base points. Marriott Rewards members earn two free nights for the same level of spend the SPG member earns one night at the St. Regis. And this is without peak season rates at the St. Regis raising the price to 35,000 points per night for part of December 2011.

Comparing award nights using base points value ignores key points-earning components for loyalty members: elite bonuses, promotions and co-branded credit cards. SPG has a slight advantage at the Gold level with 50 percent elite bonus points. Other programs offer 10 to 25 percent bonus at mid-level elite. SPG’s elite advantage is lost at the SPG Platinum level where most programs match 50 percent elite bonus points for top-tier elites.

SPG needs high-value promotions to compensate for an uncompetitive award scheme at high category hotels. Bridging the hotel spend gap of $4,000 to $7,000 to earn the highest awards in most programs with $6,000 to $17,500 for SPG awards necessitates better promotions than double points on stays. Otherwise, high category SPG hotel awards are geared more for high-spend SPG credit card points earners than frequent guests.

There was a reason I had to ambush Heather Passe in the conference hall. At lunch time the day before, the media conference for press Q&A at the Carlson Hotels Global Summit in Orlando brought together top executives like Hubert Joly, Carlson Hotels President and CEO. Nothing even remotely related to the goldpoints plus loyalty program was discussed. The press conference did not seem like the forum for me to ask what this loyalty traveler desired to know,

“What were the reasons goldpoints plus recently reduced their category 6 hotel award level from 90,000 points to 60,000 points?”

Would the senior executives behind a billion dollar company even know the details of goldpoints plus?

My fear came true in a one-on-one interview with an executive VP who repeatedly mentioned the name Heather Passe as the brain behind goldpoints plus. I needed to meet this person who could answer my loyalty program questions.

Heather Passe, the visionary for goldpoints plus

Heather Passe, VP Marketing, Revenue Management, and E-Commerce at Carlson Hotels, didn’t have the luxury of relaxation at the end of the Carlson Global Summit sessions and photo ops since I grabbed her off the floor to talk about goldpoints plus shortly after she stepped off the stage. Before we even reached the media room I learned she spent nearly twelve years with Northwest Airlines, most recently as managing director of passenger marketing until 2008 when she started with Carlson Hotels as Vice President of Customer Relationship Marketing. Heather brings her WorldPerks frequent flier program background to the hotel biz.

Inside the goldpoints plus vault

Doubling the number of goldpoints plus members as a component of Carlson Hotels strategic five year plan was the only loyalty program reference made in the first day of the two day Carlson Hotels sessions.

I wanted details.

Winning the Revenue Battle

The second day focused on “Winning the Revenue Battle” and it was this topic where goldpoints plus was finally presented to the audience.

Fredrik Korallus, Executive Vice President, Global Revenue Generation, Carlson Hotels provided details on several aspects of the goldpoints plus loyalty program.

goldpoints plus loyalty program evolution on the timeline

Here is the goldpoints plus loyalty program timeline presented at the Carlson Hotels conference.

• Improved and personalized member communication (initiated).
• Enriched member redemptions (the points required for hotel awards in category 4, 5, and 6 were significantly reduced in price on February 1, 2010).
• Launch hotel incentives for enrolling new members (Q2, 2010)
• Launch a small to medium size business loyalty program (Q3, 2010)
• Define next generation program evolution (Q4, 2010)

Carlson Hotels is launching a hotel level incentive program April 1, 2010 to pay hotels for new member enrollments. Actively engaging the hotel site to enroll new members should mean a higher awareness of member benefits at hotels. At least that is what I hope is an effect.

While we as frequent guests look at loyalty from the points for free nights and miles and hotel stay benefits perspective, the hoteliers are focused on the revenue aspect.

The last bullet is particularly exciting to see. Carlson Hotels is strategically committed to altering goldpoints plus. Changes will likely continue to roll out in 2010, but 2011 looks to be a pivotal year in the goldpoints plus loyalty program.

Growth Spurt Objective from 5 to 10 million by 2013

A graph showed goldpoints plus growing over the past decade from around 1,000,000 members in the year 2000 to 5,000,000 members in 2009. The strategic plan is to have 10,000,000 members by 2013. Another slide stated the 2010 goal as 1,000,000 new members. That leaves one to two million members for 2011 and another 2 million in 2012 to make the goal.

I’m thinking loyalty promotions.

10,000,000 members is about the size of Hyatt Gold Passport, Choice Privileges, and Best Western Rewards according to WebFlyer 2009 numbers.  Starwood Preferred Guest, Hilton HHonors, and Marriott Rewards are in the 25 to 30 million member range.

Optimizing Room Rates

One of the more interesting aspects of revenue management to me is the complex algorithms hotels use to establish rates. This seems to be one of the benefits of belonging to a major chain and paying the fees as a hotel owner. Carlson Hotels has the software to analyze room rate data and provide its hotel members with optimized room rates to maximize hotel revenue.

What does this mean for the frequent guest? Teams of analysts input data, jiggle the numbers, and come up with hotel rates for the next 90 days. Another day passes and rates may adjust again. At least hotel rates do not seem to fluctuate as rapidly as airfares.

I tend to be pretty good at snagging low hotel rates, but it takes observation, persistence and patience. We are alone as consumers trying to outsmart the teams of hotel pricing analysts whose job is outsmarting the guest to get the most money possible for a hotel room.

