The past few weeks have seen two hotel loyalty programs shake up their award charts in a big way. For members of the Marriott Rewards and Hilton HHonors programs, the points tucked away for some future plans were suddenly a much different asset, and mostly not in a good way (though I maintain there are still some gems in the HHonors reboot). And, while I can sympathize with people who have been squirrelling away points, saving up for "the big one" at some point in the future who have now seen their plans change significantly, I’m also rather bemused by their plight. Call it schadenfreude, if you will. It isn’t because I take joy in the setbacks they’re experiencing; it is because I think more and more people are finally discovering the truth: The value proposition of hotel loyalty programs is crap for many travelers.
I used to be a traveling consultant, on the road for work 2-4 nights per week for 35+ weeks a year. That’s how I first got in to the point and miles game. And I accrued a lot of points and miles. I also had top-tier hotel status as a function of all those nights on the road with an expense account. I got upgrades on occasion and the other elite benefits the programs offered. Then I quit my job to travel more. I had hotel loyalty back then, or so I thought. After my first few trips I realized that I was losing that game. BADLY. Once I had to pay for the rooms myself rather than getting reimbursed the math changed dramatically. Skipping out on hotel loyalty was a phenomenal way to save money, it turns out. At least for me.
There are two main types of benefits I see that come from hotel loyalty: on-property benefits and point redemption. It turns out that I cannot really find value in either. Here’s how I came to that conclusion based on my travel patterns.
"Free" upgrades to a suite, "free" breakfast and "free" internet are the main areas where loyalty programs provide benefits on-property. For some there are also lounges with snacks/drinks in the evening. And, with very few exceptions, it turns out that none of these are actually worth much to me. Finding a hotel which offers free breakfast and internet to all guests rather than to only elites isn’t very hard to do, it turns out. As an added bonus, these hotels are often available at a lower price than the properties where the benefit has "value." On the off chance that the breakfast is not free, I’ve yet to find myself in a scenario where the on-premises breakfast was a better choice than walking around in the neighborhood for a few minutes and finding a local shop. Whether it is dumplings in Beijing, sushi in Tokyo, noodles in Bangkok or pastries across most of Europe, getting breakfast out rarely breaks the bank and it provides a much better sense of place than being holed up in the hotel.
Suite upgrades are another area where I just don’t get the value. Maybe it is because I live in a small apartment when I’m home so I’m used to it, but the idea of a huge suite for my sleeping needs is one that I struggle with. Don’t get me wrong – I don’t turn them down – but the value of a suite upgrade to me is roughly nil. Especially when I’m traveling solo. I spend so little time in the room; I actually somewhat prefer one I cannot get lost in.
And the snacks/drinks in the executive lounge as a replacement for dinner is something I just do not understand. I have read far too many trip reports of people taking their meals in the lounge, "because it is free." I’ve cringed when traveling with a group and hearing that some were doing the same and suggesting that their partner join them rather than going out for the local fare (we actually invited the plus one out in that instance). Even in Europe or Asia where the lounge spreads are generally rather more impressive they still are not necessarily local food nor are they free, just included in the rate. For this category I almost see the value as negative. Failure to get out and actually experience the local dining scene should count against travelers; I know it does on my scorecard.
Somewhat surprisingly, it turns out that with all my travels the number of nights I’d even consider redeeming points for a stay are pretty low. I don’t actually go places where the redemptions are such great value. My travels this past year probably had me in towns without a western-branded hotel more than 30-40% of the time anyways. So even if I wanted to redeem points for a hotel that wouldn’t have been an option. Even where there are such hotels available the cost to acquire the points is, generally, more than I’m willing to pay. The Hyatt in Kiev, Ukraine, for example, is a lovely property. But we needed four nights in town and it was cost-prohibitive to stay there as a revenue booking. Even on points it was rather costly, far more expensive than taking a room at another hotel not far away. Sure, a credit card may have helped offset the points accrual costs but that’s not a long-term strategy for realizing 75+ nights in hotels annually.
Cash is king
At the end of the day I’ve found that realizing ~15% back on my bookings – 10% as credit towards any future hotel stay and 5% in cash – is a better value for me. I’m able to book in at less expensive properties to begin with, hotels that I’d rather be staying at thanks to the local flavor. They offer the free breakfast and internet that I want and, with very few exceptions, are perfectly suited to my sleeping needs. And when I add up the amount I save per night, multiplied across the 75+ nights and combined with another 15% off, well, I just don’t know why I’d care about points or status.
