Amidst all the talk of hotel loyalty program devaluation and skyrocketing costs of free nights, I thought it would be useful to run some numbers to see how the programs actually compare in terms of rewards per dollar spent at their properties.
So I ran some numbers for the base programs.
I wanted to see what kind of return per dollar spent you get in the form of free nights from each of the chains.
- What hotel program offers a free night after the least amount of spending?
- What hotel program will let you redeem a free night in a big city after the smallest investment?
- What hotel program will let you access its most expensive, most aspirational hotels for the least amount of spending?
I decided to have a look at the basic programs of each of the 5 largest hotel chains. And for this purpose I am going to ignore factors that are very important for some travelers — elite bonuses, elite check-in amenity points, and other promotions.
So I’m looking at the most common base-level earning (ignoring that some hotel chains award fewer points for their limited-service brands, say 5 points instead of 10 points per dollar).
And for Hilton HHonors I assume a choice of ‘points and points’ earning style (so you earn the most points possible for your in-hotel spending, rather than “double dipping” and earning some airline miles and some points for stays).
I also ignore ‘point saver’ and ‘cash and points’ awards — I’m just looking at the basic reward chart.
These various assumptions do matter, for instance with Priority Club there are often bonuses that members who are paying close attention can sign up for and even stack on top of each other that makes the program much more rewarding. Although the median member is generally not aware of these.
Here’s the chart I put together, though if spreadsheets scare you then don’t feel the need to expand the graphic and dive into the numbers. I will explain what I found.
- ** Assumes high season where applicable, and assumes point requirements post-2013 devaluation where applicable
*** Assumes base-level room, excludes premium room awards, for Marriott assumes Ritz-Carlton reward nights
Note of course that this analysis is not a weighted average of hotels by redemption category, that analysis could well bear out a different conclusion. Instead it’s an attempt to look at some common redemption scenarios and extract any patterns.
Here’s what I learned…
Most hotel chains offer a free night after about $1000 in spending, ignoring bonuses and special redemption discounts. Marriott is a bit cheaper than this, their lowest category can be redeemed after points earned from $750 in spend. And Hilton is actually the cheapest for the lowest redemption category; a free night can come as quickly as spending $333. You may not want this free night, it may not match your travel patterns or goals. But it’s true that Hilton offers a free night that exists for less spending than any other chain.
Most programs offer free night redemptions at a median big city hotel, a redemption in a place like Chicago or Boston, after $3000 – $3500 in spending. Starwood is more expensive — their ‘category 5′ (outside of high season), my proxy for a big city hotel, takes $6000 worth of hotel spend to earn a free night.
Starwood has always been the least generous rewarding in-hotel spend. Their elite program is one of the best and their credit card has been one of the most lucrative for both free hotel stays and for transferring points to airline miles for at least a decade. And they also offer a fantastic elite earning bonus (50% for Golds and Platinums, and an even bigger bonus for Platinums staying at the highest night levels). But base-level earn in the program is rough.
Hyatt Gold Passport and Marriott Rewards are the most generous at the upper-echelon redemptions. Their standard top redemption categories take $4500 and $4400 respectively worth of spending to earn enough points for these free nights. Hilton and Priority Club aren’t far behind. Starwood, with their weak base-level earn, and very expensive redemption requirements at the top tier, requires almost three times as much spend as the next most expensive program Hilton.
For truly aspirational stays I created another category, looking at the most expensive room redemptions offered by each program. Starwood has its category 7 ‘all suite’ properties that charge double points and Marriott has its Ritz-Carlton redemtpions that are more expensive than its standard award chart. While the rest of the chains don’t bump up redemption pricing for the top few hotels. In this category Hyatt really shines and Starwood becomes truly choke-worthy.
Overall Hyatt and then Marriott appear to be most rewarding for free nights from your stay activity, with Hilton and Priority Club not terribly far behind. The base-level earning from Starwood Preferred Guest is weakest, and Hilton is most generous for the truly cheapest redemption nights.
Marriott offers a good, solid redemption program. I’m not a fan of its elite program, which takes the most nights to earn status while offering some of the least generous benefits. And I’m not a fan of its co-branded credit card which offers some of the weakest rewards for spending. But as a basic rebate program for your stays it is very, very competitive. Ritz-Carlton rewards are extremely expensive though, out of line with the rest of the program.
