The Perverse Way Hilton Rewards Their Best Customers Least

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I hate when airlines run promotions that apply only to tickets purchased after registering. They’re saying that their already loyal customers, who buy tickets from them day in and day out, aren’t as important as new customers or purchases. And they communicate that customers should wait to buy from them in case a promotion gets announced, for fear of losing out on a future bonus that may be announced.

Of course the airline’s marketing department wants to limit its budget, and target its spending, rewarding only those customers that the promotion may be influencing at the margin. They don’t need to spend money marketing for sales they’ve already received.

Affiliate programs work the same way, many merchants will pay for a lead based either on the quality of the customer or the likelihood that it’s a new customer making a purchase.

And cash back or mileage shopping sites rebate a portion of their commission. I shared secrets of these sites via an interview with the head of the biggest one in an earlier post.

One Mile at a Time highlights a unique situation that lays this all bare.

  • Hilton has an affiliate program where they will pay commissions for reservations
  • They’ll pay a higher percentage of revenue for new customers who wouldn’t have been likely to make a booking from them without the site generating the lead.
  • The most likely way to know this is that the person making the reservation isn’t even a Hilton Honors member. They have no brand loyalty at all.
  • So they’ll pay the most for a non-member’s reservation, and progressively less for a general member up through top tier elite.


Conrad Bangkok

Then the perverse situation arises: a site like Top Cash Back which rebates money to you based on what it receives from a vendor. I suspect the people running the Hilton affiliate program didn’t contemplate their commission structure being laid bare, however:

Roughly speaking, and promotions aside (which are unaffected by the differential elite earning from TopCashBack) a general Hilton Honors member earns a 6% rebate on spend and a top tier Diamond earns an 8% rebate through points-earning via the loyalty program.

Elite benefits have value even if Hilton’s upgrade benefits are modest. Club lounge access or breakfast has to account.

However if you’re staying at a Waldorf=Astoria where breakfast is excluded, or at a limited-service property, you may not benefit much from your elite benefits anyway. And if you don’t need the stay credit to retain your status (perhaps you receive Hilton Gold from the Platinum Card by American Express or from the Citi Hilton Honors Reserve Card or Hilton Diamond with $40,000 annual spend on the Citi Hilton Honors Reserve Card), then consider booking through TopCashBack and not even bothering with your Hilton loyalty number or booking in the name of a non-status friend, signing them up for promotions, and adding yourself as second guest on the reservation.

A base member would earn 8% versus 1% on eligible bookings through Top Cash Back, substantially beating the mere 2% rebate spread that top status would provide.

Ultimately the more likely someone is to book from Hilton (a Diamond), the less Hilton wants to pay as a bounty for their reservation. And that has the perverse effect of being less rewarding for the chain’s best customers.

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 Milepoint.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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Pingbacks

  1. […] The Perverse Way Hilton Rewards Their Best Customers Least – Speaking of Hyatt, it appears they targeting only non-members for certain bonus promotions or cash back. I use cash back and point earning portals whenever I can and it is disappointing when you earn way fewer points or cash back if you have loyalty to a company. That makes you question your loyalty.  If you haven’t signed up for some of them yet, you could use my links for additional bonus opportunities: Ebates, TopCashBack. […]

Comments

  1. Even the 12% non-member cashback rate is a ripoff, because if you’re not going to be getting any elite benefits, you might as well book opaque (Hotwire/Priceline) and save a lot more.

  2. This post neglects to mention that TCB doesn’t pay out with Hilton on AARP/AAA/corporate/government rates, so it’s a raw deal anyway. Marriott/IHG on the other hand pay out on TCB for all rates. So instead of foregoing Hilton points, just buy a AARP membership.

  3. LOL — When it’s open season on Hilton Honors and it is raining HHonors posts in travel blogosphere, you know the program is kicking derrieres left and right. @Gary trots out the results of a model that just got thoroughly discredited to, rather appropriately, try to make a point that is not there to make!

