Tale of the Tape

In the past year, most major hotel loyalty programs have made adjustments to their award charts, citing increases in the cost of providing awards due to escalating hotel room rates. We understand their struggle, although we feel like loyal hampsters spinning around on our wheel and getting nowhere. Others like goldpoints plus have completely altered their earn and in some cases, redemption structure and even others such as TripRewards now have a new identity — Wyndham Rewards. Room rates rise, we subsequently earn more points and end up with more hotel currency so we can afford the increases to these award charts. But wait, not so fast. The programs have not introduced identical award chart changes, making it difficult to decipher whether the additional points cover the increases. Do you actually belong to the right — or richest — program?

We set out to answer that question, given that the value of hotel programs seems to be the only good news for frequent travelers these days. Are hotel mergers a threat to your points? Not an issue. Hotel room cutbacks threatening the availability of your awards? Doesn’t seem to be an issue. Award energy surcharge to cover the cost of hotel utilities? Not an issue. Yes, life does seem to be good for those who have capitalized on using their hotel points and focused on their travel loyalty currency.

Hotel loyalty programs are aggressive in their marketing campaigns, touting the richness of their programs compared to their competition. Whether using comparative charts, features like no blackout dates or just showing off the luxury of their properties, hotel programs actually allow a more level playing field for comparison — what you pay is what you earn. Among airlines, earning a mile is, well, just that — earning a mile. But hotel programs differ both in their earning and redemption structures whereas almost all airline programs are similar in their earning (a mile flown is a mile earned) and their basic award structure (most airlines offer a basic 25,000 miles saver-style award).

Have you ever tried to compare Hyatt to Hilton to Marriott? Three programs, three incompatible currency values and three different award charts. And that’s just for starters. How does earning five points (sometimes three) per dollar spent with the Hyatt Gold Passport program stack up against earning 10 points per dollar spent with Marriott Rewards? Does that make Marriott twice as rewarding? And how do Hilton and Marriott stack up when both offer 10 points per dollar spent at the base level? Well, they both seem even with each other until you factor in the Points & Points program that Hilton has pioneered, giving members nearly a 50 percent increase in earning power with 10 points plus five more in bonus points per dollar spent. Just what does earning have to do with spending your points when, unlike airlines, all hotel programs classify their hotels into different levels and there is no “standard” anywhere on the charts. Say what you will, but it just may be that those complicated airline programs are simple compared to the hotel programs.

As we have done in the past, we started thinking about the most recent changes made by these programs. Ads are fine, but anyone with a calculator and a marketing degree can throw numbers around. Beneath the hype, what’s the truth? Which hotel programs offer up what riches at what levels?

Hotel programs differ in their strengths. Some have better awards in the Caribbean, others in Hawaii, while some programs offer the best value for free nights here in the good old continental U.S. We also know that the differences can be greatly exaggerated when linking the earn and burn levels with average room rates in various cities — New York is not Des Moines and room rates fluctuate widely in different locations. And not everyone stays exclusively at one level of hotel. Our readers are a diverse group, and it’s rare to find someone who stays only in full service hotels. Any given 30 nights at Marriott will undoubtedly include a few nights spent at Courtyard by Marriott.

There are plenty of other potentially specious comparisons, but we thought we’d try to do a service to our readers who want to make an informed, objective decision about which program offers the most value for hotel stays. We concluded that perhaps the best and fairest method would be to compare the money spent with the point yield each could expect to earn from each of the major programs.

It’s probably impossible to come to an ironclad conclusion. Is a Hilton HHonors point worth more than a Marriott Rewards point? One might as well ask why sheep don’t shrink in a rainstorm. There are some mysteries we were never meant to know. But we can conclusively state which program permits you to accrue points or miles faster according to the level of hotel spend, and which programs generate the most free stays at a given level.

We did find that programs offering a wide variety of properties can be tough to beat, since points earned at higher-end or standard full-service properties can go a long way when redeemed at low end or leisure-oriented properties.

We will base our comparison on three traveler profiles: one is a high-spend traveler, another a moderate spender, and the third is a low spender. In order to reflect the complexity of frequent travel programs, we’ve included elite-level benefits in our calculations commensurate with each travelers’ hotel spend.

The reason we used “spend” as the comparison is quite simple. All programs’ award values are determined by how much money you spend on hotel stays. Confusing only because of the varying earning rates, even with these differences, it’s the total number of dollars you spend that ultimately determines your reward options.

No comparison, including the one presented here, can therefore be perfectly accurate. And our travel profiles will not be identical to the actual behavior of any real frequent traveler, of course. We acknowledge these limitations at the outset, yet we hope that our comparison has harnessed enough relevant information, and that we have constructed profiles that are close enough to the accurate spending of real travelers to provide a strong basis for an “apples-to-apples” comparison for the majority of frequent travelers.

