Changing the Game: In Points We Trust

Changing the Game: In Points We Trust

For the longest time, frequent-guest programs have been the Rodney Dangerfields of the traveling world — they just don’t get any respect, or even attention for that matter. Though travelers earn millions upon millions of points through hotel programs each year, most fail to recognize the value of these points, especially when compared to the airlines’ frequent-flyer miles.

Why do most travelers have such a large blind spot when it comes to hotel loyalty programs? Some of it can be blamed on the history of these programs. In the past, airline frequent-flyer programs truly were the best deal around — no contest. Fifteen years ago, a typical frequent -flyer award included free hotel and car rental. Hotel programs, for all their effort and good intentions, simply couldn’t match the level of the airlines’ rewards, and slipped into the loyalty background. Many travelers came to view hotel programs as a way to add extra mileage to their frequent-flyer programs — in fact, there was a time when as much as 70 percent of a hotel program’s loyalty currency was converted to airline miles (though today, that number is closer to 30 percent).

Even as the awards offered by hotels gradually improved, and those offered by the airlines tended to decline in value (just try getting an airline award today that includes hotel and car rental), the hotel programs lagged behind in the minds of most travelers. This could largely be attributed to sheer spending power. While the airlines saturated every form of media with ads touting their latest and greatest program promotions, the hotels toiled in relative anonymity, secure in their role as a sidekick to the bigger, more flamboyant frequent-flyer programs.

But all that is about to change. In the wake of recent changes and restrictions among airlines, frequent-flyer programs have begun to lose some of their luster, and the hotel programs appear prepared to speak up and make a name for themselves. Many of the hotel programs are now committed to matching the marketing muscle of their frequent-flying cousins, and as they do so it’s a sure bet frequent travelers will begin to understand that, dollar-for-dollar, hotel awards are in many cases a better deal. It’s time to take another look at these oft-neglected frequent guest programs and seriously consider re-balancing your portfolio of miles and points.

Head to Head: Crunching the Numbers
All things considered, hotel programs offer some of the best benefits around. And we can’t recall the last time that anyone in the media wrote a story about not being able to get a free hotel room. In fact, the representatives at stated that in more than 90 percent of all cases, they are able to get clients the award rooms they want, on the nights they want them.

But how do the frequent-guest programs compare on an award-to-award basis with the frequent-flyer programs? We researched three head-to-head award scenarios, pitting a hotel against an airline, to show you how the various programs stack up (To simplify the equation, we have elected not to factor in elite bonuses, etc. since we’d need another 50 pages to chart all the options). Here are the results:

Hilton HHonors vs. United Mileage Plus
Hilton HHonors is one of the more well-regarded frequent-guest programs, garnering its fair share of Freddie awards each year. With the addition of Scandic Hotels internationally and full integration of the Doubletree, Embassy Suites and Hampton Inn brands, Hilton’s property count fits comfortably into the demands of your typical road warrior.

One of Hilton’s most popular awards is the VIP ALOI award, which provides members six free nights at a Hilton Hawaiian property along with two coach airline tickets from the continental U.S. at a cost of 280,000 points. Based on our research, we’ve determined that an HHonors member would need to stay approximately 117 nights to earn the points necessary to redeem for this award. Our calculations were based on an average room rate of $159, and factored in the 10 points that members earn for every dollar spent at Hilton, as well as the five points per dollar spent that members receive when using Hilton’s American Express-branded affinity card. Total expenditure: about $19,000. The vacation cost is about $2,500 — giving a reward value of some 13 percent.

Now, let’s try that same trick with United. Two coach tickets to Hawaii on United carry an award cost of 70,000 miles. Because there’s no standard way to get hotel rooms using your airline miles, we’re going to have to rely on Hilton for this one. Six free nights will require 100,000 HHonors points, or 50,000 Mileage Plus miles (using the 1:2 Mileage Plus to HHonors conversion ratio). Total miles needed for this trip: 120,000.

Assuming that the average roundtrip on United is 2,400 miles and the average cost is $579, you’d spend about $24,000 on United to achieve the very same reward that you could get with a $19,000 spend with Hilton (We were fair and added the United BankOne Visa earning of one mile per dollar spent to even things out). The value return, then, from United, is “only” 9.6 percent.

Priority Club Rewards vs. America West FlightFund
Let’s move on to another program that really epitomizes the Rodney Dangerfield identity — Priority Club Rewards. In 2002, there was not a single hotel program that ran as many bonus promotions as Priority Club Rewards. But, for whatever reason, this program has always been regarded as less glamorous than Starwood and not as important as Marriott.

So, let’s play the same game. This time we’ll go off to San Francisco for a long weekend. We can choose to stay in a Holiday Inn or the Crowne Plaza on Union Square. Two nights costs 50,000 points. Airline tickets to San Francisco? No problem, Priority Club has an award for that also, and it will cost us 67,200 points per free ticket. Total points needed: 184,400.

OK, members earn 10 points per dollar spent and, when they use their Platinum Visa, they’ll add one more point per dollar spent. At an average daily rate of $121, members will generally have to stay 139 nights for this award, spending about $16,820.

Now let’s go to the airline: America West. This one is more difficult, since America West isn’t an exchange partner. So, how can we do this? Off we go to We’ll convert the necessary 560,000 FlightFund miles into 50,400 Priority Club Rewards points (those exchanges can really kill your program value) for the two free weekend nights in San Francisco and add another 40,000 miles for two free coach tickets (FlightFund still offers domestic awards for only 20,000 miles). Total miles required to match vacations: 600,000.

America West has shorter flight segments, so we’ll say they run 969 miles roundtrip. They have a credit card that earns members one mile per dollar spent, so it will take 438 roundtrips at an average cost of $401 to earn the needed points. A total cost of $175,638 — more than 10 times the cost with Priority Club Rewards! The value of this weekend trip is about $850.

