A tremendous Hilton HHonors devaluation

Posted by Seth on July 23, 2010 under News, points | 3 Comments to Read

Assigning a value to points in a loyalty program is always a relative calculation. Each individual will have different uses for their points and the associated value that comes with that usage will necessarily vary. Still, when I read the following email I received from Hilton I was not really expecting the devaluation of the points that they had executed:

Dear Wandering Aramean,

Hilton HHonors supports the National Coalition for the Homeless as they engage in public education, policy advocacy, and grassroots organizing focusing on the following four areas: housing justice, economic justice, health care justice, and civil rights.

If you would like to support the effort, we have arranged for HHonors members to be able to donate points to support this cause.

For every 10,000 points you donate, we’ll send US$25 to the National Coalition for the Homeless. If you would like to join us in supporting this organization in their determination to battle homelessness by donating points, please visit us here.

So what’s the problem? Well 10,000 points are worth more than $25. A lot more. A conservative valuation puts the value at much closer to $50. Buying the points directly from Hilton – a terrible idea in almost every scenario – would cost $100.

So Hilton gets some quality PR from the move, appearing sympathetic to the cause. They also get to take a tax deduction on the value of the donation they make to the charity. And they get to wipe out the value of the points on their books, reducing their financial liabilities. They look good and profit while selling the scheme as charitable.

Last time they tried this scheme – as a response to the Haiti Earthquake – they received so much bad press that they ultimately agreed to match the value of the donations made by their members. This one hasn’t been out long enough to see if such a response is coming but here’s hoping they step up and put a reasonable value back on their points.

I’m happy that the company is publicizing an organization that certainly needs support. But the way they are going about it is not above board. HHonors members who want to support the cause should donate cash directly to the organization – and get the tax deduction directly – and redeem points for your next stay that would have been cash-based. The charity will get more money out of the deal and you’ll still use your points.