Before we get into the comparison, let us say a word about our usage of the term “Average Daily Rate.” For the purposes of this comparison, the term ADR represents an aggregation of the average room rate plus a fixed quantity for additional charges (phone, laundry, etc.). Based on information from Smith Travel Research, Inc., a leading lodging industry research firm, a typical traveler spends an additional 30 percent on top of the average room rate on amenities. For the following comparisons, the dollar volume of our levels represents total spend, 70 percent of which is room rate and 30 percent reflects extras charged to the room. For example, if the average room rate is $100, then the ADR would be $143.

We’ve calculated the yield in both points and miles, where applicable, and instead of speculating about potential redemption options for members, we focused on earning ratios to determine which program offered the best value in each category. With various ADRs changing too fast to compile (last year Starwood’s overall ADR increased 11.7 percent and Marriott’s was nearly a 6.3 percent increase and climbing), it was difficult to present a “typical” view of a traveler’s profile. So we are simply presenting the point earnings based on three levels of ADR and then comparing the totals according to varying nights per year that our readers may stay at hotels.

The Profile
The low-spend traveler

The “low-spend” traveler profile is based on a total hotel spend of $2,052 with an average ADR of $108 based on three large and mid-sized cities (Washington, Portland and Pittsburgh) multiplied by nineteen nights per year. The profile assumes this member continues to qualify at the corresponding elite level for the number of annual nights and the appropriate bonuses were included in the comparison. As well, this profile assumes that all stays were in full-service hotels. Hilton HHonors members chose Points & Points as their Double Dip option.

What we see

With only nineteen nights spent at hotels in a year, chances are that members can’t expect too much — and they are right to keep expectations low. The overall champ here is Hilton HHonors by finishing with the pack on basic award redemption at the lowest level but excelling in the Opportunity offer and the tie-breaker is, of course, all those additional frequent flyer miles earned because of their Double Dip Options program. While it can be confusing to figure out which program is most rewarding, it’s worth the effort. Best Western and Priority Club finished at the bottom with low-spend members earning only two free nights at the lowest award levels. Priority Club sprinted to the top with their Point Breaks program, proving that members who know the program well can take advantage of Point Breaks and adjust the value of the program upward. And the winner at the base level is the Choice Privileges program with this member earning four free nights after spending just $2,052 over the course of a year. And let’s not forget Wyndham Rewards, which is the only program where the member actually earned enough points for a free night at the highest standard award level — all this without an elite level program.

The Profile
The moderate-spend traveler

The “moderate-spend” traveler profile is based on an annual spend of $5,928, which reflects a composite ADR of $156, approximating travel to Atlanta, Boston, Philadelphia, Phoenix and Raleigh/Durham, multiplied by 38 nights per year. The profile assumes this member continues to qualify at the earned elite level, and appropriate bonuses were included in the comparison. This profile assumes that all stays were in full-service hotels. Hilton HHonors members chose Points & Points as their Double Dip option.

What we see

The Hilton HHonors program captures the top overall value in this profile, finishing first in miles payout , second overall in standard award redemption and first in the special award opportunity category. Identical to the results of the low-spender profile comparison, Choice Hotels Privileges can stake a claim to best base value, earning 14 free nights on nearly a $6,000 spend. Another top contender is the revitalized goldpoints plus program, finishing in third place for base value earning and second for miles payout. What about getting to that top award level? Hilton HHonors and Wyndham Rewards members would earn enough points for three free nights at the highest basic category. Priority Club again shows strength in their Point Breaks program, finishing in the top three in the special award opportunity category, though they end up at the bottom when comparing the base value earning.

The Profile
The high-spend traveler

The “high-spend” traveler profile is based on an annual spend of $19,532, which reflects an aggregate ADR of $257 in cities that are also major hubs for large airlines (New York, Los Angeles, Chicago, London, Dallas, Las Vegas, Seattle, Minneapolis, Kansas City, Austin and Jacksonville), rounded to the nearest dollar and multiplied by 76 nights per year. This profile assumes the member continues to qualify for elite status at the highest elite level, and appropriate bonuses were included in the comparison. As well, this profile assumes that all stays were in full-service hotels. Hilton HHonors members chose Points & Points as their Double Dip option.

What we see

Surprised? Even at the high dollar spending level the Choice Privileges program performs well, although Hilton and Hyatt are right along with Choice. When you take into consideration Hilton HHonors Double Dip and the value of the additional miles at this level, HHonors again takes overall value. But if you are a mileage collector, then look no further than goldpoints plus which, if you know how to redeem your points for miles, gets richer the more points you have to redeem, unlike most programs with a static conversion chart. And speaking of miles, this is where Starwood Preferred Guest shows off its dual personality. But what about Wyndham Rewards? Who ever thought they were the mileage program they proved to be?

What we’ve learned is that Hilton offers an extremely valuable proposition with their Double Dip program. Congrats to them for performing well with all these measurements. But there are other ways to measure the value of your hotel program. Next month, we’ll convert points into actual hotel nights at various popular award destinations, mid- and upper tier and see how the reality meets the tale of the tape.

Taking everything into consideration, the most important question to ask yourself is this: Do you belong to the right program?