The value of loyalty

Goldpoints plus members were shown to pay an average daily rate of $127 compared to $111 paid by other guests at Carlson brands. The room rate paid by goldpoints plus members only declined 8% year-over-year compared to a 14% room rate decline paid by other guests.

Hotel owners and managers love to see this statistic.

Now as a loyalty member you may wonder – How is this good news if loyalty members are paying more than other guests in 2009?

Here is my Loyalty Traveler answer applicable to a member in any hotel loyalty program – goldpoints plus members are earning points and elite members receive additional benefits with each hotel stay. The question for the program member should be, “Am I getting $16 in extra value from Carlson Hotel stays?”

I’d argue yes in many cases. Do the Math (pun intended).

$127 ADR earns 2,540 goldpoints for the loyalty member.

Goldpoints has ongoing promotions for more points. Let’s throw another 1,000 points for any old promotion that is around. Goldpoints has had several promotions more lucrative than 1,000 points per stay in the past year.

Earning goldpoints plus Silver elite is not too difficult. In fact, I just received goldpoints plus Silver elite instantly for free last week through a link I found on FlyerTalk. Silver adds 25% to the 2,540 base points.

Loyalty member earns 4,175 goldpoints for a $127 rate.

15 room nights and you have 60,000 points for a free night at the best Radisson and Regent hotels in the system.

The guest paying $111 ADR over 15 nights saved $240. The goldpoints plus guest may have paid $240 more, an extra $16 per night, but also received enough points for four free nights at a low category hotel (likely to cost over $60 per night), or two free nights at a mid-category hotel (finding one priced over $120 per night should be easy), or one free night at the top of the chain category 6 hotels ($240 per night? Likely.)

Goldpoints plus free nights make up the difference in higher room rates a loyalty member may ultimately pay rather than using Expedia or another online travel agency or going the Priceline/Hotwire route.

Other goldpoints plus member benefits during hotel stays are all bonus and for some elite members can easily exceed a value of $240 over 15 nights in Carlson Hotels.

 

Heather Passe

Heather Passe presented in a Carlson Hotels conference session on the last day for “Winning the Revenue Battle.” She highlighted the role of goldpoints plus for full service Carlson Hotels.

Here are some highlights from her official presentation:

Loyalty Program customer goals:

• Faster track to redemption
• Improved elite treatments
• Develop richer, more relevant marketing promotions

An example of one change is goldpoints plus enhanced email communication with items like hotel award suggestions based on your account activity. The customer profiling in email content might suggest hotels you have been to or previously searched and list the award levels. An example is shown in the photo below.

Small to Medium Size Business Loyalty Program

One of the new concepts discussed is a loyalty program for small businesses where the business earns loyalty credit along with the individual employees staying in Carlson Hotels on business. This concept is used in the airline industry with small business loyalty programs like American Airlines Business ExtrAA and Continental Airlines RewardOne, but this is the first small business loyalty program I have learned about for the hotel industry.

Evaluating ALL aspects of the global customer value proposition this year

Heather Passe’s goldpoints plus message to members is a plan to deliver value to the customer and keep the program simple.

I discussed with Heather some of the confusing aspects for me in trying to evaluate goldpoints plus loyalty program.

First, the loyalty program has different earning rates for points depending on the geographic location of the hotel. In the Americas and Asia/Pacific region points are earned per U.S. Dollar  at the rate of 20 points per $1 for Country Inn and Park Inn or 20 points per USD at Radisson, Regent, and Park Plaza.

But for hotel stays in Europe, Middle East, and Africa goldpoints are earned per Euro. A $200 hotel rate in the U.S. earns the same number of points as a €200 rate in Europe with no regard to the currency exchange difference.

Heather says the Euro currency was maintained for consistency when goldpoints plus relaunched in late 2007 as a global program. This is one aspect of the goldpoints plus program Carlson will be looking at later this year.

Second, the Points + Cash award from goldpoints plus has always confused me. Priority Club and SPG have fixed rates of points and cash for their awards, but goldpoints plus is variable. The cash portion of Points+ Cash is a system based on the hotel’s best available rate, but I still don’t quite get it. Basically I have found you need to check the Cash + Points rate against other low rates available for the hotel.

Points + Cash Award Value Example in Amsterdam

Two Amsterdam hotels show different levels of savings with goldpoints plus Points + Cash. I know without looking that if I get a Cash & Points award at Starwood’s Amsterdam Pulitzer the rate is going to be USD$90 + 4,800 Starpoints.

I don’t know what to expect with goldpoints Points + Cash? I have to calculate the different options to see the best value. Free nights with points-only awards are reduced by 10% for additional nights. A category 6 award at 60,000 points is 54,000 points for the second and third nights. The discount does not apply for Points + Cash awards.

Amsterdam Park Plaza Victoria, April 5-8, 2010

• Room rate €376.20 Superior (Special Rate) or
  • 168,000 points points-only award.  Award value = $504/168 = $3.00 per 1,000 points
  • Points + Cash Award = 45,000 points + €250.80. The room rate savings is US$168 in exchange for 45,000 points. $168/45 = $3.73 per 1,000 points.
  • €418.00 Superior Room (Best Available Rate)
  • €523.00 Executive Room (BAR) or 252,000 points for Premium Award
    • Award Value = $701/252 = $2.78 per 1,000 points

Points + Cash saves $168 on the otherwise lowest rate, but costs 45,000 points and makes the stay ineligible for earning points. The redemption value is average value, not great value.

