Why I’m Not Worried About Hilton Dropping Award Charts

Yesterday I did my best to describe the changes that Hilton is making to their loyalty program. (I still have difficulty writing out Hilton Honors with one H, but then I still call Rewards Network’s dining for miles iDine.)

Readers wanted to know why I was tentative about what these changes mean and wasn’t clearer with significant conclusions. They were all in my post but overwhelmed by the detail of the moving pieces. Some might say I ‘buried the lede’.

So let me offer my framework for evaluating what Hilton is doing.

Hilton effectively already got rid of its award chart in 2013 when they introduced price ranges. They vary the price of hotel awards now based largely on the price of a room.

Here’s the current award chart:

Hilton’s award room pricing is already revenue-based when paid room prices go up, now it seems they’ll also lower points prices when room rates go down.

There are plenty of situations today where premium room awards which are directly revenue-based have been cheaper than awards for standard rooms when hotel prices are low, a pretty absurd situation. This will lower the standard room award prices in those cases.

That doesn’t excite me, it suggests points prices will be close to par with the value of points. It doesn’t mean getting exceptional value for points. It means that points prices you should never consider accepting may go away.


Conrad New York

There are a handful of pockets of value within the Hilton program today:

  • The most expensive hotels, where 95,000 points per night actually works out to a decent return on points.

    I value Hilton points at $0.004 apiece, and the new ‘slider’ examples I’ve seen have delivered just over this in redemption value. But a $1000 a night hotel delivers over 1 cent per point in value.

  • The lowest tier hotels where 5000 points per night might get you an $80 or $90 room.

The changes we’ll see, as-announced, don’t do anything to remove these.

Where there’s likely a reduction in value is the new combination of points and cash compared to older cash and points awards. Cash and points awards are not simply about using some points and some cash that misses the point. Cash and points awards are about getting great extra value for your points on nights that the hotel is looking to fill extra rooms. They make discount award nights available, and you get more for your points than you normally do. With Hilton’s new changes you appear to get average value for your points instead.

Hilton says they are not increasing the maximum price of any hotel, and do not intend to do so. If they increase pricing [effectively moving hotels up in award category, or by changing the prices for each category or increasing the price of the top category] and they do not make an announcement of this in advance they will come under much-deserved criticism.

I suspect that price increases in their ‘hidden award chart’ will eventually happen, if only because of inflation and rising hotel rates over time. The question is whether or not they’re transparent with members about they changes they’re making — sharing clearly and prominently what they’re doing to the currency in advance.

These new redemption changes — letting members use a handful of points for room redemptions, or lighting their points on fire at Amazon.com — help those who don’t have very many points at all. I don’t see them as doing anything meaningful for those who are actually engaged in the program. The changes do not themselves make things worse, although future bad behavior with the currency might and is what we’ll have to watch for.

I also don’t see these changes as improving the program where it needs to be improved. Hilton already offers good return for in-hotel spend. What they don’t offer are consistent and meaningful top tier elite benefits. They haven’t yet done anything to address that, though they say they’re working on it.

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. @Gary sez: “I value Hilton points at $0.004 apiece, and the new ‘slider’ examples I’ve seen have delivered just over this in redemption value. But a $1000 a night hotel delivers over 1 cent per point in value.”

    Fine, you value each Hilton point at 0.4cpp. But do you realize that if a Hilton redemption delivers a value of 1cpp, it means that it terms of starpoints the value the SAME redemption would be about 6cpp? That’s because while a CENT is a CENT, a POINT is not a POINT when different programs award different number of points for the same spend. The value in CENTS/POINT is, therefore, points currency-dependent and should not be interpreted literally. That’s been a tough to grasp by all by it’s trivial. Cents have an absolute value, but cents PER point have a relative value because points currencies are program-dependent and thus RELATIVE!

    @Gary then continues to misfire: “What they don’t offer are consistent and meaningful top tier elite benefits. They haven’t yet done anything to address that, though they say they’re working on it.”

    This simply needs to stop because (a) that you continue to make that claim exposes you as being clueless about the program, and (b) you have no longer a viable program out there to compare Hilton Honors top tier elite benefits to since, in addition to the benefits you touted for other programs having simply been made up [e.g., SPG Diamonds being “entitled” to suite upgrades or HGP DSUs not being capacity controlled], the two programs touted as having those supposedly better made up benefits are either dead (SPG) or moribund (HGP).

    G’day.

  2. @DCS: “Fine, you value each Hilton point at 0.4cpp. But do you realize that if a Hilton redemption delivers a value of 1cpp, it means that it terms of starpoints the value the SAME redemption would be about 6cpp? That’s because while a CENT is a CENT, a POINT is not a POINT when different programs award different number of points for the same spend. The value in CENTS/POINT is, therefore, points currency-dependent and should not be interpreted literally. That’s been a tough to grasp by all by it’s trivial. Cents have an absolute value, but cents PER point have a relative value because points currencies are program-dependent and thus RELATIVE!”

    And none of what Gary said refutes your comment, so I’m not sure what you’re trying to accomplish other than shouting at clouds.

  3. A “new” stalker named ‘Mike’ has suddenly popped in here and over at OMAAT like a “phoenix” rising from the ashes of the old one?

  4. @DCS – “A “new” stalker named ‘Mike’ has suddenly popped in here and over at OMAAT like a “phoenix” rising from the ashes of the old one?”

    I don’t know who you think I am, but I can assure you that I am not this person.

    I’m sorry that you find yourself so victimized by someone who disagrees with you that you have to accuse them of being a stalker, but that is something that reflects wholly on you, and no one else.

