Here are some thoughts on maintaining hotel loyalty elite status while traveling in cities of rising rates. STR, the hotel data company for North America, reported average daily rates last week in the U.S. were $154.50 for upper-upscale hotel market segment with occupancy at 78.0%. The luxury hotel market segment had average daily rates of $260.71 with occupancy at a high 77.3%. 

As a leisure traveler over the past decade, I have felt that an adequate annual budget for maintaining top elite status while primarily staying in upper-upscale market segment hotels takes between $3,000 to $4,000 a year. I’ve spent more and I have spent less, but $3,000 is typically around the minimum spend I can expect when planning to earn top elite like SPG Platinum, Hyatt Diamond, Hilton Diamond or Carlson Concierge elite. 

Marriott will likely take more than $3,000 for Gold elite at 50 nights and much more for Platinum at 75 nights, although elite rollover nights can reduce the annual spend somewhat. Priority Club qualification on points should take far less than $3,000 to earn 60,000 points for Platinum. I requalified for 2012 Priority Club Platinum elite status yesterday after less than $500 in hotel stays in 2011.

My Priority Club account has earned 117,330 points in 2011 and Platinum elite membership is earned with 60,000 points in a calendar year. I have earned Platinum elite status through December 31, 2012 after just 5 paid hotel nights in 2011. 

Maintaining hotel elite status in a city of rising rates

Upper-upscale market segment hotels like full service Hilton, Marriott, Hyatt and Starwood properties will frequently have rates in the range of $150 to $200 per night. 

The highest rates might be during midweek nights like in downtown San Francisco where business travelers and convention goers fill hotels on high rates. The highest hotel rates may be weekend nights like in my hometown of Monterey where many Californians come to vacation on weekends. 

$150 to $200 per night hotels on a $3,000 to $4,000 budget gets you 15 to 26 nights a year in hotels. It is tough to earn top-level elite status with fewer than 30 nights a year in hotels unless you only do one-night stays. 

Most hotel loyalty programs qualify members for elite status by either nights or hotel stays. Carlson, Hilton, Hyatt and Starwood require fewer stays than nights for elite qualification. 

Top-Tier Elite Qualification Published Requirements (in a calendar year)

• Marriott Rewards Platinum = 75 Nights
• Club Carlson Concierge Elite = 30 Stays or 75 Nights
• Hilton HHonors Diamond = 28 Stays or 60 Nights or 100,000 base points ($10,000 hotel spend)
• Hyatt Gold Passport Diamond = 25 stays or 50 nights
• Starwood Preferred Guest = 25 stays or 50 nights 
• InterContinental Royal Ambassador has unpublished qualification terms which are generally reported to be around 50 to 60 nights in IHG brand hotels with stays in at least 3 different InterContinental Hotels in a 12-month period of Ambassador paid membership.

I have met many business travelers who spend 40 to 50 nights a year in hotels and never have attained top elite status. Most business travelers average two or three night stays. If you spend 60 nights a year in hotels with 20 hotel stays and 42 nights Hilton and 18 nights in Marriott, then your HHonors Gold and Marriott Silver elite receives minor attention compared to what you would likely experience as HHonors Diamond. 

The leisure traveler spending $3K to $4K can have four or five extended stay vacations a year staying in nice upper-upscale hotels at $150 to $200 per night. Most of my friends fall in this category of travelers who pay high rates in desirable places and never qualify for more than low-level elite hotel loyalty membership.

My objective throughout the year is finding upper-upscale hotels where my average daily paid rate is well below the average $155 per night for a U.S. upper upscale hotel. I regularly find upper upscale hotels in the $100 range during slow business and low occupancy periods. This allows me to stay 30 to 40 paid nights and the ability to maintain top-elite status with good elite benefits and hotel selection whether that loyalty program is Hilton, Hyatt, SPG or another hotel loyalty program.

Typically I spend about 80% of my paid hotel nights in upper-upscale hotels and around 20% in midscale brands like Four Points, Hyatt Place, Holiday Inn Express and Hampton Inn/Hilton Garden Inn.

Conventions and Events are a Leisure Traveler budget buster 

Conferences like the International Pow Wow in San Francisco this past week tend to push the daily hotel rates up to $250 to $300 per night for upper-upscale hotel brands like Hilton, Hyatt Regency, Marriott, and Westin. These high rates force the leisure traveler down to 10 to 16 nights a year if staying within a $3,000 to $4,000 budget. You are severely limited on your ability to earn hotel elite status while staying in the upper-upscale hotel market segment and paying high rates. 

I plan for hotel travel 12 months a year with a goal of maintaining top elite status in at least one program (currently I’m top-elite in four hotel programs). I seldom book a hotel more than one week in advance, but when I see good value hotel deals, like my W Silicon Valley $64 Best Rate Guarantee nights this weekend that I found a few weeks back, I jump on them to earn loyalty points and elite credit stays. 

Then, when I really need a hotel in a specific place like downtown San Francisco last week, I am able to spend points for nice upper-upscale hotel rooms with elite benefits like free internet or free breakfast and free room upgrades. Rates were over $200 and $300 at hotels around Moscone Center during International Pow Wow 2011 travel convention. Rates are about the same next month in downtown Vancouver for the Travel Blog Exchange 2011 conference.  My points earned steadily over the past year allow me to stay in upper upscale hotels in the center of the action at a fraction of the published paid rates by using points awards. 

The fact that most other guests at these hotels are paying $200 to $300 per night does not impact me. I spent $120 and 60,000 Priority Club points to stay two nights at the InterContinental San Francisco and saved nearly $500 on the published lowest rate. I stayed at the Starwood Luxury Collection Palace Hotel on a Cash & Points award and paid $103 (after tax) and 4,800 points to save over $200 on the lowest published rate. My SPG Platinum elite status also waived the $20 daily internet fee at the Palace Hotel. I booked both of these hotels within 24 hours of arrival during one of the year’s biggest conventions in San Francisco.

So if you are one of those high-paying guests during hotel convention times, or even worse, you are staying at the airport and spending two hours a day commuting to and from the city center from your budget hotel…

“Welcome to Loyalty Traveler.” 

This is where you will find tips on getting hotel value for the frequent guest. 

You do not have to book far in advance to get the best hotel rates. You just need to plan far in advance so you have plenty of points and hopefully elite status, rather than plenty of cash to cover your hotel needs when staying in a city of high-rise and high rate hotels.

Article Correction May 31: This post originally listed occupancy for upper-upscale hotel segment incorrectly at 68% rather than 78.0%.  The upper-midscale hotel segment was 68% occupancy.

A Hilton HHonors member spends 80,000 points for a two-night hotel stay at Conrad Brussels, Belgium this week. Next week Conrad Brussels is available for 24,000 points per night on HHonors Point Stretcher Rewards. The guest next week experiences the same hotel, same room comfort, same amenities, same staff and same restaurant. And the prospect of receiving a complimentary upgrade is increased during a low occupancy hotel period.

A shift of one week in hotel stay dates results in 32,000 points savings on a normally 80,000 points two-night reward stay. Even a three night Point Stretcher stay requires just 72,000 points for the HHonors hotel category 6 Conrad Brussels.

I burned over 2 million Hilton HHonors points in the past 12 years. More than 90% of those reward nights were reduced points rewards – either Point Stretcher nights or HHonors VIP discounted 6-night rewards. Singapore, Germany, Spain, Ireland, and Belgium are a few of the locations I stayed on Point Stretcher nights. These discounts allowed me to stay about 50 more nights at Hilton properties than if I had redeemed using standard rewards like 40,000 points for the HHonors category 6 Conrad Brussels.

Discount Hotel Rewards

Several hotel programs offer discount hotel reward nights. Marriott Rewards calls them PointSavers, Hilton HHonors trademarked Point Stretcher and Priority Club has PointBreaks.

Starwood Preferred Guest has Cash & Points and a similar reduced points and cash component offer is available for Priority Club at IHG properties and Goldpoints Plus for Carlson Hotels’ Radisson and Country Inn.

There are differences in each of these program’s offers. Here is a summary of how each offer works and what you can reasonably expect to find.

Three categories of hotel reward discounts.

