Which Hotel Loyalty Program Is Right for You?

Scott Mackenzie | HackMyTrip.comFrequent Traveler University — April 27,

2014

Introduction

• Similar distance-based earn

• Similar region-based awards

• Many alliance partners

• Few alternative redemptions

• Capacity limitations on awards

• Revenue-based earn varies

• Cost-based awards vary

• Few partners

• Some transfer options

• No blackout dates

Comparison with Airline ProgramsAirlines Hotels

• Points are earned in relation to hotel revenue– Find an approach to maximize points earned with

minimal opportunity costs

• Points are redeemed in relation to hotel cost– Stay at properties that provide good value and avoid

others

• Benefits have low marginal cost– Choose benefits that you value more than the property

does– Request points as compensation

Finding Opportunity

• Benefits– Seek programs that provide what you value, and

determine how much value that is– I prefer consistency and guaranteed benefits over

“priority consideration”

• Award Travel– Determine how and where you want to travel– Family? Extended vacations? Lower business expenses?

Luxury- or budget-oriented? Replace or add to existing travel?

Short Answer: It Depends

• Where you already travel– No hotel, no benefits or earning potential

• Where you want to travel– Even “bad” programs have some unique properties

• Budget– Some benefits are only at full-service properties– Short-term expense for long-term gain

• Convenience– “Hotel hopping” earns status/points faster

• Credit Cards– Some include status and may earn points more quickly

Maximizing Opportunity

Six Major Hotel Programs

Silver

IHG Rewards

Club Carlson

Hilton HHonors

Marriott Rewards

Starwood Preferred Guest

Hyatt Gold Passport

Gold

Silver

Silver

Platinum

Gold

Platinum

Gold

Gold

Gold

Diamond

Platinum Platinum

Diamond

Platinum

Concierge

10 15 25 35 50 60 75+40Qualifying Nights:

How Many Nights?

IHG Rewards

Club Carlson

Hilton HHonors

Marriott Rewards

Starwood Preferred Guest

Hyatt Gold Passport

Silver

Platinum

Gold

Platinum

Gold

Gold

10 15 25 35 50 60 75+40Qualifying Nights:

Free Status Possible with a Credit Card

Lower TiersSPG Hyatt Hilton Marriott Carlson IHG

Qualifying nights

25 15 10 10 15 10-15

Qualifying stays 10 5 4 N/A 10 N/APoints per dollar 2 5 15 10 20 10Total points (bonus)

3 (50%)

5.75 (15%)

16.5 (15%)

12 (20%)

23 (15%)

11 (10%)

Welcome points 125-250

300-600

Late check-out 4 PM 2 PM Request Request Request N/AMore detailed charts available online:http://hackmytrip.com/2014/04/best-hotel-loyalty-program/

Middle TiersSPG Hyatt Hilton Marriott Carlson IHG

Qualifying nights

25 15 40 50 15 10-15

Qualifying stays 10 5 20 10Points per dollar

2 5 15 10 20 10

Total points (bonus)

3 (50%)

5.75 (15%)

17.5 (25%)

12.5 (25%)

27 (35%)

11 (10%)

Welcome points 125-250

100-1,000

300-600

Late check-out 4 PM 2 PM Request Request Request• SPG, Hyatt, and IHG (italics) don’t have middle tiers– SPG Gold could be considered comparable to other

programs’ middle tiers

Upper TiersSPG Hyatt Hilton Marriott Carlson IHG

Qualifying nights 50 50 60 75 75 40-50Qualifying stays 25 25 30 30Points per dollar 2 5 15 10 20 10Total points (bonus)

3 (50%) 6.5 (30%)

20 (50%) 12 (20%)

35 (75%)

15 (50%)

Welcome points 250-500

500-1,000

100-1,000

500 300-600

Late check-out 4 PM 4 PM Request Request Request• SPG members who stay 75+ nights get extra

benefits– 4 points per dollar (100% elite bonus) and Your24 choice

of check-in/check-out time

Program Details

• Gold status comparable to competitors’ mid-tiers– Most difficult to obtain with a credit card