  5. So be it. If you are not this person, you are beginning to seem like him or her, so please forgive me if I ignore your comments from now on, especially if they address me or are about me.

    Goodbye, “Mike.”

  6. Gary,

    So great you think the best values are at the extreme ends. Yet strangely I won’t be redeeming any HH for those hotels… we don’t do award travel to stay at Hilton Garden Inns, and we usually aren’t near a five star hotel either. More likely just some nice Hilton near a beach someplace. If the values of these upper end but not top tier properties go down then for me, and perhaps for most people, the value of HH goes down. Period.

  7. So they’re replacing room categories with “promised maximums”? Is that what you’re getting at? When do promised maximums go away? Can a hotel shift to a lower promised maximum? And what if Hilton HHonors really does want to incentivize points usage on a given night? Will they give *more* than 0.4 cents each?

  8. To me, it makes perfect sense to drop the categories. With the new system, I have found a category 10 that will cost as little as 38,000 points and another that will never be less than 95,000. For marketing purposes, they would have to say that a cat 10 costs anywhere from 38,000 to 95,000 points which has two problems. First, it is so broad as to be meaningless. Second, Honors members will get mad when they see that the category goes from 38,000 to 95,000 and go to book the hotel that is always 95,000 points and can’t find any 38,000 point nights.

  9. So DL not having award charts is horrible, Hilton not having them is fine? Hilton basically saying “trust us” is fine even though it’s not OK to trust Delta? You suspect future hikes “may” happen? I’d bet large sums of money that hikes WILL happen – how could they not?

  10. I’m kind of amazed that anybody cares about these hotel loyalty programs. Even if you’re “gaming them,” the value is usually modest (at least beyond the credit card sign up bonuses). And for “normal” travelers? I can’t imagine why you’d care.

    Even as a “gamer,” 80% of HHonors properties weren’t worth using your points at in the old system. The best values were usually cash and points redemptions (when available) in the lower tier properties. And once you got about 50,000 points/night, there was always a better hotel option somewhere.

  11. I agree that the best value was in some cash & point rates, offering more than 0.5ct/pt value – and those opportunities are going away.
    I also agree that there was good value in category 1/2 hotels, and those may or may not go away, we won’t know until we try to book as Hilton is not announcing category changes any longer.
    I disagree though that there was good value at the top end – while in theory the calculated value of cash vs points suggest outsized value – in those locations you can often find independent hotels that are much better value than the top end Hilton’s, so the actual value of the points is not that great.
    Bottomline, Hilton is becoming even more revenue-oriented than it was, leaving little to no opportunity to find high-value redemptions and therefor less incentive to accumulate or buy points.

  12. At least after LATE FEBRUARY the pontificating and hyperventilating will be based on actual empirical experience/evidence and we’ll get a reprieve from the current onslaught of fact-free conjectures and suppositions!

    Here’s the roll out TIMELINE of the changes as provided in an infographic I just got in an email from Hilton:

    1. Points & Money
    Pay your way
    Introducing a more flexible way to pay for your stay. In addition to using Points for free nights, now you can choose ANY combination of Points and money* using our new payment slider that starts at 5,000 Points. With this new perk, Points pricing will be more flexible. When rates go down, Points prices go down. No blackout dates.
    — Coming Late February 2017

    2. Pooling Points
    Go more places, together
    Want to travel together more often? When you pool your Points with family and friends, you can get to a reward night faster.
    — Coming April 2017

    3. Amazon Shop with Points
    Shop your way
    Use Hilton Honors Points to shop at Amazon.com
    — Coming July 2017

    4. A new perk for Diamond members…
    Bank your Diamond status
    New job? Going back to school? Having a baby? Life changes, and it doesn’t always happen on a requalification schedule. We get it, and that’s why we’re giving eligible Diamond members the chance to extend their status for one-year, one-time, for any reason.
    — Coming March 2017

  13. @iahphx – um ok, sure. I’ve averaged 20%+ returns on Hilton awards across all types of properties over the past years. And that’s just a simple ratio of redeemed rack rate to cash spend with Hilton to earn the points.

    And painting with the even broader brush extending to all loyalty programs? I can hear out an argument that going cheapest-rate on hotwire, etc. is the way to go, but a lot of us like or need to have a relationship with major chains for various reasons.

    I doubt “normal travelers” (statistically speaking, that would be someone who travels a couple times a year and buys the cheapest available) are reading this website.

  14. @Andrew — I will not address you because my sense is that @Gary has had it with your type of comments that simply target other posters without contributing any substance to the discussion, and I applaud him for it.

    This is just a warning…

    G’day!

  15. @DCS: Funny thing is, DCS, you just did address Andrew. So…yeah.

    @Gary: Thank you for the great posts, and I’m sorry you have to deal with us, the annoying people who can’t act like adults in the comments section. Keep up the good work.

    “G’day!”

  16. This is a precursor to Hilton devaluing. Guaranteed. I look forward to looking back on these posts in a year.

    It is foolish to think that taking away award charts is anything but an anti-consumer move in the long run.

  17. Prediction: Hilton Gold loses the breakfast benefit within a year too. The most mediocre program calculates that they can get just a bit more mediocre without seeing too much defection.

  18. I was looking at Hilton point options recently for an upcoming Europe trip. My values were coming out to .006-.0065. Which actually was much better value than using Marriott points. The only thing worth redeeming Marriott points for seems to be points+miles. In that case a 7 nights stay in category 8 works out to around 90,000 Marriot points, compared to 240,000 normally. I am cancelling my Marriott card because the yearly free room coupon is such a low category I’ll never be able to use it. And I have better status anyway from my SPG card. And at least the Hilton credit card is free.

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