Limited Date Discounts

• IHG PointBreaks = 5,000 points per free reward night. (IHG reward nights are normally 10,000 to 40,000 points per night.)
• Marriott Rewards PointSavers = discount to next lower hotel category reward level; for example, category 5 hotel (25,000 points/night) requires category 4 points (20,000 points/night) for free nights. 5^th night free does apply to PointSavers rate.
• Hilton HHonors Point Stretcher  = Pay 60% of standard reward points per night (40% discount); for example, category 6 hotel at 40,000 points is 24,000 points per night with PointStretchers. HHonors VIP Extended stay discount (4 or more nights) does not apply to Point Stretcher rewards. 

Extended Stay Reward Discounts

• Marriott Rewards =  5^th night free (pay hotel category level points for four nights)
• Starwood Preferred Guest =  5^th night free (pay hotel category level points for four nights)
• HHonors VIP rewards for stays 4 nights (15% discount); 5 nights (20% discount); 6 to 14 nights (25% discount). VIP discount rewards are restricted to HHonors elite members Silver and higher.
• Goldpoints plus = 10% fewer points for additional reward nights after first night.

Cash and Points Rewards

• Starwood Preferred Guest Cash and Points nights require 40% normal points and cash portion ranging from $15 to $150 depending on SPG hotel category level from 1 to 6. Not applicable to SPG category 7 hotels. Cash & Points have the potential for very high savings and points value. There are opportunities to save more than $200 on published room rates and receive a very high redemption value for your points, particularly at the category 4 ($60 + 4,000 points) and category 5 ($90 + 4,800 points) award level.
• SPG Cash & Points awards are capacity controlled.   

SPG Cash & Points chart

• Category 1 = $25 + 1,200 points (only in U.S., Canada, Asia-Pacific)
• Category 2 = $30 + 1,600 points (only in U.S., Canada, Asia-Pacific)
• Category 3 = $45 + 2,800 points
• Category 4 = $60 + 4,000 points
• Category 5 = $90 + 4,800 points
• Category 6 = $150 + 8,000 points
• Category 7 = N/A

Priority Club – Points + Cash is a system for buying points to complete a hotel reward stay booking. Two options: Pay $40 for 5,000 points or $60 for 10,000 points. This option is available even if you have sufficient points for the hotel reward stay. This is a way to buy points at a huge discount and save Priority Club points for more hotel free nights. Buying points directly from Priority Club costs $230 for 20,000 points.

Goldpoints Plus Cash & Points offers the option to pay a cash supplement for reduced points reward nights. Category 1 to 3 hotels require 5,000 points and category 4 to 6 hotels require 10,000 points. Cash portion determined at time of hotel booking.  

Important to Remember: Reward stays, including Cash and Points rewards, do not earn hotel stay credit for annual elite qualification, with the exception of Hilton HHonors and Choice Privileges where reward stays earn elite qualification credit.

IHG PointBreaks

These are the cheapest hotels available in hotel loyalty world at 5,000 Priority Club points per night, but I am wondering if Prioity Club members have seen the best days pass for this incredible reward discount. The last two PointBreaks lists may indicate a new pattern for PointBreaks with mid-month release in December and January for hotel stays through the end of the following month. The list released this week does not include a single InterContinental Hotel which I hope does not become a new trend.

June 7, 2010 – 118 hotels (79 US, 39 international) – stay through August 30, 2010.

August 2, 2010 – 130 hotels (79 US, 51 international) – stay through October 30, 2010.

October 4, 2010 – 126 hotels (77 US, 49 international) – stay through December 30, 2010.

December 13, 2010 – 35 hotels (15 US, 20 international) – stay through January 30, 2011.

January 24, 2011 – 55 hotels (31 US, 24 international) – stay through February 28, 2011.

The deal here is any hotel on the list is available for 5,000 points. All Crowne Plaza hotels have a standard reward cost of 25,000 points per night. A PointBreaks reward night for a hotel like Crowne Plaza Denver International Airport is an 80% discount.

InterContinental Hotels have standard rates at 30,000 points or 40,000 points per night. Landing a PointBreaks vacation at an InterContinental Hotel like IC Budapest (October 2010 PointBreaks hotel) means your 40,000 points can put you in a hotel room for an eight night Pointbreaks vacation rather than just a one night stay using a standard 40,000 points reward.

PointBreaks reward nights were an 87.5% discount at the normally 40,000 points per night InterContinental Budapest luxury hotel for stays October through December 2010.

Marriott Rewards PointSavers (Loyalty Traveler post 1/26 Marriott PointSavers)

Marriott Rewards PointSavers reduce the cost of an award night by one category level. A great feature of these rewards is the 5^th night free is still offered with PointSavers. A category 6 hotel reward is normally 30,000 points per night or five nights for 120,000 points. PointSavers reduce the nightly cost of a category 6 reward down to the rate for a category 5 reward at 25,000 points per night or 100,000 points for five nights.

Biggest savings is 33% and results at Marriott category 3 level where a 15,000 points per night reward is just 10,000 points when paying the category 2 hotel reward rate. Five nights at a category 3 hotel for 40,000 points with a PointSavers reservation will likely have a high redemption value for your points in excess of $10 per 1,000 points (this occurs when the published rate of the hotel is more than $80 per night or $400 for five nights).

Marriott Rewards PointSavers Chart

PointSavers Free Nights

• Category 1 – Standard =  7,500 points; PointSavers = 6,000
• Category 2 – Standard = 10,000 points; PointSavers = 7,500
• Category 3 – Standard = 15,000 points; PointSavers = 10,000
• Category 4 – Standard = 20,000 points; PointSavers = 15,000
• Category 5 – Standard = 25,000 points; PointSavers = 20,000
• Category 6 – Standard = 30,000 points; PointSavers = 25,000
• Category 7 – Standard = 35,000 points; PointSavers = 30,000
• Category 8 – Standard = 40,000 points; PointSavers = 35,000

PointSavers are also available for select Ritz-Carlton Hotels offering 10,000 points per night discount. 

Hilton HHonors Point Stretcher (Loyalty traveler Dec 3 post HHonors Point Stretcher)

Hilton HHonors published a long list of hotels in early December offering Point Stretcher reward dates through May 2011. This is a welcome change for a program feature that languished a couple of years with very weak offerings. The hundreds of hotels on the current Point Stretcher list make Marriott Rewards, at just 25 hotels currently posted as PointSavers, look like the Hilton HHonors of old.

But don’t count on finding a Hilton HHonors Point Stretcher Category 1 Reward anytime soon.

Point Stretcher Free Nights Chart

• Category 1 – Standard =  7,500 points; Point Stretcher = 4,500
• Category 2 – Standard = 12,500 points; Point Stretcher = 7,500
• Category 3 – Standard = 25,000 points; Point Stretcher = 15,000
• Category 4 – Standard = 30,000 points; Point Stretcher = 18,000
• Category 5 – Standard = 35,000 points; Point Stretcher = 21,000
• Category 6 – Standard = 40,000 points; Point Stretcher = 24,000
• Category 7 – Standard = 50,000 points; Point Stretcher = 30,000

Extended Hotel Stay Rewards

Carlson Hotels goldpoints plus (Radisson, Park Inn and Country Inn) discount every reward night after the first night by 10%. This is the best standard discount available for two or three night stays in hotel loyalty world.

Four night stays: Hilton HHonors steps in with a 15% total points discount available as an elite member VIP reward.

Five night stays: Hilton, Marriott and Starwood all discount five night stays by 20%. Hilton restricts all VIP discount rewards to elite members.

Hilton HHonors unquestionably wins the biggest discount contest with 25% off the reward cost for stays of 6 to 14 nights. Marriott Rewards was the best discount until they went to 5^th night free in 2009. That being said, there is still competitiveness for Marriott with Hilton in that the hotel category reward distribution is much more skewed to lower categories for Marriott than Hilton. For example, there are many places where Marriott Rewards category 4 and 5 hotels are the same hotel market segment class as Hilton HHonors category 5, 6 and 7 hotels.

Marriott Rewards category 5 = 25,000 points per night or 7 nights = 150,000 points (5^th night free).

Hilton HHonors category 6 = 40,000 points or 7 nights = 210,000 points (25% discount).

HHonors Points & Points earner at 15 points/$1 compared to Marriott Rewards at 10 points/$1 makes these two rewards nearly comparable in points cost for the respective programs. The promotions make all the difference for the member (or credit card earning).

Hilton, Marriott, SPG and goldpoints have the advantage over all the other hotel loyalty programs offering no discount for extended night hotel stays.

Conclusion: The value of your points increases when you take advantage of discount rewards. There are many hotels offering discount reward rates at any given time.

