Why You Should Carry the Hilton HHonors Reserve Card — But Not Try to Get Diamond Status

Link: Citi® Hilton HHonors™ Reserve Card

This Hilton HHonors devaluation is really bad. Hilton points out — and cites my blog analysis as evidence — that they actually have the program that requires the least amount of spending to get a free night. That’s true, it takes only 1/3rd the hotel spending of Hyatt, Priority Club, or Starwood to get the least expensive free hotel night.

But the top hotels, that required the most points, will now require orders of magnitude more. The Conrad Koh Samui was one of the best redemption values at 50,000 points per night. It will be 95,000 points per night for 10 out of 12 months of the year.

Lucky acknowledges these changes but says he’s still going to spend $40,000 on the Citi® Hilton HHonors™ Reserve Card. He realizes the points he’ll earn will be worth less, but still thinks it’s a good idea since he’ll earn Hilton HHonors Diamond status. With respect, I disagree.

Benefits of the Citi® Hilton HHonors™ Reserve Card

It’s unquestionably worth getting the card for most frequent flyers.
The card offers:

• Two free weekend nights after $2500 in spending as a signup bonus
  
• Gold status as long as you have the card or Diamond status after $40,000 spend
  
• No foreign currency transaction fees
  
• 10 points per dollar spent at Hilton, 5 points per dollar on airline and rental car spend, 3 points on everything else
  
• An annual free weekend night each year you put $10,000 on the card

Lucky and I had a debate where he argued that HHonors points are worth 0.8 cents apiece, 3 HHonors points per dollar amounts to a 2.4% rebate which is as valuable or more valuable than any card for spending. His valuation was based on how great a deal it was to redeem for properties like the Conrad Koh Samui and Conrad Maldives. That isn’t looking too good these days.

At the time I argued that HHonors points are worth less than that, but the free night after $10,000 in spending makes this card exceptionally valuable to put $10,000 on, probably the most valuable use of $10,000 in spending you can have besides using that spend strictly to meet the requirements of signup bonuses.

And that the card was outstanding to have for Hilton HHonors Gold status — Hyatt and Starwood offer the best loyalty programs (with Hyatt best for both free nights and for top tier elite status) but that neither chain is everywhere, so you need a ‘backup’ and Hilton makes a great backup when you can have Gold status for just the cost of a credit card annual fee.

Why it Makes Sense to Get this Card for Hilton Gold Status (and 2 Free Weekend Nights)

Hilton has properties just about everywhere. So having some status with the chain is a no brainer for a frequent traveler. Gold normally requires 16 stays, 36 nights, or $6000 in spending with Hilton. Or you get it just for signing up for this credit card.

Gold gets you 25% bonus points, Executive floor upgrades when available and breakfast when there’s no club upgrade (or no club) available. Golds also get modest room upgrades and free internet.

And as a signup bonus the card offers two free weekend nights after $2500 in spending, and these are valid at nearly any Hilton property. It’s become much more expensive to get free nights via points, but the ‘cost’ of free nights via credit card signup remains the same. Two free nights aren’t worth more than before, but two free night certificates are worth relatively more than HHonors points (since those are worth less).

My strategy is to focus on a chain that provides you the best elite treatment — Hyatt or Starwood — and make Hilton the backup for travel to a city that doesn’t have a hotel with the better program. And for those cases, you walk into the hotel with status rather than without, just for getting a credit card — which more than pays for itself in the first year with those two free weekend nights.

Why it Makes Sense to Spend $10,000 on this Card Each Year

Contra Lucky, I didn’t think this was a great card for spending since even before the devaluation of HHonors points I valued 1 Starwood point or 1 Chase Ultimate Rewards point more highly than 3 Hilton points (the reward for unbonused spending).

In fact, I valued 3 Hilton points at least than 2 cents meaning that I’d argue putting spending on a 2% cash back card would be better.

But for the first $10,000 in spending each year you get a free weekend night and the HHonors points from the spending. There are few more rewarding places to put $10,000 in spending (besides qualifying for credit card signup bonuses).

Put $10,000 on a Starwood American Express card and you get a free night at a category 4 hotel. Put $10,000 on this card and you get a free weekend night at nearly any Hilton hotel and 30,000 points which is worth a free mid-tier hotel night. Strong value proposition.

Why it Doesn’t Make Sense to Spend $40,000 for Diamond Status

Here’s where Lucky and I really differ. I just do not think that it makes sense to put $40,000 in spending on this card to earn Hilton Diamond status.

I didn’t think it was worth it before, since Diamond really doesn’t provide much benefit over Gold.

And I certainly don’t think it’s worth it now that the points earned don’t go nearly as far.

Lucky writes,

I do think it’s worth “gambling” $300 for guaranteed lounge access and the occasional suite upgrade if you have at least few Hilton stays per year. So to answer Alan’s question, yes I think it’s reasonable, and yes, I’m still planning on going for Diamond through spend on the Citi Hilton Reserve Card.

Here’s why I disagree.

1. Diamond isn’t much better than Gold, which you get just for holding the card. You get incrementally more (devalued) bonus HHonors points — 50% instead of 25% on your in-hotel spend — and guaranteed lounge access (which Golds usually get but I generally prefer a restaurant breakfast anyway). In theory Diamonds might get better upgrades than Golds but there’s no entitlement to suites in the HHonors program.

2. You’re giving up too much value for extra $30,000 in spending beyond the $10k that earns the free weekend night each year. $30,000 will generate 90,000 HHonors points which used to be nearly enough for two nights at just about any Hilton hotel property, now it won’t in all cases even be enough for one night. As Joe Brancatelli noted to me, 50,000 HHonors points used to get you the Conrad in New York City. Now the best you can do in Manhattan for 50,000 points is the Hampton Inn on Pearl Street.

3. You should put the spending towards credit card signup bonuses not towards Hilton HHonors Diamond status. That’s where the most leverage is in your credit card spending, not striving for the incremental difference between Gold and Diamond in the HHonors program.

The only exception to this analysis, I think, is if you actually do $30,000 in Hilton hotel spending. In the past I earned Hilton Diamond through credit card spend because I was able to put a Hilton hotel conference bill on my card. This card earns 10 points per dollar on Hilton spend (the American Express Surpass card earns 12 and offers Diamond after $40,000 spend as well). That sort of spend makes sense.

Otherwise, not so much.

Bottom-line this card belongs in the tool kit of most frequent flyers. It’s worth putting $10,000 a year in spending on this card. But it’s not worth spending on the card beyond that.

(Note that the Citi® Hilton HHonors™ Reserve Card offers referral credit to me if you’re approved using my link, which I greatly appreciate.)