I realize that rate of return by using hotels.com and their Welcome Rewards program. That covers the 10% back (after every 10 nights). It is a direct credit and there are minimal hoops to jump through. Of the booking engine-based schemes it is the best I’ve come across so far. For the extra 5% cash back I use a cash-back booking portal. I happen to be partial to my own travel rebates site, but there are others available, including TopCashBack, ebates and more. Check the rates on those sites; they can vary and different sites may offer better or worse deals on any given day.
If you really are committed to getting the hotel points – something that a hotels.com booking will preclude – these cash-back booking portals can still work for you. I know that Marriott, SPG, IHG and Accor participate in many of them (I have Accor on mine). Just make sure that your brand loyalty isn’t costing you more money in the long term.
Like most people who saw the news late yesterday that the Hilton HHonors award chart was changing I was quick to note how bad the changes appear to be. And, to be fair, they are bad in many, many places. But I also like to make sure I’m getting (and sharing) the full picture, so I decided to delve a bit deeper into the data. Hilton has built a website for figuring out the points required at any given property under the new scheme. And, fortunately, it is reasonably easy to script that site. So I did. I picked, somewhat at random, Alaska, Missouri, Illinois, Idaho, Texas, Florida, Georgia, New York and Virgina as US states to query. I also chose Canada, Mexico, France, Japan, Thailand and Slovakia as countries to research. The site limits to returning only the first 100 properties in any query so I know it isn’t a complete set of data but I ended up with 862 valid data points to analyze, roughly 20% of the HHonors properties. I then listed them out with the month-by-month rates in the new program compared to the fixed rate in the old program, looking to see how many were higher, lower or the same. I ended up with just over 10,000 data points – rate at a hotel in a given month – to review. Yes, there is a lot of red (higher rates) on the chart. But I was also surprised at how much green (lower rates) I saw. Of the rates I compared more that 4,500 are now higher under the new scheme. That is roughly 45% or 9% more than what Marriott increased in their recent changes. But there are also just over 3,000 instances (about 30%) where the rates are lower than before. That’s much better than what Marriott did. As a means to try to calculate something resembling a weighted average I also totaled up the cost to redeem one night in each month of the year under the old and new rules for every hotel in the set. There are 60 properties where that total weighted change is a drop of 100,000 points or more. If we presume that my sample is reasonably random then that extrapolates out to about 7% of the total properties. Not a huge number but it does represent significant drops in the redemption rates at those hotels. There are properties dropping 2 or 3 levels in the award chart in some cases. The biggest drop was 300,000 points across 12 redemptions. Not to be too satisfied with seeing the number of hotels which dropped in price, I also checked for the number which increased by 100,000 or more points using the same metrics. There were 103 of them in my set; using the same extrapolation as above that is about 12%. The biggest increase was 430,000 points across the 12 redemptions at the Hilton Garden Inn Times Square and Hampton Inn Manhattan-Times Square North. The increases absolutely outweigh the decreases. There is no doubt about that. But there are some areas where it isn’t actually horrible, maybe even slightly better. The big picture might not be quite as bad as initial impressions suggested. I still think that they’ve made it excessively complex and that the overall value of the program is not one where I think there is a reasonable RoI for my travel patterns, but it isn’t all completely awful. If you want to review the data I based the above on it can be found here.
The 60 best changes:
The 40 worst changes:
For anyone with a stash of Hilton HHonors points tucked away the news out today is likely to drive you just a wee bit crazy. And not in a good way. Hilton announced the changes for their 2013 program rules and the details are not good news at all. The new rules go into effect on March 28, 2013. On the plus side, elites will get a 5th night free with any 4 night award reservation. On the down side, however, there are now 10 different tiers for hotels and within the top 7 of those tiers variable pricing based on which month of the year you are booking the hotel. It is, quite frankly, a mess.
The 5th night free thing matches other major brands and I suppose that’s nice for some of their members. I don’t begrudge them that benefit though it means nothing to me; I haven’t stayed that long in any one place that I can remember. Maybe 10 years ago in St. Lucia but that property isn’t even a Hilton anymore. So there is a little bit of value in that benefit but not for me.
The other changes, however, pretty much destroy the program, if only by making what was already probably the most complicated hotel program even more difficult to manage and understand. Here’s the old award chart:
Pretty straightforward and easy to figure out. Not so much with the new one:
So I suppose the first thing everyone is supposed to get excited about is that the points required for a room are dropping at the bottom end of the spectrum. And they are. Alas, there aren’t all that many properties there. And the inflation and complexities introduced at the mid-tiers are miserable. Here’s a look at some NYC hotels over a 3 month window:
Not only are some of the rates astronomical but the variation is hard to comprehend. Everything is at max rate in November/December in New York City. I get that. But in January they don’t drop consistently. Figuring out rates will take way too much time and effort. And that’s putting aside that all the rates are at least 40% higher than they are today at peak season; the DoubleTree in Times Square is one of many properties now 95% more expensive to book. YIKES!