Priority Club has its attributes, but choosing a best program of the year based on a hypothetical “average traveler” who spends ten nights with five stays a year in hotels?

I question the whole premise that an average traveler with as little as five stays in a year even needs to bother with a commitment to a hotel loyalty program.

Here are the reasons the SmarterTravel editors list for selecting IHG Priority Club Rewards as the 2010 Best Hotel Loyalty Program:

1. Numerous hotels – IHG Priority Club at 4,400 hotels globally has more hotels than Hilton (3,600) or Marriott (3,400), although fewer than Wyndham Rewards (7,000+) and Choice Privileges (6,000+). There is a good argument that Priority Club is a higher quality hotel on average than Wyndham or Choice.

2. Price Point – IHG Priority Club hotels do have lower average rates than Hyatt or Starwood. There is an argument to be made that Hilton and Marriott may have a better price point. IHG has most brands in the range of $90 to $100 average daily rate. InterContinental is higher at $153 and Candlewood Suites lower at $62.50. Here is a recent post I made on Marriott Hotels latest quarter average daily rates which are comparable to IHG brand rates.

Starwood only has 10% of its chain, the Four Points brand with an average daily rate around $100. Systemwide the Starwood Hotels have an average daily rate of $158.

Average is relative to your travel pattern. The average rate for Le Meridien is $209 in the Americas. Le Meridien San Francisco is where I can regularly spend under $120 per night on weekends.

3. Priority Club has frequent bonus promotions, but the real value in Priority Club is combinable bonuses which the SmarterTravel article never mentions. Tim Winship really favors hotel loyalty promotions with an easy threshold of qualification. I agree with that sentiment. But I disagree that getting a $50 gift card per weekend night stay, beginning with the second stay, is easier or a better incentive than getting a free night with two Hyatt stays. There are plenty of Hyatt rates below $100, although the average rate for Hyatt is much higher than Priority Club properties and there are only 10% as many Hyatt hotels as in InterContinental Hotels Group.

4. The editors list the low cost of a reward night at 10,000 points for some Holiday Inn properties as a good redemption feature. There are about 300 hotels in the 10,000 points award category, fewer than 10% of the 3,500 Holiday Inn and Holiday Inn Express Hotels. 1,000 of these 3,500 hotels are in the 25,000 points reward category. See this link for a breakdown of 10,000; 15,000; and 25,000 points properties in Holiday Inn and Holiday Inn Express.

Hyatt has 24% of its hotels (97 hotels) in the lowest 5,000 points category and another 36% (147 hotels) in its second lowest reward category of 8,000 points. I earned over 6,000 Hyatt Gold Passport points on a single $100 night recently with all the bonus points like 2,500 points for a closed Regency Club even though I was given a full free breakfast in the hotel restaurant, and 1,000 points as a Diamond elite gift. There was also a 2,000 points G bonus any member could receive. And of course the five points per dollar and 30% bonus.

But Mr. T, SmarterTravel’s “average traveler” only travels ten nights and five stays for year. He would only make Platinum with Hyatt Gold Passport after five stays unless he could get around to making another five nights for the Diamond elite fast-track [May 26 update: Hyatt Gold Passport fast-track elite offering complimentary Platinum and fast-track Diamond elite for 15 nights recently expired]. The argument that first-tier elite benefits are “modest” does not necessarily apply to Hyatt or SPG. SPG Gold offers 50% bonus points. Hyatt Platinum offers free internet and Hyatt Platinum awards certificates after every third stay for hotel amenities.

5. The no blackout dates for award nights is a sticky issue. There are ways around it. Starwood is generally the easiest program to gauge award availability since the standard website rate search shows rooms available for points along with paid rates and the availability of the Cash & Points option. SPG has a convenient search feature for finding rooms available for points.

My main criticism of the SmarterTravel article is the premise that a traveler with just 10 nights and five stays in a calendar year even needs a primary hotel loyalty program. With that little travel, Mr. T should just follow the promotions. Stay at a Hyatt Place twice and earn a free night at any Hyatt. Find a Country Inn & Suites or Radisson for two stays this summer and earn a free night with Carlson Hotels.

Mr. T could just use Priceline and save some money if budget is the primary factor. Priceline can make four star hotels the same price as a Days Inn or Motel 6. And since Mr T does not have elite status he will not likely get the preferred view room anyway at the IHG brand hotels.

Global properties do not matter unless you are traveling global. If you want a trip to Australia or France next year, then use hotel loyalty programs with the objective to earn points and free nights that will allow you to stay free in Europe or Australia or anywhere you desire to go. I have used this strategy for over a decade to spend $2,000 a year on cheap hotels ($100 average) in the US and then redeem points and free nights for expensive hotels ($250+ average) when traveling outside of the country. Hilton, Starwood, and Carlson all have promotions running that will allow you to earn free nights you can use late in 2010 or even into 2011.

The bottom line is the best program for your hotel loyalty is dependent on your travel pattern. The SmarterTravel editors also make this argument.

SmarterTravel states the methodology I used when comparing hotel loyalty programs for InsideFlyer magazine in April 2010 is impractical.

A definitive comparison of all the programs’ value propositions—how much you get back in awards for every dollar spent on paid stays—is impractical. There are just too many earning and redemption variables spread across too many brands.

I purposefully did not state a “Best Hotel Loyalty Program” in the InsideFlyer magazine article.  While there may be too many variables among hotel loyalty programs for earning and redemption to easily compare programs, I have to make the argument that the number of variables in loyalty programs pales in comparison to the number of variables in individual travelers that makes the term “average traveler” totally meaningless.

Update: May 27 – Tim Winship posted an Up Front blog entry on Frequentflier.com on why he did not pick a “Best Airline Loyalty Program” which is a great read.

http://blog.frequentflier.com/2010/05/and-the-award-for-the-worlds-best-frequent-flyer-program-goes-to-.html

I read Tim’s blog yesterday after writing and posting this piece on the SmarterTravel.com “Best Hotel Loyalty Program”.

Tim’s reasoning is basically the same I felt when reading the “Best Hotel Loyalty Program” piece.

As usual Tim Winship expresses his thoughts much more eloquently and succinctly than I do. I love Tim’s writing and I have been a reader of FrequentFlier.com since 1999.

Update August 4, 2011: Singapore Airlines changed to 1:1 points-to-miles exchange since this article was written. Looking back over my notes it appears that SPG changed the wording of their Airline Direct Deposit since March 2010 when the page read like this:

1. Base members of Starwood Preferred Guest who have opted to earn miles for stays will earn 2 miles for each eligible U.S. dollar with most airlines. Elite (Gold and Platinum) members of Starwood Preferred Guest who have opted to earn miles for stays will earn 3 miles for each eligible U.S. dollar with most airlines. Exceptions are as follows:
• Air New Zealand AirPoints:
• All members earn a flat 20 AirPoints per stay for hotels outside of Australia and New Zealand.
• All members earn a flat 40 AirPoints per stay for hotels within Australia and New Zealand.
• El Al Israel: All members earn a flat 12 El Al Points per stay.
• Iberia Plus: Base members earn 1 Iberia Plus point for every eligible $5 US spent. Elite members earn 1.5 Iberia Plus points for every eligible $5 US spent.
• LANPass: Base members earn 3.2 kilometers for every eligible $1 US spent. Elite members earn 4.8 kilometros for every eligible $1 US spent.

There was no exception for other airlines at the time this post was written. August 2011 there are different rules clearly explaining Starpoints conversion. United/Continental are a 2:1 transfer partner for SPG points-to-miles exchanges where 20,000 point transfers offer a 25% bonus. United/Continental remain a 1:1 partner for Airline Direct Deposit while Varig changed to 2:1 transfer partner through Airline Direct Deposit.

CONVERSION EXAMPLES

1:1 example

A Preferred (base) member who has an eligible spend of $420 at a participating Starwood hotel will earn 840 Starpoints, which are then automatically converted (at a 1:1 ratio) to 840 airline miles. A Gold or Platinum member will earn 1,260 Starpoints, which then convert to 1,260 airline miles.

2:1 example

A Preferred (base) member who has an eligible spend of $420 at a participating Starwood hotel will earn 840 Starpoints, which are then automatically converted (at a 2:1 ratio) to 420 airline miles. A Gold or Platinum member will earn 1,260 Starpoints, which then convert to 630 airline miles.