Another interesting thing about goldpoints plus awards is the option of Premium awards offering the opportunity to book an upgraded room with points.

Amsterdam Radisson Blu, April 5-8, 2010

• Room rate €429.30 Superior (Special Rate) or
  • 168,000 points Award value = $576/168 = $3.43 per 1,000 points
  • Points + Cash = 45,000 points + €286.20 = US$192/45 = $4.26 per 1,000 points.
  • €477.00 Superior Room (Best Available Rate)
  • €591.30 Business Room (Special rate) or 252,000 points
    • Award Value = $793/252 = $3.15 per 1,000 points

Points + Cash gives 24% more value for points than points-only  in both of these examples

Both of these examples reveal the Points + Cash rate is about 24% better value than the straight points redemption. Points + Cash are a better value, however, I would like to see the Points portion increase while the Cash portion decreases for this goldpoints option. The cash portion of the Points+Cash award is about 67% of the otherwise lowest rate and the points portion is just 25% of the normal points-only award night.

Contrast SPG Cash & Points to Carlson goldpoints Points + Cash

Starwood Preferred Guest Cash & Points awards require 40% of the points relative to a points-only award night.  The Amsterdam Pulitzer would be $90 + 4,800 points per night for SPG Cash & Points. The Pulitzer hotel was not available for the same dates as used in the examples above as a Cash & Points award, even though it is available as a SPG points-only award for 12,000 points per night.

Goldpoints plus Points+ Cash wins out here since SPG does not offer Cash & Points for the same dates.

But, if the SPG Cash & Points award were available based on the current rate €229/night the comparison of goldpoints plus Points + Cash and SPG Cash & Points would look like this:

Starwood Hotels Luxury Collection,The Pulitzer, Amsterdam

• Room rate €687 Classic or
  • 36,000 points Award value = $922/36 = $25.61 per 1,000 points
  • Adjust SPG and Carlson to similar scale and this is equivalent award value around $2.56/1,000 points and lower than the goldpoints plus award value. (SPG earn 2 base points/$1; goldpoints plus earn 20 base points/$1).
  • Points + Cash = 14,400 points + $270. US$652/14.4 = $45.27 per 1,000 points. Adjusted to the same scale as goldpoints plus and the SPG award value is slightly better.

 

The key points to note in the comparison of goldpoints Points+Cash to SPG Cash & Points awards

1. SPG Cash & Points rate gives 76% better value than SPG points-only.  Goldpoints plus Points + Cash award is 24% better value than points-only award.
2. goldpoints plus Points + Cash requires a cash portion about 67% of the otherwise lowest available room rate. SPG cash portion is only about 30% of the otherwise lowest available rate. SPG will certainly not always have a cash portion as low as 30%, but this is typical for high category, high priced hotels. My searches of goldpoints Points + Cash awards indicate the cash portion is generally well above 50% the otherwise lowest available cash rate.

Important to remember: SPG Cash & Points awards are not as widely available as goldpoints plus Points +Cash awards, but  the cash savings can be huge when they are available.

Keep your eye on Carlson Hotels goldpoints plus. Changes are on the horizon.

P.S. - thank you from Loyalty Traveler to Carlson Hotels, Randy Petersen, and Inside Flyer who made this trip to the Carlson Hotels Global Summit possible.

Yours truly is cited as a “loyalty expert” at the Carlson conference.

My question though, “What happened to the … “loyalty love”?

Starwood Points Earning Power in Real Travel

One of the primary difficulties in hotel loyalty program-to-program comparisons is the inability to accurately predict the earning power of real hotel travel due to variability of hotel program special offer bonuses for the frequent guest.

Most comparisons simply calculate points earned based on a fixed dollar amount of hotel spending, and adding applicable elite bonuses for the projected number of hotel nights and stays.  (See InsideFlyer’s hotel loyalty program comparison from June 2008).

The problem with this method is that it does not reflect the real earning power of points for real hotel stay travel.  Starwood Preferred Guest (SPG) generally comes out at or near the bottom in a simple analysis of base point earnings for hotel stays when comparing loyalty programs. 

I have been SPG Platinum (qualification is 25 stays or 50 nights in a calendar year) for six years.  During that time frame, I estimate more than 80% of all my hotel points earned from hotel stays were bonus points on top of points earned from base spending.  That means if I earned 9,000 points from hotel stays through base spending ($3,000 in eligible hotel spending at 3 points/$1 for Gold or Platinum elite members), I estimate that I earned an additional 35,000 points or so from SPG bonuses and platinum-elite amenity gifts (500 points per stay, except 250 points/stay at Four Points brand hotels). 

Base Spending is Not Sufficient in an Analysis for Hotel Loyalty Program Comparisons

Most hotel program comparisons only count Starpoints earning power at 2 or 3 points per $1 of hotel spending.  (I even did this in my last post when I compared Wyndham Rewards to SPG for hotel-points-to-airline-miles transfers which spurred my incentive to write this piece today.)  My actual experience over the past several years shows my Starpoint earnings to be more in the range of 10 to 15 points per $1.00 in hotel spending.  (American Express Starwood credit card is not being considered in this analysis).

For example, Starwood had a promotion at the Westin Market Street San Francisco for 5,000 bonus points on a 2-night weekend stay this summer.  Rates were $179 for several weekends in August.  (This promotion expired August 31, 2008).  Base spending in this example is quite small as a proportion of total Starpoints earned for a 2-night stay.