• Platinum status is among the best of major chains– Promises upgrade to a basic suite, if available– 10 suite night priority requests annually– Incremental benefits for additional qualifying night

• Okay partnership with Caesars Entertainment

TIP: Earn elite qualifying credit for up to three rooms

Starwood Preferred Guest

• Some argue that Starpoints are more valuable for airline redemptions than hotel stays

• Get 25,000 miles for 20,000 points with many airlines– Includes: Air Canada, Alaska Airlines, American Airlines,

Singapore Airlines, Lufthansa, Emirates

• Four credit card applications = 175,000 airline miles

Transfer Starpoints to Airlines

More hotel transfer options available online:http://hackmytrip.com/2013/03/points-transfer-tables/

• Platinum status provides only small benefits, but it’s easy to obtain

• Diamond status is among the best of major chains– Four confirmed suite upgrades annually (up to 7 nights

each)– Complimentary Regency Club or Grand Club access– If the club is closed, complimentary breakfast and 2,500

points• Great partnership with MGM Resorts

TIP: Points + Cash awards offer significant value

Hyatt Gold Passport

Hyatt’s Points + Cash AwardsHotel Category

Free Night Award

Points + Cash

Cost per Point

1 5,000 2,500 + $50 2 cents2 8,000 4,000 + $55 1.375 cents3 12,000 6,000 + $75 1.25 cents4 15,000 75,00 + $100 1.33 cents5 20,000 10,000 +

$1251.25 cents

6 25,000 12,500 + $150

1.2 cents

7 30,000 15,000 + $300

2 cents• Depending on how you view it, you could either pay for the extra points, or use points to pay for the cash portion– Points + Cash awards are elite-qualifying, unlike regular

free night awards

• Gold status provides good benefits and is easily obtained …perhaps too easily

• Best mid-tier status of any chain– Complimentary breakfast– May receive lounge access

• Hotels awards appear to be expensive, but Hilton also makes it easier to earn points

TIP: Search for off-peak awards

Hilton HHonors

• The most difficult chain with which to earn elite status– Often provides opportunities to catch up

• Promises financial compensation for missed benefits– Sometimes sets a low bar for fulfilling benefits

• Separate Marriott and Ritz-Carlton Rewards programs are potentially confusing

TIP: You can earn free status with manufactured spend, earning one night’s credit for every $3,000 on a Marriott Rewards credit card

Marriott Rewards

• History of point inflation instead of traditional advertising

• Does not have many luxury properties• Very good value if you’re satisfied with mid-level

brands and have a Club Carlson credit card

TIP: Save half your points with a Club Carlson credit card

Club Carlson

• Anything but Platinum status is worthless– And you can even get it with a credit card

• Platinum status isn’t worth much– Revamped welcome amenities this year

• Better benefits from Ambassador or Royal Ambassador status with InterContinental Hotels

TIP: Book (then cancel) Points + Cash awards to “buy” unlimited points for 0.7 cents each

IHG Rewards

How Rewarding Is Your Program?

• You spend money at a hotel to earn points

• A free award night requires a certain number of points

• The amount you spend to earn a free night =“Revenue per Award Night”

• Hotels have so many different rates for earning and burning that we need a common measure.