10:1 example

A Preferred (base) member who has an eligible spend of $420 at a participating Starwood hotel will earn 840 Starpoints, which are then automatically converted (at a 10:1 ratio) to 84 airline miles. A Gold or Platinum member will earn 1,260 Starpoints, which then convert to 126 airline miles.

https://www.spgpromos.com/moremiles/airlines.cfm?language=en_US&EM=VTY_MoreMiles_enUS

United, Continental, Varig, and Singapore Airlines earn more miles in your account through Starwood Preferred Guest Airline Direct Deposit than Starpoints-to-miles transfers. This is true even considering the 25% bonus miles for 20,000 point transfers to airline miles.

SPG.com/moremiles is the website for airline direct deposit registration of your SPG account.

How Airline Direct Deposit with SPG works

The SPG member earns points for hotel spend at the same 2 base points per USD$1 when using Airline Direct Deposit and SPG elite members earn 3 points per $1.

Points earned are transferred directly to airline miles for the frequent flier partner you select. There are some advantages of airline direct deposit and some disadvantages.

Advantages of Airline Direct Deposit

1. Minimum transfer requirement does not apply for airline direct deposit. When earning points and then transferring points-to-miles, SPG Gold members must transfer a minimum 1,500 Starpoints for airline miles. SPG members without elite status must transfer a minimum of 2,500 points to miles. Platinum members do not have a minimum transfer requirement for points-to-miles transfers, so this is not relevant to top elites.

SPG Airline Direct Deposit will allow the $200 hotel stay to transfer directly from Starpoints into 400 or 600 miles in your frequent flier account depending on your elite level.

2. Update August 4, 2011 – I revisited this topic today and realize this information is not accurate in explaining SPG Airline Direct Deposit. Singapore Airlines changed to 1:1 airline exchange partner with SPG over past year. Continental, United, Singapore, and Varig Airlines have a points-to-miles transfer ratio of 2 points = 1 mile. Transfer 10,000 Starpoints into these programs and you only receive 5,000 frequent flier miles.

Airline Direct Deposit with SPG means a $200 hotel stay will earn Starpoints normally (400 points or 600 points for SPG elite) and those points will be converted to miles based on the 1:1 conversion formula when enrolled in Airline Direct Deposit. $200 hotel stay earns 400 miles (elites=600 miles) with Continental/United Mileage Plus.

Airline Direct Deposit is a way around this restriction to earn 1 mile for every point earned from your hotel stays. You can double, or nearly double, your miles in these frequent flier programs with airline direct deposit.

20,000 Starpoints earned will result in 20,000 miles through airline direct deposit rather than settling for 12,500 Continental OnePass or United Mileage Plus miles with a 20,000 points-to-miles transfer.

3. Air New Zealand  Airpoints can be earned at the rate of 20 Airpoints per hotel stay or 40 Airpoints per hotel stay in Australia and New Zealand with airline direct deposit. This can be much more lucrative than points-to-miles transfers where 65 Starpoints = 1 Airpoint.

A $130 hotel stay will earn 260 Starpoints for a non-elite or 390 Starpoints for an elite member. The points-to-miles transfer at 65:1 will result in a non-elite member needing to spend about $1,300 to reach the minimum transfer requirement of 2,500 starpoints and the member will receive 40 Air New Zealand Airpoints.

Assume you have 10 hotel stays for $1,300. You will earn a minimum of 200 Airpoints with Airline Direct Deposit compared to just 40 Airpoints through points-to-miles transfers (60 Airpoints if SPG elite).

If your hotel stays are in Australia and New Zealand you can earn 400 Airpoints from ten Starwood hotel stays. An SPG Platinum member would need to spend around $6,700 to earn 20,000 Starpoints and a points-to-miles transfer would then result in 384 Air New Zealand Airpoints.

Will you spend $6,700+ for 10 or 20 hotel stays? Airline direct deposit is the way to go for Air New Zealand Airpoints.

4. El Al and Iberia Airlines do not participate in points-to-miles transfers, but you can earn frequent flier credit in these two programs through SPG airline direct deposit.

El Al members earn 12 El Al points per hotel stay.

Iberia members earn 1 Iberia Plus points per USD$5 or 1.5 points per $5 if SPG elite. Iberia is a 10:1 airline partner meaning 1,000 Starpoints converts to 100 airline miles.

Disadvantages of SPG Airline Direct Deposit

1. The versatility to transfer Starpoints into a variety of frequent flier accounts is limited. Personally, as a Platinum member, I can transfer my Starpoints into any of the 28 airline programs participating in points-to-miles transfers. Airline direct deposit means all your Starpoints are transferred into the one airline program you designate.

You can really work the SPG program and change your airline preference between hotel stays or even move back and forth between earning points and airline direct deposit, but that can be a hassle.

2. One of the main disadvantages of airline direct deposit is losing the 25% bonus in miles for 20,000 Starpoint transfers in the points-to-miles transfer program.

Airline Direct Deposit means 20,000 points will convert to 20,000 miles. This is great if you are earning in CO, UA, or SQ. You get an extra 7,500 miles for every 20,000 points earned compared to just 12,500 miles through a points-to-miles transfer.

But if using airline direct deposit for a 1:1 airline transfer partner, then your points are transferred as they are earned and you do not get the advantage of the 25% bonus for transfers of 20,000 Starpoints to miles. 

Loyalty Traveler advice:

Airline Direct Deposit is an advantage over earning Starpoints primarily if you want United, Continental, Singapore, Air New Zealand, Varig, El Al, or Iberia frequent flier credit. You are probably better off sticking with Starpoints if your miles preference is one of the 1:1 airline transfer partners.

Personally, I save all my SPG Starpoints for hotel travel. I don’t rack up Starpoints with credit card spending so my hotel stays are my source of limited points. I get good value on the order of $30 to $50 per 1,000 points by using them selectively for Cash & Points awards and hotels charging extraordinarily high rates during my stays.

People have different needs and Starpoints can be even higher value if used for a premium frequent flier award.

I’ve only transferred Starpoints in 20,000 point blocks once to airline miles, years ago, and the miles put me in reach of a 150,000 British Airways First Class award ticket. Considering the retail cost of the British Airways First Class ticket was $26,000, my Starpoints had an award value around $216 per 1,000 points. That is value difficult to beat with a free hotel stay.

Starwood points may be purchased for $14.00 per 500 points ($28/1,000 points) up to the 20,000 points calendar year limit from November 10 to December 31, 2009. This is a 20% discount on the regular purchase price for Starpoints at $35 per 1,000 points. The sale price is not yet posted on the SPG website. Starwood Lurker made a pre-sale announcement last Friday on FlyerTalk. Tuesday, November 10, the price will be reduced for purchases made through the link shown below.

www.spg.com/starpointpurchase

Some reasons why you might consider purchasing Starpoints are if you need additional points for:

Cash & Points night,

5^th night free award,  

Nights and Flights award  which includes 50,000 airline miles and 5 nights at a Category 3 hotel (60,000 points) or 5 nights at a Category 4 hotel (70,000 points). This is basically a way to get a 5-night Category 3 hotel stay for 20,000 points or Category 4 hotel stay for just 30,000 points in combination with the 40,000 starpoints exchanged into 50,000 airline miles.  

Starpoints exchange 1-to-1 with most SPG airline partners. Members receive a 5,000 points transfer bonus when exchanging a 20,000 mile block of Starpoints to a frequent flyer program.

20,000 Starpoints can be exchanged into 25,000 airline miles with about 20 frequent flyer programs.

Continental, United, and Singapore have a poor exchange rate at 20,000 Starpoints = 12,500 miles.

Buying 25,000 miles for $560 is probably not a good deal for economy class domestic travel, but this is likely a lower cost route to miles than a purchase through most airline programs if you plan to top off a frequent flyer account and redeem miles for a premium award airline ticket or upgrade to business or first class.

SPG members with accounts registered at the same address can transfer Starpoints between accounts to combine points for awards. This is one way around the 20,000 points calendar year limit if you have multiple SPG accounts in one household.

Last week I posted tables for excellent SPG hotel award value. The tables were based on the purchase price of $35 per 1,000 points needed for Cash & Points awards, free night awards, and 5^th night free awards. These awards are even a better bargain at lower room rates than shown in the tables with the 20% discount SPG points purchase option for the member needing more Starpoints to buy a great hotel stay value.