SPG non-elites earn 2 points/$1.  Two nights at $179/night = $358 in eligible spending. 

$358 x 2 = 716 Starpoints earned based on hotel spending. 

5,000 points earned through SPG bonus. 

Of the 5,716 points earned for the 2-night stay, only 13% of the Starpoints earned were from the $358 in hotel base spending.  This example illustrates the problem with making hotel loyalty program comparisons solely using base spending as the points earning criteria for the guest.

Starwood Platinum-elite guest using example above for Westin San Francisco Market Street would potentially earn $358 x 3 = 1,074 points for base spending; 500 points platinum amenity gift; and 5,000 points for weekend stay bonus = 6,574 points and still only 16% of Starpoints earned are from base spending.

Priority Club Rewards is usually calculated at 10 points/$1.00 in hotel base spending.  FlyerTalk members routinely state combined promotional bonuses for hotel stay spending push actual earning ability as high as 30 points/$1.00 and I have seen claims of individuals earning nearly 50 points/$1.  This is far above the 15 points/$1 usually used as the earning power of a Priority Club Platinum member (50 nights/year).

Real Travel Comparison of Points Earning in Starwood Preferred Guest

Current promotions:

1.      FlyerTalk 500 points per night for hotel stays in September (combinable with other promotions)

2.      North America 1,000 points per stay during weeknights (Sunday-Thursday); Four Points stays earn 500 bonus points.

San Rafael Four Points 3-night stay from Tuesday September 9 to Friday September 12

$109/night

Non-elite member Base Earning = $109 x 3 nights x 2 Starpoints/$1 = 654 Starpoints for stay.

Plus Bonus #1: 500 Starpoints/night FlyerTalk bonus = 1,500 Starpoints

Plus Bonus #2: 500 Starpoints for weeknight stay at a Four Points = 500 Starpoints

 

2,654 Starpoints earned for this stay and 75% of Starpoints earned are from bonuses and not points from hotel spending.  A platinum elite would receive an additional 250 points as a platinum amenity gift and 327 additional elite bonus points for 3,231 Starpoints.  Only 30% of the Starpoints earned would be from spending based on the hotel rate, yet comparisons of hotel loyalty programs generally only consider hotel spending.

 

Hyatt Gold Passport standard points earning is 5 points/$1 in base hotel spending.  Hyatt also has numerous hotel specific bonuses which can greatly increase member earning power.  See my post on Hyatt “G” Bonuses.  And as a Hyatt Diamond member, a guest can receive a 1,000 points diamond amenity bonus at many Hyatt hotels. Hyatt Platinum elites earn a Platinum Extras certificate after every three stays for additional bonus points opportunities and other benefits.  (The Hyatt website is down as I am writing this so I can’t show a hotel stay example as I had planned.)

In the final analysis of hotel loyalty program comparisons, the points earning is determined by the member’s diligence in looking for promotions, registering for promotions, and booking through the specific links to get the best applicable offers for each hotel stay. 

Loyalty Traveler tip:  After an initial search of hotel rates for your destination, check the actual hotel property’s webpage and look for the special offers link to see if there are better rates or bonus point offers.  PointMaven.com also performs this special offer search task, however, I find it easier to just check the websites of specific hotel properties most of the time.

Traveling with a hotel loyalty plan can mean the difference between earning a free hotel stay after a few hundred dollars in actual hotel spending vs. earning a free hotel stay after thousands of dollars in spending. 

Loyalty Traveler is geared to the frequent guest who wants to know how to get more value from your hotel spending and will take the time to find a better deal.

 

Hilton Auckland, New Zealand

Stephen Colbert might ask, “Hilton HHonors hotel loyalty program – Great or Greatest?

I have loads of respect for the crew at Inside Flyer. Without Randy Petersen and FlyerTalk, I’d probably still be a fully employed school teacher taking lots of vacations and getting less value out of my travel expenditures . But now it is time for this loyalty program graduate to challenge my teachers at the House of Miles. I question some of the calculations from Inside Flyer’s recently published Hotel Loyalty Program Comparison Tables.

Back in February when I was in Colorado for a few days without internet access, I made a comparative analysis of earnings for a Hilton HHonors member who chooses each of the different earning options of Points & Points, Points and Variable Miles, or Points and Fixed Miles. I don’t think I ever published my findings on my blog.

I am revisiting this topic in conjunction with the Inside Flyer Hotel loyalty program comparison chart published in the June 2008 issue that I mentioned in last Friday’s blog post.

I noticed errors in the Hilton HHonors portion of the report and considering the findings of Inside Flyer’s comparison that Hilton provides incredible value with their Double Dip program, I feel I need to report what I see as errors in the published charts of the Inside Flyer report.

Since the charts simply show numerical data without any reference to how the numbers were calculated, I have undertaken the exercise of taking a closer look at the Hilton HHonors data and independently constructing the numerical data to maximize points and miles from the given variables of spending per year and the number of hotel nights used for the Inside Flyer report.

Without more data I can’t determine exactly how InsideFlyer came up with some of their numbers, but I do see some patterns that appear to have been due to incorrectly calculating HHonors “Double Dip” points earnings.