    What you think you have uncovered here is as fuzzy as your math…. You get cheap rates, do not give your HH membership number, get no elite recognition like a suite upgrade, breakfast, stay/night/bp credit, redeemable points…tc… Do the math 😉

    Also, you know things are really dire, when the purported lack of breakfast at WAs is being repeated mindlessly. I have been served breakfast that was nothing short of a royal feast, and would put HGP’s to shame, at WA Rome Cavalieri, WA Shanghai on the Bund and the spanking new WA Beijing. As soon as I return from this meeting in Alexandria , I will do a picture post on breakfast at WA that I will link to every time the “Thought Leader” tries to peddle that canard. You realize @Gary that even if just one WA offers breakfast it makes the T&C rule obsolete by showing that it is meaningless since any property can ignore it? (many do!!!).

    Go ahead, cheat the system according to the “Thought Leader’s” infallible and magical formulae and models! 🙂

    G’luck!

  4. Everytime I see a Hilton post, I have to open it and read it just to see DCS’s reply 😀

    @DCS, why do you put so much effort in defending a hotel loyalty program? I mean….you’ll put to shame the guys arguing about Mac/PC or iOS/Android. Just kidding, just kidding. I do find it amusing though. Not trying to provoke you or anything….just curious.

  5. @DCS,
    Breakfast a “royal feast” … at a Hilton?

    Did you have your wedding reception at Dunking Donuts?

  6. @DCS your still my hero!

    @everyone could you just book using no HH account and then apply your diamond number at check in? That way you get the discount but also you normal benefits. Of course it may limit your suite upgrade potential but at least it might work.

  7. @Ben O — Amazing, but you pretty much stumbled on why this is a non-story and why it is as ridiculous as you made it sound. Just lay off the ‘hero’ stuff ’cause before you know it I’ll become a cult figure in your head and you’ll start hounding me from blog to blog.

    G’day.

  8. I noticed the discrepancy when I book stays on Hilton. It makes you feel like they don’t care about your business much when you see you only earn 1% back, while a non-member gets 12%. I understand why they do it, but it makes you question your loyalty. Especially since being top tier at Hilton doesn’t net much to begin with.

  9. Why don’t you just become a non-member and enjoy the same “benefit” of 12% cash back?

    Seriously, anyone who would get bent out of shape because a ‘homeless’ gets tossed a little bread crumb — that’s the apt analogy here — is unhinged.

  10. After our house fire we stayed at a Hampton nearly 3 months,without any issues. When life had settled, we decided to take a short visit to the south. Tuned out to be the most expensive weekend EVER! The Nashville Hilton was more than rip-off! They convinced us that it was cheaper and more secure to use their parking garage, @ $35 per day. Our vehicle was purchased the day before the trip. Since we walked everywhere, we never had our vehicle out of the parking garage. It’s about the $35 per night they can accomplish, when they’re parking larger trucks on the sidewalks in front of the hotel. Couldn’t see the front of the hotel due to the cramped up parked trucks. In their garage or not…$35. We witnessed many valet drivers having fun with guest vehicles, also saw a valet driver ‘side-swipe’ 2 guests vehicles. Most employees were foreigners, who didn’t speak fluent english. Very annoying! Putting our trust in Hilton to take care of our newly purchased vehicle. We didn’t think to check for damages! Until, the day of our departure, stopped for fuel about 6 miles from the hotel. That’s when we saw the frontend/rearend scrapes & obvious damage from the door of another vehicle, LITERALL! When we return home, I call 14 different #’s, to be told that i hadn’t reached corporate, to be given another number. Finally get a call from an unknown number, whom they said they were from Hilton corporate. Took a statement,said that they would get back to me. Which never happened. For such a large hotel, the pool was very small & unkempt. Too much money for such a mess of what was supposed to be a relaxing vacation, damages to the vehicle…Unacceptable!

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