Mark Ashley of Upgrade: Travel Better  posted a strategy yesterday to cash in on the Travelocity new hotel price rate guarantee. I took a closer look at Travelocity today and made a sample rate check for San Francisco next week to see if there are some possible claims.

The new Travelocity Best Rate Guarantee is an addition to the old policy in that a customer who makes a Travelocity “Good Buy” prepaid hotel booking can invoke a BRG claim at any time until the day before check in. A successful claim results in a refund on your prepaid room to match the lower rate found and until December 31, successful claimants will also receive one $50 promo code to apply to a future “Good Buy” hotel room or Flight + Hotel Vacation Package purchased on Travelocity.

The new Travelocity BRG policy for anytime “up until the day before check in” only applies to “Good Buy” bookings which are prepaid rates, but are not necessarily nonrefundable. The fine print for “Good Buy” prepaid rates on hotels I checked is cancellation must occur before 3 days of arrival or a penalty of one night’s room rate is forfeited. Travelocity Good Buy Rates terms.

Travelocity has several restrictions to their new “Good Rates” BRG policy. The main restriction I saw is a limit of 5 BRG claims in any one month. I had more than 5 successful BRG claims in May 2009 with Starwood Hotels.

TRAVELOCITY PRICE and SERVICE GUARANTEE

Rule 17  Limit: Each customer shall be limited to five (5) Price and Service Guarantee claims per customer per calendar month, regardless of the number of accounts used by the customer.  

http://svc.travelocity.com/info/info_popup/0,2766,TRAVELOCITY:EN%7CGUARANTEE_TERMS,00.html

The most important restriction for frequent guests focused on the price of a hotel room is group rates are not covered in Travelocity’s price guarantee. This means a lower rate available from the hotel chain using a AAA or a senior discount is not covered by the Travelocity guarantee. Since AAA is the most common lowest rate I find when searching hotels, this is a big gap in a Best Rate Guarantee policy from any online travel agency. The rate comparison table at the end of this thread shows several examples of lower AAA rates and there were some good senior rates deals in San Francisco.

Travelocity covers non “Good Buy” Hotel Rates with older Best Rate Guarantee policy

Travelocity’s old Best Rate Guarantee policy is still in effect for non-prepaid hotels and is more in line with hotel chains’ BRG terms. Find a lower rate on Travelocity or another US-based website within 24 hours of booking on Travelocity and you will receive a $50 promo code for a future “Good Buy” hotel or Flight + Hotel Vacation Package.

An even better plan may be to stick with a hotel loyalty program.

My searches today revealed several opportunities for cashing in with Travelocity’s $50 offer, but honestly I wouldn’t bother leaving the hotel chain’s own websites for the $50 credit with Travelocity. The points and benefits I earn from most of my hotel stays have a tangible value higher than $50. That is why I am a Loyalty Traveler.

I have invoked around 25 Best Rate Guarantee (BRG) claims this year directly with Hyatt and Starwood and about 2 out of 3 were approved. The denied claims were due to two reasons. The first reason is some online travel agency (OTA) websites do not actually book the room in real-time and these sites are not covered by the hotel chain’s BRG policy. Some agencies require you to submit your reservation and then they email you when the room is booked. These not in-real-time bookings are excluded from the hotel BRG eligibility. At least that is what I have been told by Hyatt over most of my denied claims I find through Kayak with OTAs I have never heard of before.

Travelocity, Orbitz, and Expedia all book in real-time and close the deal with a confirmation of your room purchase and price. GTAHotels.com is one particular smaller online travel agency site I have had great luck finding approved BRG claims this year.

The second and more common reason for a denied BRG claim is a rate change before the claim is processed by the hotel chain. This issue will likely be the same with Travelocity. Screenshots of a lower rate do not count. The good thing about Hyatt Hotels is the ability to call and process a claim directly over the phone. Starwood Hotels takes up to 24 hours and several of my valid BRG claims were not honored due to a rate change within 24 hours of finding a lower rate on an online travel agency site. I submitted a claim, but the rate had gone up in the typically 18 to 23 hours  before receiving a Starwood BRG reply.

Hotel  Chain’s own Best Rate Guarantee policies:

Hyatt Hotels BRG matches lower rate and discounts additional 20% off lower rate. BRG claims are allowed without having an existing room booking. Search Hyatt, search Kayak.com or other online travel agencies for lower rates, and call in any potential discrepancy for a 20% discount on the lower rate.

Starwood Hotels BRG matches lower rate and discounts an additional 10% or matches lower rate and receive 2,000 Starpoints rather than the 10% discount.  I have earned loads of Starpoints invoking the Starwood BRG points offer this year. BRG claims can be made before booking a room.

Hilton Hotels BRG Must book room through Hilton first, then if lower rate found on another site within 24 hours of your booking, Hilton will match lower rate and award you with a $50 American Express gift check.

Marriott Hotels BRG Must book room through a Marriott channel first, then if eligible lower rate found within 24 hours and at least 24 hours before check in, Marriott will discount lower rate 25%.

InterContinental Hotels Group BRG Must book room through IHG channel first, and if lower rate found within 24 hours on a competing site, IHG will discount the lower rate by 10%.

All BRGs aside, here is my rate search comparison for a downtown San Francisco hotel next Friday, November 6, 2009 for a one night stay. Take your chances with a Travelocity BRG claim or just go with the lowest rate. The lowest rate for the hotels I checked was found on the hotel chain’s own site nearly every time.

A hotel rate search strategy I recommend is use Travelocity’s “Good Buy” Flexible calendar rates to see 90 days of a specific hotel’s rates. This is a better search than most hotel chains’ websites. If a GoodBuy rate is low on Travelocity, then the rate will either be low on the hotel chain’s site or you have a good rate candidate for invoking the hotel chain’s Best Rate Guarantee option.

Starwood Preferred Guest Cash & Points awards are the best way to get excellent value out of your SPG points. Cash & Points Award Nights, when offered, provide a 60% discount in the points required for a free room night in exchange for a specific cash co-pay that is set according to the SPG hotel redemption category.

Free nights using points-only is covered by the SPG “No Blackouts” policy, but the Cash & Points option is not. Cash & Points may have blackout dates, and in fact, are frequently not offered on the SPG website when points-only rooms are available. [Tip from Gary Leff is to call the hotel anyway and check for Cash & Points even when they are not appearing on the website. He reports this frequently works for Cash & Points awards.] When you have the Cash & Points award option it is a great way to conserve points on a hotel stay.

Here are some important points regarding Cash & Points award stays:

1. Cash & Points Awards are not applicable to the 5^th Night Free Awards. A 5-night stay requires 5 nights of Cash & Points payment. A “Points-Only” 5^th night free award requires only 4 nights of points-only payment.

2. Cash & Points award stays do not earn Starpoints on the paid cash portion. You are eligible for Starpoints on other eligible hotel charges like dining. A Cash & Points stay may not even show up on your account. Check with the hotel or SPG if no points post on additional charges from your Cash & Points hotel stay.

3. Cash & Points award stays are not eligible for elite qualifying credit. This also applies to points-only award stays.

4. Cash & Points award stays may not be upgraded in advance with supplemental points. Points-only award stays may be upgraded in advance based on availability using additional points. As an SPG Platinum member I have frequently received very nice upgrades on Cash & Points awards.

5. International hotels priced in non-US Dollars will be converted to local currency for payment. (Loyalty Traveler note – some exchange rates are wacky. I have ended up paying 20% less than the US dollar amount and I have paid 20% more than the US dollar amount for Cash & Points stays outside the US.)

SPG Cash & Points Award Table with Loyalty Traveler Excellent Quality Scale

Yesterday’s Loyalty Traveler post displayed a qualitative table based on a scale where an excellent redemption value for your points results in a cash savings greater than $35 per 1,000 points spent. The table points out the difficulty in getting a high redemption value in the range of $35 per 1,000 Starpoints when redeeming points for SPG high category hotels.

An SPG Category 6 hotel needs to be over $700 per night when spending 20,000 points for a free night in order to realize a cash savings of $35 per 1,000 points redeemed. Most Category 6 hotels are not priced that high in the present hotel travel economic environment.

 The value of Cash & Points becomes apparent when running the numbers for these awards at a Category 6 hotel.

For example, St. Regis Monarch Beach at Dana Point, California is a SPG Category 6 property. A check of rates for next week shows Cash & Points availability for the dates Tuesday, November 3 to Friday, November 6 for a 3-night stay.