These are the numbers for HHonors points and miles as I calculated them:

Low-spending traveler: 19 nights and $2,052 in points-eligible hotel charges

HHonors Points and Points = 35,910 HHonors Points; InsideFlyer calculated 38,475 points.

HHonors Points and Fixed Miles = 25,650 HHonors Points and 9,500 frequent flyer miles (assuming 19 stays and 500 miles earned per HHonors stay).

Total Miles if Points and Fixed Miles and all HHonors points exchanged for miles =

11,200 US Airways; or

11,500 if Alaska, Continental, Delta, Northwest, or United; or

12,500 miles if American, Midwest, or Hawaiian. Most other airlines will be 11,500 or 12,500 miles total.

Inside Flyer calculated 14,000 miles earned.

Moderate-spending traveler: 38 nights and $5,928 in points-eligible hotel charges

HHonors Points and Points = Loyalty Traveler calculates 118,560 HHonors Points; InsideFlyer calculated 133,380 points.

HHonors Points and Fixed Miles = 88,920 HHonors Points and 19,000 frequent flyer miles (assuming 38 stays and 500 miles earned per HHonors stay).

Total Miles if Points and Miles and all HHonors points exchanged for miles =

25,800 US Airways; or

27,000 if Alaska, Continental, Delta, Northwest, or United; or

31,000 miles if American, Midwest, or Hawaiian.

Most other airlines will be 27,000 or 31,000 miles total.

Inside Flyer calculated 38,500 miles earned.

High-spending traveler: 76 nights and $19,532 in points-eligible hotel charges

HHonors Points and Points = Loyalty Traveler calculates 390,640 HHonors Points; InsideFlyer originally calculated 439,470 points, but the figure was changed sometime between Friday and today to 390,640.

(Did someone act on my email to InsideFlyer? But only that one figure was changed and the accompanying narrative was not altered along with the points.)

HHonors Points and Fixed Miles = 292,980 HHonors Points and 38,000 frequent flyer miles (assuming 76 stays and 500 miles earned per HHonors stay).

Total Miles if Points and Fixed Miles and all HHonors points exchanged for miles =

62,650 US Airways miles; or

67,000 miles if Alaska, Continental, Delta, Northwest, or United; or

81,500 miles if American, Midwest, or Hawaiian.

Most other airlines will be 67,000 or 81,500 miles total.

Inside Flyer calculated 68,500 miles earned.

******************************************************************************

The Double Dip Issue

HHonors is the primary program for this analysis since the Double Dip earning preferences appeared to be the root of the major errors I see in the charts. The problem in calculations results from incorrectly applying HHonors elite member bonuses to the Points and Points Double Dip earnings preference.

The Inside Flyer tables base the hotel points and miles earnings on the frequent guest member holding an elite status level from the beginning of the year. This means that the scenario assumes a HHonors frequent guest starts the year with an elite level membership (say Gold or Diamond) and maintains that level throughout the year with regard to calculating points earned.

The accumulated earnings of points and miles will be lower if the member starts hotel stays with no or lower status and attains a higher status during the course of the year.

HHonors “Double Dip”

HHonors allows members to select their preference for earning HHonors points or airline miles and there are three ways for a member to collect HHonors points and miles.

1. Points and Points
This option provides 10 HHonors base points per $1 and a bonus of 5 points/$1 for a total of 15 points per dollar.
HHonors points earned are 15 points/$1.00 US in eligible hotel spending.

2. HHonors and Variable Miles (Earn 1 mile per $1 US) or

3. HHonors Points and Fixed Miles (Earn 500 miles per stay, except 100 miles per stay at Hampton Inn and Homewood Suites hotel brands)

HHonors Gold Elite

HHonors Gold elite membership is earned after 16 stays or 36 nights. Hotel stays as a Gold elite member receive the benefit of a 25% bonus on base points earned.

BY THE NUMBERS

HHonors Points Earned per stay for the Low-Spending Traveler using a Points and Points preference for “Double Dip”

1,080 HHonors base points are earned for a $108 stay.
Points and Points bonus on base points: 50% = 540 HHonors points
Gold elite bonus 25% on base points only: 1,080 x 0.25 = 270 HHonors points
HHonors points earned per $108 stay as Gold elite = 1,890 HHonors points

Inside Flyer makes the assumption the member is starting at an elite level equivalent to 19 stays which is HHonors Gold.
The calculation for HHonors points earned over the course of a year simply becomes 19 nights x 1,890 points/night = 35,910 HHonors points.
1,890 per stay x 19 stays = 35,910 HHonors points (Loyalty traveler calculation)

Inside Flyer shows 38,475 HHonors points earned.

I believe Inside Flyer calculated per night earnings in this way:
$108/night
10 base points per $1 = 1,080 HHonors base points
Points and Points option = 540 HHonors points
Points and Points earning = 1,620 HHonors points
1,620 points x 25% Gold elite bonus = 405 points (incorrect calculation to apply the 25% elite bonus to the Points and Points 50% bonus on base points; the 25% elite bonus should be 270 points.)
2,025 HHonors points earned per $108 night hotel stay

2,025 HHonors points x 19 nights = 38,475 HHonors points.

The difference in my numbers and the number in the Inside Flyer chart is the calculation error of applying the HHonors elite bonus to the total HHonors Points and Points earnings. The HHonors Gold elite 25% bonus points applies only to the base points portion of the Points and Points Double Dip selection for HHonors earnings.

