Hilton Deflects Criticism of their Devaluation: Fair or Not?

Nicholas Kralev covered the Priority Club Luckiest Loser campaign this week.

In the promo, Priority Club — which naturaly has had its own devaluations — calls out Hilton for the magnitude of theirs. And as I’ve noted before, it’s an especially deep devaluation at a time when hotel occupancy and room rates are suffering in unprecedented ways making the chnages uniquely egregious and difficult to justify.

Kralev quotes Steve Sickel, who’s in charge of the Priority Club program:

“In my 17 years in the loyalty business — first at Continental Airlines and now at InterContinental — I’ve never seen such a drastic devaluation,”

Hilton downplays the changes:

Hilton also sent me some numbers that surprised me. Of nearly 3,500 hotels around the world, only 354 were assigned a higher category in January, and 547 actually decreased while the rest remained the same.

This is more than disingenuous. As Loyalty Traveler notes after crunching the numbers,

Approximately 82% of Hilton Worldwide hotels, around 2,900 hotels, require more HHonors points for a free night after the January 15, 2010 changes.

All programs devalue. I laid out the reasons why back in 2004. Miles and points are proprietary currencies with no central bank or currency board. With fixed quantities of product to redeem for, and increasing outstanding points, there have to be either shortages or price increases. Programs, especially during economic tough times, inflate — the print more points to incentivize incremental travel and revenue and then when times get better they raise points requirements. There’s a certain Lucy, Linus, and the football element to it.

The uniquely irksome thing about the Hilton changes, though, is that they’re being made during the challenging times for hotels, so members have a difficult time understanding it, and Steve Sickel has a real opening to shout them down. But indeed, as Hilton observes in the Kralev piece, pot/kettle/black.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I think this marks my first post here and I am ashamed for not participating sooner in your outstanding forum.It was quoted in the media in an interview with Jeff Diskin that this was the first increase in many years. That too was not fully accurate or entirely true in my own assessment as much as I admire Mr.Diskin for many years. As just one example last year and without notice cat 5 and 6 property awards were raised with the multi night HH American Express redemption award codes. Many members only found out when they went to redeem their points and got the bad news.
    There are so many ways that the folks at HH could have softened the recent blow to gradually handle the increases and let their best customers slide a little longer. Unfortunately greed prevailed. I agree with Mr.Sickel that as hotel programs go I can’t remember anything this steep. I started my own observations since 1994.
    I find it interesting besides the fallout of members who are leaving the program is that it brought up all the other underlying core problems that have sadly been unaddressed at HH for many years. It has their customers really re-evaluating their relationship at HH.Hilton has had a great program for years fundamentally. However they have always had a number of issues. Going forward how badly did they damage their value proposition in the minds of customers and can they stop some of the defection and resentment they have created amongst their customers? Damage control 101 anybody?Time will tell all. Cheers

  2. I intend to show Hilton how unloyal an eight-year gold veteran can get. I’ve just cancelled my AMEX Hilton card and I will only now stay at a Hilton with a paid stay every 9 months just to keep my points alive, as long as I still have a balance. I think back with regret to the times that I’ve gone out of my way (literally not just figuratively) to stay at a Hilton to earn the points that they’ve just devalued. With careful shopping around and using Hotwire et al I can probably be better off. Mark, New Jersey.

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