Marriott Rewards vs. American AAdvantage
In the battle of the heavyweights let’s head off to do some holiday shopping in New York City. A quick look at Marriott’s award chart reveals that it will cost 10,000 Rewards points for four nights at the Marriott Marquis, a Category 7 hotel. Add in another 125,000 points because you’ll need 50,000 American AAdvantage miles for two free coach tickets to New York. Total points required for this award: 235,000.

Assuming you earn 10 points per dollar spent, use your Marriott Visa, which adds another three points per dollar spent, and the average room rate is $159, you’ll earn 2,067 points per stay. This works out to a total of 114 nights and an approximate spend of $18,000.

With American, you’ll need the same 50,000 miles plus another 180,000 miles to get four nights at the Marriott Marquis using American’s Vacation Awards option (paying for hotels with miles). Total required: 230,000 miles. Since the average roundtrip on American is similar to that of United, we’ll assume 2,400 miles and we’ll throw in one additional mile per dollar spent for using your Citibank card. Average ticket price is $579. You’ll need 77 flights to earn these miles and will spend about $45,000 toward this award effort.

Looks like Marriott is the clear winner, costing less than half the price to earn similar awards. The award has a value of $2,300, meaning an award value of 13 percent with Marriott and five percent with American.

Adding Up the Results
Though these are just a few examples, they do demonstrate the extent to which hotel points are underrated as compared to airline miles. And we didn’t even get to local favorites Hyatt and Starwood, let alone Ramada and Best Western. Trust us, the results would have been similar. In all three cases, it is clear hotel programs can be very important allies when planning your next award vacation and, dollar-for-dollar, they are of greater value to members if that value is used correctly.

Trading Points
We’ve covered the subject of transfers from points to miles in previous issues, but many of you out there still continue to enroll in an auto-transfer program. As noted from our research, you really do want to keep the points at home and use them when it makes the most sense. But, despite the evidence, some of you will still not be interested in hotel room value from awards, so let’s look at another way you can get even more value from your miles transfers.

Take the following scenario: In the Marriott Rewards program, you may choose to automatically earn airline miles with each stay or you can choose to earn Rewards points (which can later be redeemed into airline miles). If you choose to automatically earn airline miles, you start with a handicap. You’ll earn three miles (with major U.S. frequent-flyer programs) for each dollar spent at full-service Marriott and Renaissance Hotels, but you’ll only earn one mile per dollar spent at Courtyard and Fairfield Inns. If you choose to earn rewards rather than miles, you actually earn a full 10 points per dollar spent at both the full-service Marriott and Renaissances as well as the Courtyards and Fairfields.

Now, let’s say you stay 24 nights a year at Marriott with those nights split evenly between each type of property. Average rate at Marriott is $159, average rate at Courtyard, etc. is $119. Total miles earned from the auto-earning option of Marriott Rewards is 7,152. But if you had chosen points, and then later converted into miles, you would have used award #790, which converts 30,000 of the 33,360 points you would have earned into 10,000 miles. This method would have earned you a 40 percent bonus in miles.

Why did we choose 24 nights for this example? Because if you stay less than 24 nights a year, you’ll earn more miles with the auto-earn option than by earning points and converting. Twenty-four nights is the magic threshold. While the threshold changes by program with the auto-earn option, you can now use this scenario to figure out your own best options.

The Rest of the Equation
Another often-overlooked component of the hotel programs are the amenities. It seems every time we turn around, the hotels are introducing new choices and benefits for members. Don’t take these benefits for granted, since it’s highly unlikely the airlines will greet you with a list of amenities when you board your next flight. And though some might compare floor level lounges to airport lounges, who besides British Airways and Delta include them as high-elite benefits at no additional cost? Also note the award sales that Hilton and Marriott offer members each Spring and Fall. While the some of the airlines also offer discounted awards from time to time, they certainly don’t discount as many awards as regularly as the hotels.

And shall we dare mention upgrades here? In most major frequent-flyer programs you either earn a limited number of upgrades or spend your miles and money seeking to sit in front of the dreaded coach curtain. That is the frequent-flyer version of “best available seat.” On the hotel side of things most elite members are automatically upgraded to the “best available room” subject to availability. Now, we do sometimes question what “upgrade” means at hotels since it just may be a room not next to the elevator or overlooking the alley. But nonetheless, it’s nice to know your ability to luck on to a suite or parlor room is there just for the asking without deductions and spending your points. Of course most self-appreciating regular at a hotel seems to know the latest excuse to ensure that suite upgrade. Could you imagine talking to the check-in agent at an airline and really trying to impress upon them that you hope an upgrade is available since you just closed a big deal and want to celebrate, or were wondering if, since your significant other will be flying with you, that you could have tow seats up front? After years of comparing the benefits of both, we find it much easier and rewarding to be a member of hotel programs with elite status.

Now, we don’t want you thinking we dislike airline programs — quite the opposite. But we do want to wake the traveling public up to the award-purchasing power of hotel programs.

Bottom line: Frequent-guest programs deserve more respect. On top of all the advantages we’ve already listed, most hotel programs also offer free account consolidation between spouses (last we heard, airlines were charging for that benefit). And, when you compare express fees and other award-redemption fees charged by hotels versus those charged by airlines, you’ll find the airline charges are about 40-percent more expensive on average.

While there’s always some inherent unfairness when comparing hotel and airline loyalty programs (they are, after all, two distinct industries), a strong case can be made for acquiring more hotel points than frequent-flyer miles in the coming year. So, if you’ve been funneling those hotel points into your airline program, it might be wise to balance your portfolio.