Here are the options: (I am ignoring the $25 per day resort fee in these calculations. The resort fee is additional to numbers shown for the three options. Tax is a confusing issue. Sometimes I have been charged hotel tax on the Cash portion of the Cash & Points award and other times I have not paid the tax. In the past two years the hotel tax has usually been applied to the cash portion for my US hotel Cash & Points award stays.)

St. Regis Monarch Beach Payment Options

Cash & Points: $150 + 8,000 points per night = $450 + 24,000 points

Points-Only: 20,000 points per night = 60,000 points

Cash-Only: $470 per night (includes 10% tax) = $1,410

The SPG redemption options are either spend 60,000 points to save $1,410 or spend 24,000 points to save $915.

$1,410 cash-only rate – $495 cash portion  of Cash & Points rate = $915 equivalent value of points.

(I added 10% hotel tax to the cash portion of $450 for 3 nights = $45 tax for the award stay).

Spending 60,000 points for 3 hotel award nights gives a redemption value of $1,410 ÷ 60,000 = $23.50 per 1,000 Starpoints. 

I rate this as a “Fair” redemption value in my Redemption Quality table shown above for SPG Category 6 hotels.

Spending 24,000 points to save $915 gives a redemption value of $915 ÷ 24,000 = $38.12 per 1,000 Starpoints and now the redemption value rates as “Excellent” in the Loyalty Traveler Category 6 redemption quality scale.

At this rate of redemption value the remaining 36,000 points saved by using Cash & Points rather than 60,000 points for Points-only free nights at the St. Regis Monarch Beach next week has a value of $1,372 for future cash savings on hotel stays.  (36,000 points x $38.12/1,000 points = $1,372)

The economics of Cash & Points provides high value opportunity for Starwood Preferred Guests.

Here are SPG Cash & Points Redemption Quality tables to correspond with the Points-Only tables from yesterday’s Loyalty Traveler post.

SPG Cash & Points Redemption Quality Guide

Loyalty Traveler's SPG Cash & Points Redemption Quality Guide

I’m working to come up with qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

Translating Quantitative Points Value into Qualitative Value

Example using a Hilton Hotel in Paris, France.

A single night at the HHonors Category 6 Hilton Arc de Triomphe for dates I checked came to $495 per night. The choice is $495 or 40,000 points. The quantitative redemption value works out to be $495 ÷ 40,000 points x 1,000 (or simply $495/40) = $12.38 per 1,000 HHonors points redemption value.

This is an “excellent” redemption value in my opinion.

So here is the basis for creating a qualitative judgment based on quantitative values. I think most of us will agree that getting $12 per 1,000 HHonors points is an “excellent” value.

As value drops below $12 per 1,000 points spent we must reach a point where the value is no longer “excellent”, and simply a “good” value.

At an even lower quantitative redemption value, say $5 per 1,000 points the qualitative value at some point drops to another lower level of just an “average” value for hotel points spent.

And at some point the money saved by spending points must become a “poor” value, i.e. the cash saved is not worth the cost in points for a free night, and the choice to spend cash rather than points becomes the better value for most hotel loyalty program members.

I’m working to come up with these qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

In yesterday’s Hilton HHonors post I set $7.00 saved per 1,000 points spent as my marker for when the redemption value using points is “excellent”. I set less than $3.00 per 1,000 points as a “poor” redemption value. This is a work in progress that I am trying to refine.

The Value of HHonors Points Exchanged for a Free Room Night

(based on a set-point of trying to get $7 in cash savings for every 1,000 HHonors points spent on free night rewards.)

Hilton HHonors Qualitative Value by Hotel Category for Excellent and Poor Points Redemption Value

Now I know there are category 6 hotels that will cost over $280 per night (Hilton Arc de Triomphe) and these hotels provide an excellent value for HHonors points based on this scale of $7 per 1,000 points being rated “excellent” redemption value. Even if the Hilton Arc de Triomphe goes to category 7 in 2010, the redemption value will still be “excellent” when spending 50,000 points to save $495, the room rate for the July 2010 dates I checked. $495 ÷ 50,000 points = $9.90 per 1,000 points.

This table advises me that I am getting excellent value for my HHonors points if I spend 25,000 points and get a Category 3 hotel room that would have cost over $175 per night. Are there Category 3 hotels that cost over $175 per night more than just a few days per year? I have not looked into that.

Certainly there should be Category 1 hotels in 2010 where the nightly rate will be over $52.50 and using points will provide an “excellent” redemption value.

Here are some real examples of redemption value using San Francisco hotels for Tuesday October 27, 2009.

Hilton San Francisco Union Square (HHonors Category 6 = 40,000 points)

Pay $160.65 ($185.68 after tax) or spend 40,000 points for King Bed Deluxe Room

$186 ÷ 40,000 points (x 1000) = $4.65 per 1,000 points (“average” value)

Hilton Union Square, San Francisco (white tower has great city views)

The factor that complicates the calculation is determining the points a member does not earn when using points for a free reward stay. Here is an example:

Hilton San Francisco Fisherman’s Wharf (HHonors Category 6 = 40,000 points)

Pay $179 ($206.75 after tax) for a King Bed Deluxe on a special rate offering 2,500 bonus points.

A HHonors basic member can earn 15 points per $1 when choosing Points & Points earning preference.

This means the HHonors member is not earning 2,685 HHonors points when redeeming points for a free night rather than paying for the hotel stay. ($179x 15 points/$1 = 2,685.)

This particular Hilton property also has a rate offer for 2,500 bonus points per stay. The bonus points rate is no additional cost compared to the lowest best available rate for the hotel at $179.

By using points for a free night reward the HHonors member actually is not trading 40,000 points for $207 in savings since the member would earn 5,185 points by paying for this hotel night. If the HHonors member earning Points & Points spends $207 rather than 40,000 points, then the member’s account balance will be 45,185 points higher after the stay. (I’m ignoring elite bonuses and other promotional bonuses which will drive the redemption value even lower.)

The simple calculation is 40,000 points saves $207. Redemption value = $5.18 per 1,000 points. This is a “good” redemption value.

But, the real calculation should be $207 ÷ 45,185 points = $4.58 per 1,000 points. The redemption value is now below $5/1,000 points and I rate this as just “average” value.

And depending on what bonus points promotions you are eligible for and what elite or HHonors credit card spending bonuses you may be entitled to the redemption value for HHonors points drops even more.

Hilton Fisherman's Wharf, San Francisco

Hampton Inn San Francisco/Daly City (HHonors Category 3 = 25,000 points)  Oct 27, 2009

Pay $139 King Bed ($152.90 after tax) or 25,000 points?

$153 ÷ 25,000 points = $6.12 per 1,000 points. This is a “good” redemption value.

A more precise calculation will count the points I do not earn when using a reward stay.

$139 x 15 points per $1 = 2,085 points

My new calculation is $153 ÷ 27,085 points = $5.65 saved per 1,000 points and this still ranks as a “good” redemption value.

Caveat: Although the Hampton Inn Daly City is quantitatively a “good” value, the added benefit of being in downtown San Francisco at the Hilton Union Square or Hilton Fisherman’s Wharf is value that one must consider when making a hotel points redemption. You may get better value quantitatively with the Hampton Inn Daly City, but the quality of a hotel stay in downtown San Francisco is a factor one must consider when choosing where to spend points.

Here is the link to the Qualitative tables by HHonors Hotel Category from yesterday’s Part 1 post.

Here is the link to Part 2 with rationale for why I created these qualitative tables.

I plan to develop qualitative tables for Starwood Preferred Guest next. And the SPG post will not include the detailed explanation of why and how I am creating these tables.

What is a good value when spending hotel points?

This is the basic question I am asking. This is a qualitative and subjective question. Yesterday, I just threw out some charts of qualitative value without much discussion of why I created the tables.

I’m working to come up with qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

Say I spend 40,000 hotel points instead of the $200 room rate (after tax) being asked by the hotel.  

Did I get “good” value for my points?

Quantitatively I can say I received $5.00 per 1,000 points I spent.

$200 ÷ 40,000 points x 1,000 = $5.00 per 1,000 points.

This is a simple quantitative value I can calculate based on the money I saved by using points. But my main question is qualitative.

Is spending 1,000 HHonors points to save $5 a “good” value for a Hilton HHonors member?  