Hyatt Gold Passport
Hyatt is by far the most generous program in this analysis. They’re competitive at the low end, but they really shine providing the best value for top end aspirational redemtpions.
Starwood Preferred Guest
The program’s original claim to fame for its redemptions was its no blackout, no capacity control concept. Sure you had to spend more at its hotels to earn the points necessary for free nights, but then you could actually use those nights.
Since then other hotel chains have caught up with Starwood for reward night availability, without charging the same high redemption prices. And Starwood’s redemption pricing has gotten even more expensive with category 6 and now category 7 redemptions, and even charging double points for hotels in those categories where the rooms are all suites (even though the character of the rooms is how they charge rates high enough to be in those categories to begin with).
Still, Starwood makes up for it with their elite members by offering the biggest elite point bonuses. And members can really rack up the points with what’s by far the most generous co-branded hotel credit card. Plus Starwood’s unique selling proposition becomes elite treatment and a collection of the most aspirational properties, places many members dream about using their points. The idea here isn’t the cheapest redemptions, it’s the most desirable redemptions.
(Ironically, Starwood is actually fairly competitive with the very cheapest redemptions — weekend nights as category 1 hotels, though that’s a fairly limited set of nights and properties.)
Even after their pending big devaluation, Hilton’s redemption program remains in the ballpark for the rest of the industry.
Their top tier redemptions are cheaper than Starwood’s, though more than a third more expensive than Marriott’s new category 9 hotels.
They’re the least expensive at the cheapest end and still clustered with their competitor chains for big city hotel redemtpions. It’s really just the 90% increase in redemption costs for the really top notch resorts and expensive world cities that undercuts their value proposition.
Still, they offer easy elite status (upgrades, internet and breakfast merely for signing up for a co-branded credit card) and they will continue to play a key role for many travelers.
Their redemptions are competitive with the rest of the industry, across-the-board, whether it’s the cheapest hotels or the most expensive.
Priority Club also offers outstanding bonus-earning opportunities, especially the ability to sign up for several bonuses and earn them all during the same stays. Most of their members don’t know about these, and they don’t factor into this analysis, but the bonuses on top of the regular program make Priority Club really competitive for redemptions.
The program doesn’t work well for me because they’re the weakest when it comes to honoring elite benefits on reward stays, and offering access to upgraded rooms on points.
While some hotels will upgrade elites when redeeming reward nights, the program doesn’t require it. An elite member can expect to stay in a base level room as a reward for their loyalty. They’re the only chain of these five like that.
What’s more, since you can’t expect free upgrades on points, it becomes even more important to be able to spend more points if you really care about the room you’re getting, be it a suite or an ocean view. But Priority Club is also the only one of these 5 programs that doesn’t offer the ability to spend more points for a better room. It’s not always a great option with the other chains, but at least it exists.
Further, Priority Club’s elite program is weakest (weaker than Marriott’s even), and their co-branded credit card is a poor choice for everyday spending.
Priority Club’s challenges lie outside of the basic earn and burn components of their program. As a simple matter of free nights per dollar spent at their hotels, they’re right in the middle of the pack.
Several factors go into choosing a hotel program — whether the chain has hotels in the places you travel, whether those hotels match your price point, how lucrative the loyalty program is in return for your spending, and how well the chain treats you during your stays (which is partly a function of elite programs).
I consider the Hyatt Gold Passport program to offer the strongest top tier, with Starwood Preferred Guest second. But while Starwood has the most top-end luxury hotels to use points at (my own preferred redemption goal), many of those hotels are extremely costly to use points for. I like the Starwood credit card quite a lot, but don’t find the basic earn-burn structure to be advantageous.
Currently I believe Hyatt’s program is most rewarding overall (not to mention they offer what I think of as the best reward of any hotel program), but their hotels aren’t everywhere and so loyalty to that chain needs to be supplemented, the easiest way to do that is with Citibank’s Hilton Reserve credit card which offers Gold status in the program as long as you have the card (for a $95 annual fee). The Ritz-Carlton Rewards card gives you Gold status, too, and that is honored across Marriott, but the annual fee is higher.
The Hyatt-Hilton strategy doesn’t work for everyone. Marriotts are everywhere and provide a consistent and strong redemption program. If elite benefits aren’t as important to you, this program is a solid choice. Just try to avoid using your points at Ritz-Carltons as those redemptions are extremely expensive.
There are other ways to do this analysis, and I look forward to critiques, counters, and improvements in the comments