The Big Hotels Are the Least Rewarding — Why US News Gets Hotel Loyalty Backwards

Just like US News presented a highly flawed ranking of frequent flyer programs that was mostly a ranking of the airlines themselves, they have also put out a ranking of hotel programs that is as much about “how big is the hotel chain?” as it is “do they provide any value in their loyalty program?”

As a result the biggest chains, for the most part, win. (As before, a hat tip to the indispensable Terry Maxon.)

Here are their rankings:

1. Marriott Rewards, Marriott, 4.59
2. IHG Rewards Club, InterContinental Hotels Group, 4.47
3. Best Western Rewards, Best Western, 4.39
4. Club Carlson, Carlson Rezidor Hotel Group, 4.24
5. Starwood Preferred Guest, Starwood Hotels and Resorts, 4.20
6. Hilton HHonors, Hilton Worldwide, 4.09
7. Wyndham Rewards, Wyndham Hotels and Resorts, 4.08
8. La Quinta Returns, La Quinta Worldwide, 4.01
9. Hyatt Gold Passport, Hyatt Hotels, 3.90
10. Leaders Club, Leading Hotels of the World, 3.55
11. Le Club Accorhotels, Accor Hotels Worldwide, 3.48
12. Choice Privileges, Choice Hotels, 3.33
13. Stash Hotel Rewards, Stash Hotel Rewards, 3.04
14. Omni Select Guest, Omni Hotels & Resorts, 2.93
15. Kimpton Karma Rewards, Kimpton Hotel & Restaurant Group, 2.80
16. Fairmont President’s Club, Fairmont Hotels & Resorts, 2.14
17. YouFirst Rewards, Loews Hotels and Resorts, 1.51

50% of the Score is Based on the Size and Scope of the Hotel Chain, not the Loyalty Program

  • 20% of the score is just ‘Number of Hotels in Network’ This is purely about size, not quality or value.
  • 15% of the score is ‘Property Diversity’ — having different kinds of properties (resorts, city hotels, apartments) at different price points is considered good, even if most of the kinds of properties aren’t likely to appeal to a given traveler. A chain focused entirely on luxury would get knocked down here, and so would a chain focused on budget accommodations — although that has nothing to do with how valuable the loyalty program is for people who value the kinds of accommodations offered.
  • 15% of the score is ‘Geographic Coverage’ — again, size matters, although this is more about scope. You may be interested in domestic properties only, but how big is the chain’s international footprint? It doesn’t matter the points cost or availability of the rooms, just that the rooms exist around the world.

The Half the Survey That Actually Has to Do With the Value of the Loyalty Program is a Hodge Podge

There are only two categories which are actually about the loyalty program in the US News ranking of hotel loyalty programs.

  • 30% of the score is ‘Ease of Earning Free Night’.. how many nights you have to stay to earn a free night in each of 16 destinations. But since most hotel loyalty programs aren’t punch cards, and don’t work that way (stay X nights, get a free night) this is likely to lead to some odd results.

    They are asking how many nights, at an average price point for hotels in a certain set of destinations, will it take to get a free night at a hotel in a different destination that may be of a different quality level. And they’re comparing different quality properties across chains as though they are the same.

    A better metric, I think, is what I tried to lay out recently when I looked at how much spending with each chain is required for a free flight at a variety of different types of hotels — the cheapest entry level, the standard big city full service, and the top end luxury. That exercise was illuminating, for me at least.

  • 20% of the score is everything else and though the survey says it is unbiased we do not know what portion of this mere 20% is upgrades, what is the ability to redeem for premium rooms rather than just base level rooms, or how much “whether points can be earned for flights and credit card purchases” factors in and the extent to which the ability to redeem points against your room folio (something that’s almost never a good idea) matters although these are all listed as the sort of things in this sand pile.

Getting Loyalty Exactly Backwards

While a loyalty program needs to be associated with hotels where you travel for it to be useful to you, in general the biggest loyalty programs are also the least rewarding.