“Revenue per Award Night”

Award Cost Distribution

Award Cost Distribution – Elite

Starwood’s Outliers Skew Data

Opportunity Is Not Evenly Distributed

• Some programs excel at elite benefits– Starwood and Hyatt provide the most lucrative benefits

to top-tier elites with rewards that can be expensive …but worth it

• Some programs excel at free nights– Club Carlson and IHG Rewards have very inexpensive

free nights but mediocre benefits

• Some programs compromise– Hilton offers decent benefits in the form of Gold status

for credit card holders and has decent free nights, too

Loyalty Program Summary

Credit Cards

• Hotel-specific card– Lower annual fee– Free night– Elite status– More points– Closed system

• Generic travel rewards card– Higher annual fee, or none at all– Fewer points– Flexible transfer options

Choosing a Hotel Credit Card

• Chase Sapphire Preferred: 2.7 – 3.6%• Chase Ink Bold or Ink Plus: 2.5 – 3.4%• Barclaycard Arrival: 2.2%• Fidelity Rewards Amex: 2% (no annual fee)

• SPG Business Amex: 7-7.5% including 5% OPEN rebate– Select full-service properties in North America

Rewards from Non-Branded Cards

Award Cost with Status Bonus

Award Cost with Credit Card + Status

Elite Status Only vs. Credit Card Bonus

NOTE: Includes status that would be received automatically for having the credit card.

Many hotel credit cards are worth the annual fee, but this is the one I consider most valuable

• Two free nights sign-up bonus• 3X at Hyatt• 2X on flights, car rentals, and dining• Complimentary Platinum status

– Access to My Elite rates with 20% discount– Status match to M Life Gold

• Up to 5 stays/10 nights elite credit for spending $40K

• Free night at Category 4 hotel each year

Hyatt Credit Card

Alternatives

• Online travel agency (OTA) loyalty programs– Hotels.com– Orbitz– Expedia Rewards– Travelocity Rewards

• Airline miles from booking portals– PointsHound– Rocketmiles– Airlines

Alternatives to Hotel Programs

• Punch card system: Book 10, get 1 free

• Award value equals average cost of 10 nights

• Pay the difference if you want to book a more expensive award night

Hotels.com Welcome Rewards

• Earn points with flights, hotels, and more– 0.2 points per dollar on flights– 2 points per dollar on hotels, packages, and activities

• Redeem points on flights, hotels, and more– 0.7 to 1 cent per point on flights– 0.7 cents per point on hotels

• No partial redemptions

• Elite status after $10,000 or 15 nights provides 25% bonus points

Expedia Rewards

• Earn future credit for flights, hotels, and more– 3% back on hotels (5% via mobile app)– 1% back on flights (2% via mobile app)– 1% back on vacation packages

• Orbitz Rewards Visa earns 5% bonus; no annual fee

• Redeem points on flights, hotels, and more– 1 Orbuck = $1 credit

• Pay the difference for more expensive awards

Orbitz Rewards

• Earn cash back with Travelocity Rewards Amex– 3 points (3% back) for Travelocity.com purchases– 1 point (1% back) everywhere else

• Rewards provided as statement credit in $50 increments (5,000 points)

• Must use Travelocity Rewards credit card– No fee Fidelity Amex provides 2% back on all purchases;

significant opportunity cost

Travelocity Rewards

Hotels.com Welcome Rewards

Program rewards: 10%Ultimate Rewards portal: 3.75%

Total: 13.75%

OTA Program Summary

Travelocity Rewards

Program rewards: 1%Ultimate Rewards portal: 2.5%

Total: 3.5%

Expedia Rewards

Program rewards: 1.4%Ultimate Rewards portal: 1.25%

Total: 2.65%

Orbitz Rewards

Program + Card rewards: 6%Ultimate Rewards portal: 1.25%

Total: 6.25%

• The same hotels you’ll find from big OTAs

• 100s of miles per stay

• Select rates guarantee elite status and benefits

• Best-rate guarantee

• Curated selection of hotels in certain markets

• 1,000s of miles per stay

• Not eligible for qualifying stays or elite benefits

• No best-rate guarantee

Earn Miles for Hotel Stays

• Hotel loyalty programs are very difficult to value, but can be the most rewarding– Stack with credit card bonuses for maximum benefits

• OTA rewards programs can offer good value with more flexibility, but tread carefully– Stack with shopping portals for maximum benefits

• New booking portals offering miles will rope you into an airline loyalty program– Each have their pros and cons

Comparing Your Options