I’m not going to spend much time going through all the properties to figure out what got more expensive. My quick scan of major cities is sufficient for me to believe that enough have to make this move similar to the Marriott devaluation from last week: Massive. And with the added bonus of making things way more confusing than they need to be.
This one really hurts.
Marriott rate changes announced for 2013: OUCH!
This past week saw perhaps one of the most significant announcements in the evolution of loyalty programs in recent years: Crossover Rewards from Delta and Starwood. The two have teamed up to change the way hotels and airlines work together to reward their most loyal customers, and the implications could be quite far-reaching across the industry. Airline and hotel programs have partnered before, but none to this depth of integration.
Crossover Rewards is focused on the elite members in each program, the type of customers which the programs work hard to attract. From time to time hotels have offered trial elite status promos to airline elites. That can build a short-term bump in customer base but it doesn’t seem to have the long-term effects that the hotels are looking for. The new Crossover Rewards program is built to be a long-term solution, not a flash-in-the-pan change to the numbers.
For elite members in either program the main bonus is getting to earn both hotel and airline points for activity on either of the partners. The only thing close to this historically was Hilton‘s Double Dip program and that meant earning airline points in lieu of extra hotel points, though it is also available to everyone rather than just to elites. Crossover Rewards allow for elites to earn points in both programs without sacrificing earning on either side; that’s a pretty significant step forward.
For top elites in both programs – Platinum elite on the SPG side and Platinum and Diamond Medallion on the Delta side – the benefits are even more significant. Rather than a one-time status gift which the customer must maintain through "natural" qualification activity the Crossover Reward program will be granting an elite-light level of benefits. For Delta Platinum and Diamond Medallion members Starwood will offer many of the same benefits as the SPG gold tier, including priority check-in, complimentary room upgrades (no suites) and free internet. For SPG Platinum members Delta will offer many of the same benefits available to Silver Medallions, including one free checked bag, priority check-in and priority boarding. It is not a full elite status – no bonus elite points or priority service other than on the day of travel – but it is definitely more than what everyone else gets. And, more significantly, the benefits are valid so long as the partnership survives, not just for a trial period.
Finally, it is worth noting that the earning rates for points on the Crossover Rewards partner are based on spend. While this is normal in the hotel loyalty world it is decidedly not in the legacy airline loyalty programs. For SPG elites the earning will be one Starpoint per dollar spend on the base fare, excluding taxes, fees and surcharges. It is not much of a surprise that Delta has the ability to track this data; they recently announced intentions to put similar metrics on elite qualification in coming years. For Delta Medallions the earning will be based on room rate only at Starwood hotels; ancillary spend will not earn SkyMiles. While not groundbreaking overall, this approach is definitely another move in the direction of tying elite benefits to revenue. No surprise that Delta is on board with that given their recent announcements regarding similar plans for 2015 Medallion qualification.
Perhaps the most impressive thing to come from this change is that there doesn’t actually appear to be anyone who will lose with the changes. Starwood has committed to prioritizing their own elites over the Delta Medallions for room upgrades and there will be no competition for Delta upgrades as that isn’t one of the benefits. Earning crossover points doesn’t cost customers earning opportunities in the main program; it is purely additive. And the other benefits – waived fees for various services and priority access – doesn’t really cost anyone else anything.
The two companies would seem to have almost nothing but upside from the changes, too. Yes, they will forgo some revenue on the ancillary fees side of the ledger. And there will be some costs to handle the points earning. But the partnership opens up a strong marketing avenue to top travelers without significantly diluting the benefits for their existing elite customer base.
This may prove to be an enhancement which is actually beneficial to both customers and companies. There are far too few of those happening these days.
The Q1 promo for Hilton is open for registration, as reported over at PointsHoarder. The promo – double points or double miles for all nights through 31 March 2013 – is neither particularly generous nor stingy. Still, it isn’t enough to sway my hotel spending. For one thing, I am not particularly inclined to sift through the list of 600ish non-participating properties when I go to book a reservation, just to see if I might get a few extra points along the way. Plus, I find the 15% back I get via hotels.com and their WelcomeRewards program to be far more valuable personally. Given the upped requirements to attain HHonors Gold in 2013 the program has even less value to me.
Still, I’ll be registering for the double miles version, just in case I happen to end up in a participating hotel. You never know…
Did you catch the latest episode of the PointsHoarder podcast? If not you missed Stephan, Fozz and me talking about a bunch of changes to hotel loyalty programs for 2013, mostly regarding it becoming harder to qualify for elite status. And, believe it or not, one of the three actually thinks it is a good thing. We also talked a bit about American Airlines getting their pilots on board with a contract and the potential that leads to with respect to the theoretical merger with US Airways somewhere down the line. You can listen to the episode here.