When Marriott Rewards members speak about the program they often say they like it because there are properties everywhere, so they can earn their points no matter where they go. You can pretty fall into a Marriott or a Hilton (or related brand) regardless of destination.

But being loyal to Hyatt or to Kimpton or even Starwood is a choice. The chains are smaller, so they have to offer greater value to their frequent stay guests in order to encourage them to make that choice.

The smaller ones provide the most value through their programs because they need to do so to put heads in beds.


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. Well, if you weren’t impressed by their airline rankings, you’re probably not going to like their hotel loyalty rankings. Best Western’s high rank is the most head-scratching. If that program is attractive (yeah, right!) it certainly has escaped the attention of frequent flyers. There are only 4000 Best Western forum posts on Flyertalk; in contrast, there are 500,000 posts for lower-ranked SPG.

  2. Coverage is very meaningful part of the value equation.

    It’s why the smaller big chains like Hyatt and SPG have to deliver more value from their programs.

    A ranking that puts Marriott, IHG, and Starwood ahead of Hilton makes good sense.

    Hyatt seems a bit low, but frankly it’s over-rated for the typical traveler because the bloggers get preferential treatment from them. Much like AA love fest.

  3. Gary, this is a bit like getting mad at bears for fouling the woods. Consider US News’ audience- on balance, I’d guess that the average reader views loyalty programs like punch-cards, to the extent that they think about them at all. I agree that you’re metric is much more informative, but the average customer just doesn’t care about understanding the rules enough to maximize a program’s value.

    One point of disagreement: I do think that chain size is an important component in determining a program’s value. If a chain has the best upgrades, earning structure, and benefits in the world, but doesn’t have hotels where I want to stay; that loyalty program holds little value for me.

  4. I completely agree with AndyAndy. Although I love Hyatt and SPG hotels, there simply aren’t enough of them (or any at all) in several places I want to go. Points are only good if you can use them.

  5. Last time I checked I could not earn points at a hotel that does not exist in the city I was visiting. And I could not spend those points when vacationing in some place where the chain has no presence.

    I do much of my work travel to industrial towns, often in the midwest. I hate to break it to you but there are no Park Hyatts there.

    If I can only go to a given chain on 75% of my stays due to coverage, whereas with another chain I could use them for 100%, doesn’t that, ceteris paribus, make the second chain 1/3 again more valuable to me?

  6. Its not number of hotels that matters. It is number of hotels at which I would be willing to stay. Hilton and Marriott come out ahead for me. I will stay at a Hampton Inn or better (but would prefer better). IHG, Best Western, and Club Carlson all have quite a few member hotels that I would rather avoid (as do Choice, Wyndham, and La Quinta). I can see some folks insisting on a higher minimum than a Hampton Inn, but then there are many places where a Hampton Inn or Courtyard is the best that you’ll ever find.

    If you want to run a good hotel program, set a decent minimum standard and stick to it.

  7. I’ve switched hotel loyalty programs this year. I agree with that smaller chains do offer better value for frequent stay guests.

    I rarely get upgraded whenever I stay with Marriott properties with my platinum status, although I have been upgraded to suites at each Courtyard hotel I stayed at. Excluding the complimentary United silver status (best benefit IMO), I only receive a free soda or snack at the hotel upon check-in. I switched over to Kimpton’s program (became an Inner Circle member) last year and have not turned back. Not only do I receive room upgrades upon check-in most of the time, I receive the welcome amenity of your choice listed on your profile (bottle of wine & chocolate covered strawberries for me), $10 raid the mini-bar credit, free wifi, and complimentary chef’s treat at Kimpton restaurants. I’ve also moved onto SPG because of the flexibility & value of the points.

    Marriott points have decent redemption values outside the US.

  8. Andyandy is right; what good is an awesome program if it does not have any locations in which I can earn or spend points?

