When travelling outside of the United States, you might notice how “few” hotel points you seem to earn on your hotel stays.
Here’s an example from a recent stay. I paid nearly $230 for my room, but Hyatt only counted $195 as “Qualifying Spend”.
Why does it work this way?
Value Added Tax (VAT)
In the United States, you are probably accustomed to your hotel room rates being quoted pre-tax. A $199-per-night room rate will probably end up as $215-220 once any local or state taxes are added to your bill. But when you check the number of points earned for your hotel stay, they will be based on the $199 room rate you consciously booked.
In Europe, things work differently. Most, if not all, countries apply a national sales tax – usually called Value Added Tax. By law, prices must be quoted including VAT. So, when you book a €220 or £190 hotel rate, you know that’s exactly what you will pay. (with one minor exception, mentioned in the next section)
However, the major hotel chains calculate “qualifying spend” using the pre-tax room rate. You probably couldn’t care less about the VAT rates in each different European country – after all, you just pay the headline price – but the hotel chains certainly care. So… if it looks like you earned a particularly low number of hotel points, it might just mean that the country you visited has a very high VAT rate. (in the United Kingdom, for example, it’s 20%!)
Local Tourist Taxes
Many cities in Europe add a small, nightly “tourist tax” that rarely amounts to more than 2-3 euros per night. You always pay the tourist tax direct to the hotel, even when prepaying (direct or via an Online Travel Agency) or using points.
Pro Tip – If a hotel receptionist asks you if you are staying for business or tourism, always respond with “business”. This might exempt you from a local “tourist tax”.
In any event, local tourist taxes are also not considered “qualifying spend” for calculating the number of points you earn from your hotel stay.
Once you have reversed out VAT and any local taxes from your room rate, you still might be unable to figure out the base “qualifying spend”. The difference is due to the foreign exchange rate used.
Although exchange rates fluctuate constantly, the major hotel chains update their exchange rates much less frequently. To ensure that they aren’t disadvantaged, the FX rate chosen tends to be substantially “worse” than the actual rate at the time of your hotel stay.
If you’ve ever felt that you earned far too few hotel points for a hotel stay in Europe, take a look at the VAT rate for the country you visited. That should explain most of the difference…