Ritz-Carlton Rewards launched Sept. 15, 2010 with great fanfare from the world press heralding a luxury level hotel loyalty program. Ritz-Carlton Rewards members receive Marriott brand benefits. Finally Marriott Rewards members receive points and elite benefits for Ritz-Carlton hotel stays!

New Ritz-Carlton Rewards members even receive one free night after two Ritz-Carlton Hotel stays by Dec 31, 2010. The catch is you must never have been a Marriott Rewards member. That eliminates about 30 million loyalty members from this offer.

The Earn and Burn Equation

Earning is only one side of the loyalty equation. The other side of the loyalty equation is the cost to redeem, or ‘burn’ your loyalty points for hotel stays. In January 2009, Marriott Rewards adopted a “Fifth Night Free” hotel rewards table for Marriott brand hotels. Stay five nights and only pay points on four nights. Starwood Preferred Guest has the same 20 percent reward discount. But prior to 2009, Marriott Rewards offered a progressively deeper discount for reward stays of two, three, five or seven nights. Marriott Rewards kept this progressive discount for Ritz-Carlton extended stay rewards until the launch of Ritz-Carlton Rewards.

Ritz-Carlton Rewards Stays Now Use a ‘Fifth Night Free’ Discount

While earning points at Ritz-Carlton hotels is an enhancement for Marriott Rewards members and elite recognition is a bonus, the other shoe did drop with the increased cost for many extended-stay rewards at Ritz-Carlton hotels. Ritz-Carlton Rewards eliminated what I called in my April 2010 InsideFlyer review of hotel loyalty programs the “overall multi-night best value” available to loyalty members.

Tier 1 Imports Value to RC Rewards

Ritz-Carlton hotels are now designated from Tier 1 to Tier 5 for reward stays. Formerly, there were just two Ritz Carlton tiers for Marriott Rewards hotel partner rewards. Former Tier 1 hotels are distributed mostly in the new Tier 1 and 2. The old Tier 2 hotels are in Tiers 3, 4, or 5.

Of 72 Ritz-Carlton hotels, 20 are in the current Tier 1. Reward nights cost 30,000 points, equivalent to a Marriott Rewards Category 6 hotel. The reward tables are most favorable at the 20 Ritz-Carlton hotels in the new Tier 1 and 18 hotels in Tier 3 with an overall lower cost for most reward stays. Two-night stays are 15,000 fewer points for Tier 1 hotels and 10,000 fewer points for Tier 3 properties. The savings is equivalent to base points earned from $1,000 to $1,500 in hotel spend.

Ritz-Carlton Tiers 2 and 4 Cost More

Seven Ritz-Carlton Tier 4 hotels and 26 hotels in Tier 2 require an additional 30,000 or 20,000 points respectively for three-night rewards. This can be $2,000 to $3,000 additional hotel spend to earn the points differential between the old and new reward cost.

Five nights at the Tier 1 Ritz-Carlton Atlanta is 30,000 points less than before; however, five nights at the Tier 2 Ritz-Carlton Denver is 10,000 more points and Tier 4 Ritz-Carlton Bachelor Gulch ski resort and South Beach Miami cost 40,000 points more. Earning that Ritz-Carlton ski or beach vacation will require a few thousand dollars more in Marriott hotel spend.

Extended-Stay Blues

In fact, Ritz-Carlton Rewards is the third move by Marriott Rewards increasing the cost of extended-stay hotel rewards over the past two years. In subtle ways Marriott Rewards significantly devalued Marriott Rewards points.

Marriott Rewards Category 8 hotels in London, Paris, New York and Rome require 240,000 points for a seven-night stay. This is 90,000 more points than November 2008 for the same hotel reward stay; equivalent to an additional $9,000 in hotel spend.

Marriott Vacation Club properties were placed in Marriott Rewards hotel categories in July 2009. Marriott’s Timber Lodge South Lake Tahoe, a Category 6 hotel, increased from 125,000 points to 210,000 points for a seven-night, one-bedroom villa reward. This is equivalent to base points earned from an additional $8,500 in hotel spend.

Respectful Request

Hyatt Gold Passport gave members full transparency of imminent reward changes when it announced early May 2010 the introduction of a new Category 6 hotel reward as of June 4. Members could book hotel rewards using the better value and make changes up to 90 days.

Marriott Rewards shifted over 600 hotels in March 2010 and gave members advance notice on fewer than 10 percent of hotels changing categories.

Ritz-Carlton New York Central Park increased 170,000 points for a seven-night reward stay; equivalent to $17,000 more spend. How long do you think there will be only one Ritz-Carlton hotel in Tier 5?

Ritz-Carlton Rewards members benefit from the ability to earn and redeem points. Marriott Rewards members gained some benefits and lost some value. Some of the Ritz-Carlton hotels are quite good reward value.

So burn points for Ritz-Carlton Tier 1 Rewards today. Hotel category shift may limit your Marriott Rewards choices tomorrow.