In addition to the podcast there have been a few useful posts over there including:
Give it a listen (or read) and let me know what you think. There’s some pretty good stuff over there these days…
The latest episode of the PointsHoarder podcast is now online with Stephan and me discussing a whole bunch of events from the past couple weeks. Listen to our discussion of the new Middle Eastern carrier alignments/partnerships/alliances and also discussion of Delta‘s planned expansion of their Seattle connectivity to Asia. I still cannot figure out how they plan to fill up those planes, but they seem to have a plan. Oh, and a couple mistake fares not being honored.
Also on PointsHoarder this week:
According to one recent study the answer to that question is – somewhat shockingly – yes. The report says that 54% of members find the programs are so out of touch with the needs of their guests that it is enough to drive them away. Putting aside that most customers feel this way, suggesting that the grass isn’t any greener elsewhere, this raises some interesting questions about hotel loyalty programs in general, mostly about whether they are valuable or not.
Also according to the report, biggest complaints about the hotel programs include:
- “Too much spam and junk email” – 44%
- “Too many conditions and restrictions” – 38%
- “Rewards that lacked real value” – 37%
I’ve made no secret of my general distaste for hotel loyalty programs. I rarely find the value proposition a smart play for me. And while I’ve heard a few others chime in recently with similar views I’ve never seen numbers this bad. But I certain understand the sentiments expressed regarding the junk mail. Just looking at the past three weeks I’ve received, on average, one email every work day from Hilton.
Apparently their data mining isn’t very good as they cannot figure out that my dream vacation wouldn’t go anywhere close to Hawaii, I have no desire to visit one of their spas and Puerto Rico, London, Paris, Rome or a Grand Prix aren’t high on my list at all. Hilton has taken a shotgun approach to marketing, just hoping that something sticks. Just like spammers. And while this is not enough to drive me away that’s only because I’m already gone.
The survey reveals that only 40% of the members are even opening the emails sent to them. That number may seem disappointing but I’m not sure how it compares to other markets or industries. I would hazard a guess that it actually isn’t all that horrible. As much as the customers hate the misguided targeting and the marketing of services already subscribed, they are still opening at least some of the messages.
Reports like this always give me pause. If the programs really are missing this badly then is there a chance of them being fixed? The institutional momentum in this case will make it very hard for any one program to become significantly different and alter the course. Airlines are in a similar bind but a few have made changes in their programs which are relatively drastic. Hotels may have to do the same.
Hilton is sending out emails this morning giving a "sneak peek" into their summer earning promotion. And enrollment is now open. Here are the details as they presented them:
Being a Hilton HHonors™ member is now more rewarding than ever. Because with this sneak peek at the Triple Your Trip promotion, you can get to your next getaway three times faster. Simply sign up and stay by September 30, 2012, to earn Triple HHonors Points for Friday, Saturday and Sunday nights starting July 1, 2012. And earn Double HHonors Points for Monday through Thursday nights at participating hotels and resorts. Take advantage of this special preview today. Because whether you’re earning double points on business or triple points on a weekend away, you can always count on HHonors to get you to your next getaway faster.
In other words, triple points on weekend nights and double points the rest of the week. Not too shabby. Members must enroll to get the promotion; the sign-up link is here: https://www.hiltonhhonors.com/Quarterlypages/2012/Q3/landing.aspx.
The bad news is that there are a whole bunch of hotels which are not participating. Given that the promo period is during the Olympics I suppose I shouldn’t be surprised that all the London properties are opting out. That doesn’t explain the scores of hotels across the rest of the globe opting out, but such is life.
Overall, a pretty good promo with reasonably few strings attached. Enjoy!
Well, maybe they’re worth mentioning, though it is hard to know some days. Neither is an incredible offer, but both might have some value.
First up, DoubleTree is running a contest to win a trip to Costa Rica as part of a cross-promotion with The Lorax. Register here (DoubleTree.com/TheLorax) and you can win. Stay at a DoubleTree before April 29, 2012 and get an extra entry. And you can mail in a postcard to get more entries, too. Odd of winning are perilously low, but there’s no real work involved in entering (at least the one freebie) so no harm there either.
Next up is a discount promo from one of my favorite small-chain hotel brands. They recently won some award and are celebrating by offering 15% off at a bunch of their hotels for stays through March 31, 2012.
The deal includes their property in New York City, for those who are averse to such awesome destinations as Barcelona, Madrid, Buenos Aires or Mexico City. More details on that promo here.
Like I said, nothing earth-shattering, but worth mentioning.