Double Dip with HHonors Points and Miles
Inside Flyer shows the low-spend frequent guest with 19 nights could have earned 14,000 frequent flyer miles.

How was this calculated?

Hilton HHonors has two selections for hotel stay earnings with the option of earning airline miles in addition to HHonors points.

HHonors and Variable Miles (Earn 1 mile per $1 US) or
HHonors Points and Fixed Miles (Earn 500 miles per stay, except 100 miles per stay at Hampton Inn and Homewood Suites hotel brands)

HHonors and Variable Miles provide the HHonors member with 1 airline mile per $1 spent in eligible hotel charges. Inside Flyer uses $108 as the average daily rate (room and incidental charges like food). The HHonors member selecting Variable miles will only earn 108 miles per stay.

The other Double Dip selection option for miles is HHonors points and Fixed Miles which offers 500 miles per stay, except for 100 miles per stay at the HHonors brands of Hampton Inn and Homewood Suites.

Assume 19 one-night stays in the low-spend traveler profile and total annual spending $2,052.
HHonors and Variable Miles = 2,052 frequent flyer miles
HHonors Points and Fixed Miles with 19 stays = 9,500 frequent flyer miles.

So how does Inside Flyer come up with 14,000 miles earned?

Remember the selection is HHonors Points and Miles and the HHonors Gold elite frequent guest still earns the base points for $2,052 in spending and elite bonus points.

$2,052 x 10 base points/$1 US = 20,520 points.
25% HHonors Gold Elite bonus = 5,130 points.

The HHonors low-spending frequent guest earns 25,650 HHonors points in addition to the 9,500 frequent flyer miles when selecting HHonors Points and Miles.

This is enough HHonors points for a free night Category 3 hotel reward. HHonors PointStretcher reward for a Category 6 hotel is only 24,000 points and can easily be a $400 value when used for a free hotel night.

So, how did Inside Flyer come up wth 14,000 miles earned?

A feature of HHonors is the ability to exchange HHonors points into nearly 40 different airline frequent flyer miles currencies. 8 airlines provide an exchange rate of 10,000 HHonors points convert into 1,500 airline miles. American Airlines is in this category.

23 of the 37 airline frequent flyer programs participating in HHonors points exchange for miles use the rate of 10,000 HHonors points = 1,000 miles. Airlines in this group include most of the major US carriers and large international airlines: Alaska, British Airways, Continental, Delta, Flying Blue (KLM/Air France), Lufthansa (and Miles and More airlines), Northwest, and United.
There are 5 airlines with individual exchange rates. 10,000 HHonors points exchanges into just 850 US Airways miles.

HHonors points to miles exchanges must be made in 10,000 point blocks. 20,000 points earned by the low-spending HHonors Gold elite member can be converted into 1,700 US Airways miles. Add this to the 9,500 miles earned from 19 stays with a Double Dip preference of HHonors Points and Fixed Miles the member ends up with 11,200 US Airways Dividend miles. A bit short of the 14,000 Inside Flyer shows.

The low-spend traveler would earn 2,000 frequent flyer miles from the 20,000 HHonors points earned and exchanged into airline miles with AS, CO, DL, NW, or UA.
The low-spend traveler earns 11,500 miles total with the HHonors Points and Miles earnings selection and exchanging earned HHonors points into miles.

American Airlines, Hawaiian, and Midwest have the best exchange rate for US carriers at 1,500 miles awarded for 10,000 HHonors points. Virgin Atlantic, South African, Mexicana, Gulf Air, and Qantas also offer this exchange rate.

A preference for American AAdvantage miles will provide the HHonors Gold member having 19 stays with 3,000 miles from HHonors points exchange and 9,500 miles from stays for a total of 12,500 American Airlines AAdvantage miles. This is still shy of the 14,000 reported by Inside Flyer in their table.

How did Inside Flyer calculate the numbers to reach 14,000 miles earned?
Here is my guess.

It goes back to the problem of applying the HHonors Gold elite bonus points to the total Points and Points earnings.

There are only 3 options for earnings with Hilton HHonors. Inside Flyer stated the calculations are based on a person selecting Points and Points earnings. It looks to me like the HHonors miles earned was calculated by using 500 miles earned per stay x 19 stays = 9,500 miles earned. Then, the points earned were converted to miles on the basis of 38,475 points earned.

HHonors exchanges must be done in blocks of 10,000 HHonors points. In the case of earning 38,475 points, the HHonors member can exchange 30,000 points for airline miles. If the selection is American Airlines the member will receive 9,500 AAdvantage miles for 19 stays and can also earn another 4,500 AAdvantage miles after an exchange of 30,000 HHonors points. This adds up to 14,000 miles as shown in Inside Flyer’s table.

14,000 total miles earned looks to be an earning preference of “Points and Points and Miles.” Double Dip with HHonors doesn’t work like that. Inside Flyer appears to have used the HHonors Triple Dip in their table calculations.

HHonors would be incredible if the earnings were that good.

The problem is a person selecting HHonors Points and Fixed Miles earns 9,500 airline miles from the 19 stays, but then only earns HHonors Base Points for $2,052 in spending for 20,520 HHonors points and a 25% Gold elite bonus for a total of 25,650 HHonors points.

The member exchanging points for miles is trading a free hotel night at 25,000 points for 3,000 miles at best. This loyalty traveler would redeem the HHonors points for a hotel room and just buy the airline miles or better yet find a better way for getting 3,000 miles than burning 20,000 HHonors points.

