About 10 days back I wrote a post about travel providers being less than generous in offering members the ability to redeem miles for donations, and in awarding members with bonus miles for making their own donations.
As I noted in the post at the time, I contacted American about the bonus miles they were awarding for donations to the Red Cross, and didn’t hear anything back. So I went on to explain how charities do buy miles as part of their donor acquisition strategy. But in fact airlines also partner with charities as part of their usual corporate giving. And according to this Nicholas Kralev column in today’s Washington Times, that’s the case with the Red Cross and bonus miles offered to members who donate for Haitian relief. Good on American! I wish they had clarified this with me earlier, as I certainly do accept their explanation and stand corrected on this point.
The column raises my issue with Hilton, that the program is being especially ungenerous in redeeming 10,000 points for a $25 donation.
1. While I know the economics of Starwood and Marriott’s reimbursement to hotels for award stays better than Hilton, this is almost certainly not more costly for Hilton than when members members redeem for free hotel nights.
2. Members who are going to pay for a Hilton stay would do better to redeem their points for that stay, and use the cash they would have spent as a donation to Haiti, because more money will go to charity that way (the donation offer represents a quarter of a penny per point, while you should be able to get half a penny a point by redeeming for hotels and saving your cash).
If this isn’t a terrible deal, it really just points out how little Hilton points are worth these days.
And, indeed, Hilton’s response is basically that they aren’t being ungenerous, after all they offer some redemption options that are even worse!
In fact, if you wanted to redeem points for merchandise or other non-hotel options, the value of those points would be less than if used for donations, Mr. Diskin said. For example, you need 50,000 points for a $100 gift card, he said.
That seems a pretty weak defense.
Now, as the piece observes, the redemption value for Marriott points is worse — since Marriott offers the same conversion rate of 10,000 points for $25 in donations, but Marriott points are generally worth more than Hilton points for hotel redemptions.
Marriott converts 10,000 points into $25 donations, too, but Mr. Leff said a Marriott point is generally considered more valuable than a Hilton point by frequent travelers.
A Marriott point can go much farther than a Hilton point for hotel stays, so Marriott members really should save their points and give cash instead. And if they’re cash constrained, use points for hotel stays they would have paid for, and give the cash they save for those stays.
Though I should note that Marriott immediately donated half a million dollars through an associated foundation. Good on them. Travel providers making cash contributions are what ought to be applauded the most, those are especially valuable. And of course donating that they’re uniquely positioned to offer, such as airlines making flights with relief supplies. Many travel providers are indeed doing quite a bit for relief.
My point in all of this is that not all efforts are as generous as they seem. And not all travel providers’ actions are created equal.
In the points for donations game, I noted that I believe Starwood is being much more reasonable than competitor chains.
Starwood, he added, “is giving more than a penny a point to charities” — no less value than you would get if you redeem for hotel nights.”
I should clarify: it costs Starwood no less to have members redeem points for donations than to redeem points for hotels. Members will generally get more value for themselves by redeeming for hotel nights and donating the associated cash savings. But the cost to the Starwood Preferred Guest program is likely a little bit higher for donations than for free night redemptions.
On nights when a hotel is less than 90% occupied, Starwood compensates properties on average a bit under a penny per point redeemed. So offer a 1.25 cent per point conversion of points to cash donations is more costly.
And Starwood offers at best 1.25 cents per point for Instant Awards, so this is a fairly normal points to cash conversion on Starwood’s part. Starwood Preferred Guest certainly doesn’t come out ahead when members redeem points for donations.
Update: As noted in the Times article, Hilton is now matching member donations (via point redemptions) to Haitian relief, up to $250,000. So for the first $250k that members donate, Hilton is in some sense offering $50 per 10,000 points which is much more reasonable. This change was apparently made on January 20, 5 days after my initial post criticizing them.
