Why Hilton’s No-Notice Devaluation is a Strategic Mistake

a long island with a bridge over water

Hilton Honors has made yet another “no notice” devaluation. Although the breadth of the devaluation is hard to determine – one of the main reasons for “dynamic pricing” – people definitely notice when Hilton Honors’ very best hotels start charging more.

Unfortunately, these hotels are now charging 110,000+ points per night for standard rooms. (the previous cap was 95,000 points, with one exception)

  • Grand Wailea, Hawaii
  • Waldorf Astoria, Beverly Hills
  • Conrad Maldives
  • Mango House, Seychelles
  • Roku Kyoto, Japan
  • Waldorf Astoria Amsterdam, Netherlands

I imagine that there are more, even though the Hilton Honors Points Explorer hasn’t been updated…

a close-up of a blue line


No devaluation is a good one… from the perspective of a loyalty program member. But this devaluation is particularly short-sighted for two main reasons.

Many Marriott Bonvoy members are looking for a new home

On March 29, 2022, Marriott Bonvoy is going to implement its own version of dynamic pricing. Some hotels are going to cost 130,000 Marriott points per night, with even greater increases likely in 2023.

This has a lot of Marriott Bonvoy members worried, with some of them looking for a new loyalty program to focus on. One of my most-read articles on InsideFlyer compares Marriott with Hilton – click here – precisely because they are the two major hotel chains that are most similar in terms of quality, scope and elite benefits.

So what does Hilton Honors do?  Remind everybody that it too loves to devalue…  But that Hilton does it with even less notice than Marriott. How dumb is that?

Why buy points now?

Hilton Honors regularly runs points “sales” where members can buy points, usually for 0.5 cents each. These promotions come along so frequently that I regularly joke about that aspect…

But unless some Honors members are particularly bad at mathematics – and maybe some are –  it is really rather difficult to find many opportunities to buy Hilton points and immediately spend them on an award stay. This is especially true because you can earn far more points by paying the cash rate. Click here to re-read an article about when to pay cash and when to spend points.

But there is one situation where you definitely might want to buy points… those high end resorts that have now devalued.  Even though purchasing 95,000 points would cost you $475, this can be a good deal when compared to the cash rate.

Because of the economics of hotel chain loyalty programs, Hilton corporate doesn’t mind at all if you buy 95,000 points to book an award night instead of booking a $600 room rate on hilton.com. Hilton receives $475 from selling you 95,000 points, but only reimburses the hotel a fixed amount – an amount that is well below $475.  That is a license to print money and actually more profitable for Hilton corporate than the fees and commissions the franchise hotel would pay on a $600 cash rate…

Perhaps room rates have risen so substantially that people will still be inclined to buy points in order to book high-end award stays. And 120,000 points obviously costs more to buy than 95,000 points.

But if members actually buy fewer points overall – because they can no longer find the value in buying points for luxury hotel stays – then Hilton has just risked a profitable part of its loyalty program. And for what? A non-cash benefit – members spending more points on award nights simply reduces the amount that Hilton has accrued on its balance sheet as a liability.

Bottom line

Hilton appears to have made a strategic blunder. At a time when it could be poaching Marriott Bonvoy members upset by the upcoming devaluation, Hilton has instead made it clear that they are no better…