Based on $2,052 and 19 stays the Gold elite member earns with various US airlines I calculate, that rather than 14,000 miles earned, the total miles earned is:
12,500 miles with American Airlines, Midwest Airlines
11,500 miles with Alaska, Continental, Delta, Northwest, or United
11,200 miles with US Airways

Moderate-Spending Traveler – HHonors Diamond elite member
(HHonors Diamond elite membership requires 28 hotel stays in 12 months).

$5,928 eligible for HHonors base points earnings.
38 nights at $156 per night

Inside Flyer reports: 133,380 total HHonors points earned or 38,500 miles

I believe this was calculated as per night earnings in this way:
$156/night
10 base points per $1 = 1,560 HHonors base points
Points and Points bonus points option of 50% base points = 780 HHonors points
Points and Points earning = 2,340 HHonors points
2,340 points x 50% Diamond elite bonus = 1,170 points
3,510 HHonors points earned per $156 night hotel stay
3,510 HHonors points x 38 stays = 133,380 HHonors points.

Loyalty Traveler’s calculation for HHonors Points and HHonors Points for 38 stays and $5,928.
10 base points per $1 = 1,560 HHonors base points
Points and Points bonus points option of 50% base points = 780 HHonors points
Points and Points earning = 2,340 HHonors points
1,560 points x 50% Diamond elite bonus = 780 points
3,120 HHonors points earned per $156 night hotel stay

3,120 HHonors points x 38 stays = 118,560 HHonors points and nearly 15,000 points less than the 133,380 HHonors points earned as Inside Flyer reports for this scenario.

HHonors Points and Miles as Moderate-Spending Traveler
Inside Flyer reports 38,500 airline frequent flyer miles could have been earned.

The HHonors Diamond member will benefit from selecting HHonors Points and Fixed Miles to get 500 miles per stay rather than 156 miles per stay with HHonors Points and Variable Miles.
Assume 38 one-night stays to maximize the miles earned for 38 stays x 500 miles = 19,000 miles. This is less than half the miles Inside Flyer calculates. It looks like Inside Flyer calculated the other 19,500 miles earned from exchanging 130,000 HHonors points to airline miles at the rate of 1,500 miles per 10,000 points.

13 x 1,500 miles = 19,500 miles earned from exchanging Hilton HHonors points to airline miles.

This is the Inside Flyer Triple Dip that earns 38,500 airline miles.

Loyalty Traveler Calculations for Moderate-Spend Traveler
Assume 38 one-night stays and HHonors Diamond elite membership.

HHonors Diamond member who has selected HHonors Points and Fixed Miles earns $5,928 x 10 base points = 59,280 HHonors base points and 19,000 miles. The Diamond member 50% elite bonus on base points adds another 29,640 HHonors elite bonus points.

HHonors Diamond member earns 88,920 HHonors points and 19,000 airline miles.

Since exchanges must be made in batches of 10,000 points the member will only be able to exchange 80,000 points for 12,000 American Airline or Midwest miles; or 8,000 miles with Alaska, Continental, Delta, Northwest, or United; and only 6,800 miles with US Airways.

Total miles earned ranges from 31,000 for American Airlines AAdvantage miles; 27,000 miles with Alaska, Continental, Delta, Northwest, or United; and only 25,800 US Airways Dividend miles. This is significantly less miles than the 38,500 miles earned shown in the Inside Flyer table.

High-Spending Traveler
Assume 76 nights, Diamond elite membership, and $19,532 spending

And finally the high-spend traveler. The data in this table changed sometime between my initial reading of the report and the chart as shown today on the website.

Last Friday, the total points earned showed as 439,470 HHonors points for a person staying 76 hotel nights with an average daily rate of $257 and $19,532 in annual spending. When I looked today the number in the chart has been changed to 390,640 HHonors points. On both days the chart shows the number of airline miles earned as 66,500 miles.

One-night stays are not necessary to consider for elite status in this scenario for the person with 76 hotel nights because the criteria for HHonors Diamond elite status has been met via all three qualifying standards:
Hotel stays (28 stays)
Hotel Nights (60 nights)
Hotel Spending (100,000 base points = $10,000 eligible spending)

Calculation to get 439,470 HHonors points as originally reported in the Inside Flyer comparison, given the variables.

10 base points per $1 for $257 hotel folio = 2,570 HHonors base points
Points and Points bonus points option of 50% base points = 1,285 HHonors points
Points and Points earning = 3,855 HHonors points
3,855 points x 50% Diamond elite bonus = 1927.5 points (incorrectly applies elite bonus to Points and Points total rather just base points)
5,782.5 HHonors points earned per $257 night hotel stay
X 76 one-night hotel stays = 439,470 HHonors points

Calculation to get 390,640 HHonors points given the variables.
10 base points per $1 for $257 hotel folio = 2,570 HHonors base points
Points and Points bonus points option of 50% base points = 1,285 HHonors points
Points and Points earning = 3,855 HHonors points
2,570 points x 50% Diamond elite bonus = 1,285 points (correct calculation)
5,140 HHonors points earned per $257 night hotel stay
X 76 one-night hotel stays = 390,640 HHonors points. (corrected total as shown in report Tuesday, June 10, 2008).