When I spend 30,000 points rather than spending $100 for a hotel room I can calculate the quantitative value of my points spending as $100 ÷ 30,000 points x 1,000 = $3.33 per 1,000 points.

Is spending 1,000 hotel points to save $3.33 a “good” value? I know I can get much higher value when spending my points if I am selective about when and where I spend points.

In real travel I am often faced with choices. When I search Miami and see 12 hotel choices how do I determine which hotel is a good deal for my points?

I can stay at one Hilton hotel, rated HHonors Category 6, that will cost $300 per night or I can spend 40,000 points and leave the hotel with no credit card charge for the room night. (Tax is usually included in a hotel room night reward using points although some hotels have additional resort fees or city tax not covered in the hotel points reward.)

Another Miami area Hilton brand hotel is only a Category 3 hotel at 25,000 points or a room rate of $140.  Which hotel – the category 6 at 40,000 points saving $300 or the Category 3 at 25,000 points saving $140 is the better redemption value? Quantitatively it is easy to see that the Category 6 hotel provides better value on a simple numerical basis (Redemption value = $7.50 per 1,000 points), but how much worse is the value for the Category 3 hotel (Redemption value = $5.60 per 1,000 points).

Saving $7.50 per 1,000 HHonors points I spend is a better value, but is getting only $5.60 per 1,000 points a much lower value for my points? Should I be concerned if I only save $5.60 per 1,000 HHonors points? Am I wasting the value of my points?

I am only considering the numbers here and not specific hotel attributes like location on the beach, hotel facilities, and TripAdvisor reviews which may all be important factors in your final decision on where and when to spend points.

The primary qualitative question most of us want answered when trying to get hotel value out of our points spending still remains after determining the quantitative redemption value for hotel points.

Is redeeming 1,000 HHonors points for a $5 hotel cash savings a “good” value?, an “average” value?, or a “poor” value?

Loyalty Traveler Guide to HHonors Hotel Value

My Loyalty Traveler question is whether I can create a guide for hotel loyalty program members to reference and quickly decide what is a good value for any hotel program?

Yesterday, I started on this path of qualitative analysis with HHonors.

I have redeemed around two million HHonors points for free room nights over the past 10 years. Intuitively when I started to create tables I thought getting $10 per 1,000 HHonors points would be the benchmark for getting “excellent” value from points spending for free hotel nights. This means if I spend 25,000 HHonors points I want to realize a $250 cash savings with my hotel points redemption reward.

Once I placed these values into tables I had to reconsider my initial qualitative analysis. When looking for $10 per 1,000 points redemption value as the standard for determining an “excellent” use of points instead of cash, I am saying that I don’t rate a hotel redemption as “excellent” in a Category 6 property unless I am saving $400 by using 40,000 points for a free night.

Finding a Category 3 hotel requiring 25,000 points for a free night or charging $250 per night may be tough in the real world. I doubt Hilton has many hotels in the Category 3 level charging $250 for a free night.

In my economic reality I will be happy if I can save $300 by spending 40,000 points. Sure there may be better redemption values possible, but when faced with the choice of spending $300 or 40,000 points I almost certainly would go with spending points.

Higher category hotels can have outrageously high-priced room rates. Finding a Category 6 hotel requiring 40,000 points for a free night or charging $400 per night might be much easier to find than a $250 Category 3 hotel to realize  “excellent” value for my points.

Finding  a $200 per night Category 2 hotel costing 20,000 points per night is probably not that common a redemption value. I adjusted my initial tables based on seeking $10 redemption value per every 1,000 HHonors points to a lower $7.00 per 1,000 points to better match the real world rates of most Hilton Hotels across the 7 hotel redemption categories and Waldorf-Astoria Collection.

Qualitative table for HHonors Points Redemption Value

A common question is “How much are hotel points worth?”

A frequent guest wants a variety of strategies for reducing the cost of a hotel stay. Your choices are dictated primarily by the investment of time you are willing to make to find the best deal. Traveling with a big picture view of your frequent hotel stay plan allows you to consider a variety of strategies to find lower hotel rates. Earning hotel loyalty points is the major strategy I discuss on this blog.

A knowledge base of the different ways to earn hotel points combined with knowing your options for hotel points redemption is the basis for understanding and applying Hotel Points Exchange Rate Theory.

Hotel Points Exchange Rate Theory

Principle #1

Hotel Points have real value only when redeemed, or exchanged for an item in lieu of cash.

Principle # 2

Hotel points sitting in an account only have potential value.

Principle #3

The potential value of your hotel points is not a constant value.

Hotel loyalty programs change throughout the membership year due to factors such as hotel category classification changes, hotel redemption changes or promotions, and special offers using hotel points. The fluctuation of hotel rates based on season, events, location, and special offers creates a dynamic potential value for hotel points that rises and falls as room rates, redemption exchange rates and hotel loyalty program conditions change.

Principle # 3 is the focus of my hotel loyalty program work.

The potential value of hotel points is not a constant value. The potential value of hotel points is dependent on the exchange rate when you decide to use them. Hotel room rates, loyalty program promotions, and your account balance determine the potential value of your points.

My work involves keeping track of current exchange rates and sharing my analysis of the more favorable exchanges of your cash for hotel points and your hotel points for free nights.

Applying the Theory in Consumer Hotel Travel

What is an objective cash value for 20,000 Starwood Preferred Guest points?

The cost to buy 20,000 Starpoints is $700 or $35 per 1,000 points.

There is a 20,000 point purchase limit per calendar year.

20,000 points can be assigned a $700 value based on simple purchase price of points through SPG at a rate of $35 per 1,000 points. This is the elementary answer to the objective value of points.

What is the potential (subjective) value of 20,000 Starpoints?

The potential value of hotel points is a range of values depending on money saved at time of redemption.

20,000 hotel points will have no value if they are never redeemed and expire from member’s account. (This recently happened to me with Hilton HHonors inactivity. HHonors rules state a member’s account may be closed after 12 months of no activity. My account had been idle over two years.)

20,000 Starpoints may have a value of $1,000 or more if redeemed for hotel free nights with that purchase price using cash.

Real Hotel Example:

Let’s say I find myself in New York City desiring a room. W New York – The Court is a Category 6 hotel with a $479 room rate on October 21, 2009. One free night at an SPG Category 6 hotel requires 20,000 points.

After tax the W New York-The Court is a $553.15 room if I pay cash at the current room rate or

I can pay 20,000 Starpoints to check in and check-out with no charges to my credit card (assuming I have 20,000 points in my account).

While I stated in the beginning Starpoints have a value of $700 based on the SPG purchase price, the actual value upon redemption of 20,000 points in this example is only $553.15 for one night at the W New York – The Court.

$553/20,000 points.

Hotel Redemption Value = $27.65 per 1,000 points.

The individual member must decide if that is an acceptable exchange value for points. If you have to be in New York and the choice is spend $550 or 20,000 points, many of us would prefer to spend points.

[In Loyalty Traveler calculations I prefer to value points at the dollar amount per 1,000 points rather than dealing with cents and decimals. The results are less likely to have a math mistake and I think most of us can relate to a $10 value difference better than a 1 cent difference. Also, most loyalty programs price awards in 1,000s of points. Points purchases are generally required in increments of 1,000 points.]

Personally, I value my points too much for spending so many points for a single night at a Category 6 hotel. The occasion and circumstances need to be really special for me to blow 20,000+ points on a hotel night since I know there will be plenty of hotel night redemption opportunities that will offer better value for my points.

I earn very few points from credit card spending so I try and get the most value from the 30,000 to 40,000 points I earn each year from my hotel stays.

SPG Cash & Points Award Nights

InsideFlyer had a poll recently where 80% responded never having used a Cash & Points award. I find these awards to be the best value of my SPG points. when staying at hotels rated Category 3 and higher.

October 19 update: I see SPG has just changed the Cash & Points table adding Category 1 and 2 hotels in the US and Canada. Last week and for the past couple years SPG C&P awards were only allowed for Category 1 and 2 hotels in Asia Pacific.

So now there will be significantly more opportunities for SPG members to receive great value from C&P awards at Category 1 and 2 hotels in the US, Canada, and Asia-Pacific region.

http://www.starwoodhotels.com/preferredguest/account/starpoints/redeem/cash_points.html

The Westin Diplomat Resort & Spa in Hollywood, Florida has a room rate of $301.50 per night for a 4-night stay October 19-23. After tax the rate is $1,338.66 for a 4-night stay.

