Earlier in the year I offered a simple model ranking hotel programs.
- Hotel programs can be more confusing than airline programs because their points aren’t really comparable. Some are super inflated. You earn more, and rooms cost more.
- So you need to normalize the currencies — look at how much a point in each program is worth, and what the rebate value of each program is for stays.
- And separate out the rebate (earn and burn) from elite benefits offered.
I offered the value of each hotel’s currency, and suggested that for the general member Marriott and Hyatt offer stronger rebates than Hilton and IHG — and that Starwood, which has always been strong on elite benefits but weak for in-hotel spend, lags far behind.
A new IdeaWorks study (.pdf) finds similar values for each hotel’s currency when searching across real world redemption scenarios. (They don’t include Hyatt in their survey, but do add Wyndham.)
As a result they calculate rebate percentages in a similar way that I do, coming out with slightly different rebates as a result of variation in the value per point they calculate.
The methodology is imperfect, but as I say it comes close (though it may bias towards a higher price per point than I do, since I discount points relative to cash because points aren’t as flexible and more prone to devaluation than dollars are to inflation — that may explain the roughly 1/10th of a cent per point difference between my valuations and theirs).
During August 2017, IdeaWorksCompany conducted 1,350 reward queries for key hotel brands in six global frequent guest programs: Best Western Rewards, Hilton Honors, IHG Rewards Club, Marriott Rewards, Starwood SPG, and Wyndham Rewards. For each query, the lowest reward price in points was recorded along with the corresponding room price in US dollars. The value provided by points was adjusted to consider the different rates of point accrual for the programs.
…Booking queries for a party of two travelers (one night stay) were made at hotel loyalty program websites during August 2017. 15 specific dates were selected for queries for Mondays (5 dates), Thursdays (5 dates), and Saturdays (5 dates) from August 2017 through February 2018. Hotel properties from three major brands (based upon global room count) for each hotel loyalty program were selected for the survey.
US destinations in the survey: Chicago, Los Angeles, New York City, San Diego, and San Francisco. International destinations in the survey varied by brand and consisted of: Beijing, Dubai, London, Paris, and Sydney. The lowest point level and the associated refundable room rate were recorded for each query (these included rates which require program membership).
IdeaWorks finds that Wyndham is what Hilton’s Jeff Diskin once called “over-indexed” — they came out of the gate really strong with their new program. If Wyndham’s properties work for you then you can get a lot of value from their program.
They don’t have enough of the full service hotels I usually look to in order to maximize value from the program, though if I had their old grandfathered credit card which earns 2 points per dollar spent I’d be using that as my primary unbonused spend card and redeeming for vacation rentals rather than hotels.
The study’s author, Jay Sorensen, tells Scott McCartney “I was surprised at how often the award price has little relationship with the room rate.” Of course Jay has pushed revenue-based earn and redemption for years. And it somewhat misses the point.
- You have a choice when to use points and when to pay with cash
- Fixed redemption prices mean that when rates are expensive points are a good deal
- Tying redemption prices to paid rates eliminates great redemptions and gives you average redemptions every time. That’s not good for consumers.
Bear in mind looking at these values as well that:
- Rebate values are very different for elites than general members because of the way each program bonuses their elite members (as I show in the first table above)
- Rebate values are only one piece of the hotel loyalty equation, elite benefits matter and members need to figure out which are more important to them.
And of course in evaluating elite benefits you need to ascertain how achievable status is with a program, and whether the program’s footprint works for you.
It’s hard to be loyal just to Hyatt for many people because of their small footprint. And as a result it may be much harder to do 60 nights with them than with a larger chain whose benefits may not stack up as well.
My own strategy is to earn top tier status with Hyatt and Starwood (I spend a lot of nights in hotels), match my Starwood status to Marriott, and get Hilton status from my Amex Platinum card (which would otherwise also provide Marriott Gold, matchable to Starwood Gold).
Breakfast at the Sheraton Mirage, Port Douglas
My own takeaways from the data, compared to the benefits:
- Hyatt: average rebate, best benefits, small footprint
- Starwood: weak rebate, good benefits, high end properties while Marriott match provides footprint
- Marriott: good rebate, improving benefits, good redemption options with Starwood acquisition
- Hilton: weak rebate (though regular promotions help), weak benefits
- IHG: good rebate, weak benefits