  9. Gary, you actually haven’t shown how smaller programs are more valuable, and just stating “The chains are smaller, so they have to offer greater value to their frequent stay guests in order to encourage them to make that choice.” doesn’t mean they actually do.

    In my experience while the quality of the stay might be better, the ability to earn and redeem points is just not as good.

    Here’s a look at my case for 2013, I was able to book almost an equal number of Hyatt stays vs Hilton stays which can usually be challenging since Hilton properties are typically less expensive in the markets I stay in. At the end of the year I couldn’t book 3 nights at the Hyatt in Clearwater vs 3 nights at the Hilton, plus 1 night at a Hampton Inn near Orlando with points left over (and that was with all the great Hyatt bonuses we say in 2013). I did that with an average Hilton cost of $120 a night vs Hyatt cost of $137 a night. Add in the free breakfast I get as Gold with Hilton from that number of stays and yet again more value.

    Now the Hyatt in Clearwater is a much better property than the Hilton but that matters less to my family than the extra day we had to spend on the beach.

    Now all of that value to me was realized regardless of the size of the chain. When you factor in the expanded possible number of locations for me to earn and redeem, Hilton becomes far more valuable than Hyatt.

    I still prefer Hyatt, not for their frequent guest program because I can’t afford to become Diamond with them and their earnings per $ spent is poor, but the quality of their properties.

    As a final example, Kimpton can have a ton of benefits to it’s program but it’s never going to be very valuable to those traveling outside the US.

  10. No I haven’t shown it in this post, but in many many other posts. That a given hotel was sold out of standard rooms on a given date last year simply isn’t generalizable.

    Hilton offers great value for low-end redemptions, is exorbitant for high-end ones. Hilton is good for mid-tier breakfast. Pretty much little else. If that’s what you value then you’ll dig on Hilton.

  11. Hi Gary, as much as I tend to favor a lot of the same things in programs that you do…to a large extent you’re the one getting things backwards here.

    The real problem is probably trying to rank all of these programs together at all.

    Regarding the first half of the criteria – especially if you’re in “pick one” mode, number of properties, variety of properties, and geographic coverage are *crucial*. If a program can’t deliver on those grounds…then it doesn’t matter how reqarding it is. With that said, these factors are much more of a binary “go/no go” factor than they are a fuzzy continuum. A program needs to have “enough” coverage to be under consideration at all. The difference between say 1-2 hotels vs 40 hotels in a given market matters much less, and the big programs are posibly overrewarded for this (although if you’re blindly suggesting a program for the least common denominator maybe this is the right advice).

    You’ve talked plenty about paying for everyday stays and redeeming for aspirational stays as much as or more than anyone, yet you downplay the value of programs offering this ability?

    The “other half” – they don’t match my priorities there either…but they do match the frame of mind that the typical loyalty program member seems to be in. I know most of my coworkers just seem to think in terms of “free nights”, regardless of how nebulous that really is…

    The better takeaway is that it’s not worth ranking such disparate programs together, without better defining who your audience is. One-size-fits-all analysis (of any sort) rarely fits.

    As far as my breakdown of the criteria:

    “number of properties” – vital that there are “enough” to the point of non-negotiability…but Hyatt and SPG meet this bar and more than that combo has only moderate value

    Diversity of properties – again vital. Work dictates property type for work stays. For personal stays I do. These are not always the same. A program without both aspirational and everyday properties loses most of its value for me, and based on what I’ve seen here, for you as well.

    Geographic coverage – they need to have properties most of where I travel for work, and in enough destinations to offer me enough options for burning.

    Ease of a free night – matters a lot, but so does the definition of what that “free night” or other redemption is.

    everything else – drives the show…to the extent that the others are at least into “acceptable range.”

    So at the end of the day, the first 80% that their criteria list are in large part absolutely essential parts of any program…but “adequacy” is the bar that they need to pass. The last 20% may drive my decision…but only because the other criteria are good enough.

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