This hotel is a Category 5 hotel and available for the 4-night stay using 48,000 points. Using only points the member could also get a 5^th night free award for the same 48,000 points, but that doesn’t help when you only have four nights before your flight out of town.

Free Hotel Stay Using Points:

$1,339 cash saved/48,000 points spent.

Points redemption value is $27.90 per 1,000 points.

Cash & Points option for this category 5 hotel at $90 per night + 4,800 points is an even better value.

Paying $360 ($400 after tax) + 19,200 points increases the redemption value of the points. The cash cost is only 30% of the fully paid room rate ($400/$1,339) and conserves 28,800 points for future award nights.

Actual redemption value of points for this Cash & Points award stay:

$1,339 (fully paid room rate) – $400 (Cash portion of Cash & Points) = $939 saved with Cash & Points nights.

19,200 points saves $939 in cash.

$939/19,200 points = .0489 or $48.90 per 1,000 points redeemed.

Points Redemption Value = $48.90 per 1,000 points.

Cash & Points award redemption for the 4-night Westin Diplomat hotel stay increased the value of my points from $27.88 per 1,000 points using only points to $48.90 per 1,000 points.

The Cash & Points redemption value in this example is even higher than the cost to buy 19,200 points for the hotel stay for a member who does not already have sufficient points for this option. SPG members can purchase 20,000 points in a calendar year at $35 per 1,000 points.

A member with no points in account can buy 20,000 points ($700) and redeem for a Cash & Points award costing just an additional $400. $1,100 all-in compared to $1,339 for the cash rate.

Keep in mind that free nights using points or Cash & Points award nights do not earn points, night or stay credit for promotions, or elite stay credit. These are factors that influence the redemption value of points to the extent that a paid stay would have more future stay benefits than an award stay.

For example, the Westin Diplomat room only rate (no points are earned for tax portion of hotel stay) of $1,206 would earn 2,412 or 3,618 (SPG elite member) base points. And there is nearly always a promotion worth an additional 1,000 bonus points per hotel stay.

The real comparison needs to be $939 cash savings using Cash & Points nights to 19,200 points used for C&P + 3,400 – 4,600 points not earned from a paid stay.

$939/23,800 points = $39.45 per 1,000 points which is still a good redemption value with an exchange rate higher than the cost to buy points directly from SPG ($35 per 1,000 points).

Bottom line: Cash & Points awards will often provide the highest value for your SPG points redemptions.

Hotel News Now published a story on “10 hotel booking trends” from a presentation at the inaugural Hotel Data Conference by Brian Ferguson, Expedia VP of Lodging Demand and Analysis. Hotel News Now is the newsletter publication of Smith Travel Research, a leader in hotel rate data and research for the hotel industry.

The consumer trend of the past year has been a swing in hotel bookings made through online third-party hotel reservation sites like Expedia, Travelocity, and Orbitz. The viewpoint of Expedia, expressed by Ferguson, is the increased volume in bookings does not directly increase profits for third party online travel agencies due to the lower revenue generated as a portion of lower room rates across all hotel market segments.

What I want to share is the “10 Booking Trends” discussed by Expedia’s Lodging Demand and Analysis VP. I am just a hotel consumer who tries to figure out how to get great value from hotel rates. Reading what the industry experts have to say helps me focus my Loyalty Traveler work on a targeted audience who will benefit from my reporting on hotel rate trends as a frequent guest.

1.       Expedia VP Ferguson: Exchange rates are shifting travel patterns.

Hotel rates in UK have dropped primarily due to the better exchange rate for Americans. Combine the exchange rate with promotions and the UK is a bargain.

Loyalty Traveler: I totally agree, but the window appears to be closing on the exchange rate issue. Winter 2009 offered some of the best deals in years for UK and Europe due to the combination of a much better exchange rate for the US Dollar and hotel loyalty program promotions. The dollar has been losing ground as the stock market goes up. Anyone thinking Wall Street inflation?

2 nights for the price of 1 has been an ongoing deal for the past couple of years to entice travelers to the major chain hotels in Europe and Asia.

2.       Expedia VP Ferguson: Consumers are looking for a deal. Bookings made with promotions are increasing as a share of total hotel reservations.

Loyalty Traveler: I’ll take some credit for this one. I take the time to analyze hotel promotions for readers. Loyalty Traveler rarely books a room without a promotion offer. “Hotel value for the frequent guest” is the Loyalty Traveler motto. 10,000+ unique visitors a month are reading Loyalty Traveler to learn more about hotel loyalty program promotions.

3.       Expedia VP Ferguson: Promotions matter more than ever.

Loyalty Traveler: I get a chuckle out of all the news articles showing how to get better value from your spending in all segments of consumer purchases from groceries to hair cuts to travel.

I had an oil change yesterday for 25% off. The coupon took two minutes to locate on the internet. All the other people at Jiffy Lube paid full price.

Friends have commented I am a cheap ass when I pull out a 2-for-1 dining coupon. I rarely eat out for more than half-price.

I frequently stay in hotels for less than half-price. Promotions matter if you want more money for life’s other necessities and pleasures.

4.       Expedia VP Ferguson: Promotions are getting more creative. It used to be about cutting rates and now hotels add free nights and value-added incentives.

Loyalty Traveler: Promotions are more creative and take more time to analyze for this Loyalty Traveler. I’m looking for the deal whether it is a bargain rate now (free parking, free breakfast) or will result in a bargain hotel rate in the future (free hotel night).

5.       Expedia VP Ferguson: Customers who book online are trading up. Four and five star hotels are getting more affordable.

Loyalty Traveler: I have stayed in some of San Francisco’s finest hotels this year and only once paid over $125. And I received a $500 per night suite for that stay. 2009 is a leisure traveler’s hotel dream.

6.       Expedia VP Ferguson: There are massive swings in online market share.

Loyalty Traveler: No real comment to make here. I haven’t tried the phone call reservation this year. I’ve read articles on Hotel Chatter and Budget Travel about people getting a much better deal through the phone. I’ve been an online customer for 10 years and my experience has rarely been to find a better deal over the phone. I do recall my mother getting good phone rates when my mom and the hotel reservationist could not locate the online promotion I was telling her to book.

7.       Expedia VP Ferguson: Booking compression. People are waiting closer to stay date to book.

Loyalty Traveler: I reported in several posts that my rate analysis of San Francisco hotels revealed the lowest rates typically are found between 7 and 14 days before the stay date. Smart shoppers wait (or at least go with a rate allowing cancellation in case a better rate appears).

8.       Expedia VP Ferguson: Leisure rates went down first and are going down more.

Loyalty Traveler: My hotel rate focus is geared for the leisure traveler. I don’t stay in San Francisco on paid rates when a convention is in town and the hotels go up to $300+ per night. The same hotel room is around $100 per night, a 50% decrease from average leisure rates a year ago, during weeks when business travel is light. And getting an upgrade is much easier when there are not corporate executives buying up the suites.

9.       Expedia VP Ferguson: Increased use of rate fences in packages.

Loyalty Traveler: I am not a marketing person and I need to study this concept since I have been seeing it more frequently lately. Basically it seems the concept is to hide the room rate in a package of bundled services such as airfare, rental car, or hotel amenities like champagne and spa treatments.

I generally find these to be a poor value for a hotel when the components are broken down. Packages are convenient and there are some great deals if you need the car or the airfare. I think this is generally a better strategy for reducing high-cost airfare rather than getting a better value on a hotel room.

10.   Expedia VP Ferguson: Opaque channels are growing faster than non-opaque channels.

Loyalty Traveler: Opaque channels are hotel reservation sites like Priceline and Hotwire where you get a really low rate for an unspecified hotel. Opaque channels are the way to go when hotels are priced at high nightly rates. I opt for Priceline when the alternative is a $200+ night room.

My basic loyalty traveler argument is over the course of the year when traveling and staying 20 to 50 nights in hotels, the hotel loyalty program strategy can be used as effectively as Priceline to pay for rooms when they are relatively low priced and redeem points for high priced rooms.

I have saved a couple thousand dollars in past years using Priceline for trips when the chain hotels were high priced.

2009 has seen incredible promotions from hotel loyalty programs. My Starwood Hotels stays in May averaged less than $60 per room night at upscale hotels, frequently in suites, while allowing me to book $500 per night rooms with the free nights I earned.

Try doing that with Priceline.

St. Regis San Francisco "Priceline may be cheap, but this room was free"