I attended a Citibank/Hilton event last week at the Conrad New York which unveiled the new Hilton HHonors Reserve Card.
It was held at the rooftop bar, directly across from condos where several top stars live and looking out over the river.
They were pouring cocktails, but I didn’t see the executives doing the briefings drinking. So I didn’t visit the bar too often, I wanted to have my wits about me since the event gave me the opportunity to sit down with Jeff Diskin, the head of the Hilton HHonors loyalty program, and Ralph Andretta who runs co-branded cards for Citi.
Most of my questions didn’t really center around the new credit card product. It more or less speaks for itself. I did ask another Citi executive earlier in the night, “how can you afford to do this?” They’re offering a more generous product than the pretty rewarding premium American Express co-branded Hilton card, and Amex is generally bringing in higher interchange rates than Visa. I got a few winks and nods, I’m sure they all drove a really hard bargain with each other. Hilton must be giving out the Gold status pretty cheap, and fixed benefits like that get built into the annual fee. The free nights become an acquisition cost based on the expected value of the new cardholder of time. Those nights are likely a bit cheaper given that they’re restricted to weekend use. And the 10 points per dollar on Hilton spend has to be getting subsidized on the Hilton side of things.
I was interested in asking about some recent developments and some possible future developments with the HHonors program though.
One of the neat things about the HHonors program is the ability to get Diamond so easily via credit card spend. I say neat from the perspective of someone who gets their top tier elite status that way, I suspect folks who earn it ‘head in bed’ aren’t quite as enthusiastic about the notion, although most of the benefits don’t really trade off — one Gold or Diamond member receiving free breakfast and internet for instance doesn’t reduce the value of breakfast and internet for another member.
I’ve long worried about the benefit becoming a bit less useful, though. A couple of years ago Jeff Diskin was talking about the possibility of a new higher top tier. I like how easily I earn top elite now, and would be disappointed to see myself only earning mid-tier status with my $40,000 in spend for Diamond.
Diskin did say that they’re continuing to look at a higher elite status level with more benefits, but that such a change was not imminent.
I thanked him for the recent change to the terms and conditions that excludes suites from being a Diamond upgrade benefit. I asked, though, why they didn’t do any sort of rollout for this change, letting members know they were getting something better than what they had before? He said that it was because they would rather have their members surprised and delighted rather than setting up higher expectations. I have to believe it’s because while suites are no longer excluded they aren’t really guaranteed either so it would be difficult to meet those raised expectations.
Still overall I think that the Hilton program has been getting better. Their introduction of premium room awards has been controversial because those awards seem to be based on the going rate for the premium rooms on a given night, and you’re basically paying for those rooms at a low cash value per HHonors point, I find it’s order of magnitude about half to three-fifths of a cent per point when I try to get closer to a penny a point in value for my redemptions.
But more options are better than fewer options, and previously there wasn’t an ability to guarantee a better room with points through the HHonors program which was a real weak spot compared to Starwood, Hyatt, and Marriott. (When they rolled out the benefit they did offer a rebate on premium room redemptions so my Harbor view room at the Conrad Hong Kong cost me fewer points than a non-Harbor view standard redemption there would have.)
What’s been most concerning is that it seemed as though some of the top resort properties were playing games with their inventory, classifying what were once standard rooms into higher room categories so that they cost more points. I asked Diskin about this.
He told me that they haven’t seen a reduction in standard room redemptions overall, that they’ve seen greater point redemptions since they’ve increased their offerings. And that they are having fewer challenges with hotels mis-categorizing rooms in order to minimize reward night redemptions. When you could only use points for a standard room, hotels would move rooms out of the standard category. Now that you can use points for most rooms, there’s not an opportunity to close off reward bookings. I’m not sure he was speaking to every case, or is even personally aware of every case, but it was an interesting perspective.