Points and Miles for High-Spending Traveler
Stays are important to maximize earnings using HHonors Points and Fixed Miles. Assume 76 one-night stays for 76 x 500 miles = 38,000 frequent flyer miles from hotel stays.

The Points earned with the HHonors Points and Miles preference is significantly less than 390,640 points.

HHonors Points Exchange to Frequent Flyer Miles
$19,532 in annual spending earns 195,320 base points and with a 50% Diamond bonus of 97,660 points = 292,980 HHonors points. 290,000 points can be exchanged for airline miles.

Earning Miles with American AAdvantage
29 (10,000 HHonors points) x 1,500 American AAdvantage miles = 43,500 miles
38,000 miles from 76 stays and 43,500 miles from HHonors points to airline miles exchange = 81,500 American Airlines AAdvantage miles earned.

My calculation of 81,500 miles earned for the high-spending traveler is 15,000 miles more than the 66,500 miles shown on the Inside Flyer chart. I don’t know why the Inside Flyer chart is so much lower since the other two scenarios for low-spending and moderate-spending travelers seem to use the pattern of one-night stays to calculate miles earned. In real travel, I think it would be a rare frequent guest with a profile of 76 one-night stays.

Earning Miles with AS, CO, DL, NW, or UA
29 x 1,000 miles = 29,000 miles for Alaska, Continental, Delta, Northwest, or United. Add these exchange miles (29,000) to stay miles (38,000) and total is 67,000 United miles for 76 one-night stays. This is close to the 66,500 mile calculation of Inside Flyer.

Earning Miles with US Airways
290,000 HHonors points exchanges into 29 x 850 US Airways miles = 24,650 US Dividend miles
24,650 Dividend miles (exchanged) + 38,000 Dividend miles (on 76 stays) = 62,650 US Airways Dividend miles

Conclusion

Inside Flyer’s conclusion is Hilton HHonors had the highest value in terms of points and miles earned.

81,500 miles earned from Hilton brand hotel stays is sufficient for an international business class ticket using miles (or is it anymore?). Better yet, in my opinion, 390,640 HHonors points the high spender earns is enough for 13 nights using HHonors points at a Hilton Category 6 hotel.
Think 13 nights x $400/night saved = $5,200 rebate through future free stays on $20,000 in hotel spending. That is a good deal.

But, is it the best deal for a hotel loyalty program?

I think comparable value can be found with the other programs. 25% value added is just the basic known value of hotel loyalty through these HHonors calculations.

I repeatedly show in Hotels and Points blog posts how to get 50 to 100% added value on your hotel spending. The scenarios examined do not even consider promotion offers which, in my experience, can be expected to be at least an extra 1,000 HHonors points per hotel stay.
Programs like Starwood and Hyatt with different scales for their hotel properties will typically offer the frequent guest a promotional opportunity to earn an additional 1,000 points per hotel stay. The bonus points in these two programs are a significant proportion needed for the lower category hotel rooms. A Starwood free night room redemption starts at 2,000 points for Category 1 hotels and Hyatt at 5,000 points for Category 1 hotels compared to HHonors 10,000 points for Category 1 hotels.

Flexibility and opportunity await the loyalty traveler who learns to maximize the benefits of hotel loyalty programs.

Sheraton Libertador Presidential Suite, Buenos Aires, Argentina

The good life as a low-spender traveler in hotel loyalty programs.
$163/night paid rate and complimentary upgrade to this $500/night room in June 2007.

InsideFlyer has a free cover story report on a comparison of hotel loyalty programs.
The content of this first section of the hotel loyalty program comparisons is a simple analysis of the points earned based on fixed monetary spending and the cost for free hotel nights using points. Next month there is to be a continuation of hotel loyalty program comparisons using actual properties in locations. (I was planning to use this strategy to compare Radisson hotel free night redemption to some other chains in a couple of cities in Europe and came across the InsideFlyer article while doing Radisson research this morning.)

If choosing the best program were that simple I wouldn’t bother with the Hotels and Points blog.
The variables analyzed in this first report are static such as base points/$, elite bonus points based on status, and standard redemption of free nights.

The reason I started Hotels and Points is to focus my readers’ attention on the variety of high value promotions which regularly change the points and free nights hotel loyalty program earning and redemption dynamics. Offers regularly change the earning value for hotel stays with promotions like Hyatt’s Faster Free Nights, Starwood’s Cash and Points and 50% off redemption level for a free night special offer for Platinum members the past two years. Priority Club PointBreaks free nights for 5,000 points was mentioned, but not Marriott’s PointSavers or Hilton HHonors PointStretchers.

The InsideFlyer charts are a useful overview of the major hotel loyalty programs for US residents (although all these chains have international properties, there are no non-US-based hotel chains in comparison). Readers of Hotels and Points will find the $2,000 per year hotel low-spend traveler can expect a whole lot of value with a strategic hotel loyalty program plan for the year. Don’t let the InsideFlyer report fool you into thinking you need to be spending $5,000 to $10,000 a year to have a high elite hotel lifestyle. A leisure traveler can pay for hotels when the earnings are good and the rates are low and redeem for hotels when the prices are high with a significant return on investment of $2,000 to $3,000 per year in hotel loyalty.

And as a Hilton Diamond member for several years, I found the earning and redemption rates for my leisurely travel lifestyle to be more lucrative with other programs whose promotions outpace the offers I was provided by Hilton HHonors as a member with high elite status.