Hotel Award Redemption Prices Should Be Lower Than They Used to Be

According to Calculated Risk, while hotel revenue per available room and occupancy rates are trending above 2011 levels so far this year, and are of course higher than when the bottom dropped out in 2009, they are still below their median level for the 2000 – 2007 period.

That’s worth remembering when hotel chains like Starwood Preferred Guest which say they’re explicitly tying hotel categories to room rates bump up their redemption categories. I would argue that members haven’t fully shared in the effects of the Great Recession — lower room rates should mean lower redemption prices than during the 2000 – 2007 period, not just slowed growth in the increase in points necessary to redeem for rooms.

I’m tilting at windmills here, but it’s a useful perspective to keep in mind, the more we shout from the rooftops, at least programs might be hesitant to slowly inflate away the value of our points.

Back during the period of time when room rates were higher than they are now, Starwood Preferred Guest didn’t even have a category 7. And it’s true their bottom line was under pressure at the height of the boom times, because of the structure of their program — full hotels meant that SPG was paying the hotel’s average daily room rate for redemption rooms instead of its discounted rate. But when hotel occupancy dropped (and industry-wide it remains depressed), we didn’t see a suspension of category 7…

I don’t mean to single SPG out here, they’ve just been the most transparent about their category assignment formula, the overall point remains one that’s worth emphasizing with all programs — with room rates below the 2000 – 2007 period, why are redemption rates on the rise?

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 InsideFlyer.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. Just another way for hotel brand operators to ramp up their revenue/profits at the expense of their customers … even after the customers have already paid real money for completed stays.

    Hotel “loyalty” program operators getting creative in order to get their version of “increased year-over-year productivity” out of the program itself, and this is to show for that.

  2. It’s a good question however possibly because they can
    Hilton started the devaluation trend and than everyone and their mother followed suit
    I frequently stay on revenue in some programs as reward rooms have become so grossly Inflated it makes no sense
    It’s bad when airline mileage redemption seems to be of better value than redeeming for their rooms
    In fact I redeemed American airline miles recently for Andaz through a 3rd party that included breakfast for less than redeeming my Starpoints!

  3. I like this point and just wish the hotel programs would listen. I think Priority Club is the MOST HYPOCRITICAL program, because they complained about Hilton raising their points’ prices and then follow suit!

  4. @Carberrie – Couldn’t agree with you more concerning IHG’s Priority Club. Some really high point requirement increases at a time when it’s not justified. Been transferring my loyality to Club Carlson.

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