Hilton HHonors so devalued their program last year that top-end hotels which once cost as little as 32,000 or 40,000 points per night on a 5-night stay like the Conrad Maldives cost 80,000 or even 95,000 points a night
When I had breakfast with Hilton HHonors Vice President Mark Weinstein last month, he explained the bind they’re in, with room rates rising and hotels full their hotels have to be compensated more for award nights.
And I told him that doesn’t mean they want to pass on the corresponding increase to their members in all cases; that members and the program can benefit by keeping the cost of certain aspirational properties more modest even if that means holding onto them as a loss leader.
That’s because they’ll build loyalty and put heads in beds throughout the year by keeping members on the treadmill, making them think that a special trip is within their grasp. Sure, they may have to stay at the Hilton Garden Inn in Yakima, Washington — but the reward at the end of the rainbow is memories that last a lifetime for themselves and their family in a special place they wouldn’t otherwise go.
For some that’s Hawaii. For others it’s someplace more exotic. And it doesn’t mean that costs don’t all get passed along. But making the best properties so out of reach, they no longer serve as a motivator, and no longer drive other business. They can think of their programs as merely rebates of a fixed (or declining) value, and they’ll defeat the very purpose of the program to earn wallet share and keep heads in beds.
Starwood Preferred Guest has a ton of fantastic aspirational properties. But at the very top end, the rooms themselves are considered suites, and so not only are they in the highest redemption category 7 (which didn’t even exist when I started with the program) but they charge double the category 7 prices because the rooms are suites. Rates are so high because of how special the rooms are, that’s why they’re category 7 in many cases in the first place, but because the rooms are special and not just the property members get double charged. That takes the redemptions out of reach of most members, having to pay 70,000 points a night or more for hotels like the W Maldives and St. Regis Bora Bora.
The Park Hyatt Maldives remained a category 6 hotel even as Hyatt introduced category 7. Maybe Hyatt understands this principle. Or maybe the hotel rates are lower on average than what you see on the website (because they’re unloading rooms cheap on the ground in China and via specialty agents dealing with the Maldives like Linara Travel.
Hotel programs can serve their chains well by giving members something to strive for and not pricing them so outrageously that redemptions aren’t realistic goals.
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