HH Devalue Not As Bad As We Think?

Discussion in 'Hilton | HHonors' started by TheTourVan, May 27, 2013.  |  Print Topic

  1. TheTourVan

    TheTourVan Active Member

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    I posted this on another travel forum, but have to say after poking around this one from an organic search, I really enjoy the message board here and wanted to post it here as well.


    So before I go any further, obviously the answer is yes. They are making our points worth less over time and costing more money than in the past. However I am speaking more about all of the talk about leaving the program (me included) because of this recent and over the top change. Before people flame me or call me crazy, let me explain.

    Hilton now has properties that cost more than any other without a doubt, but keep in mind earnings are higher as well. Lets assume for the sake of argument that a person had the Hilton Honors Citi Visa, Amex SPG and Chase Marriott.

    Hilton Honors at gold will earn you close to 27.5 points per dollar.
    Marriott and SPG come no where near that and I mean NO where near that.

    Now yes, the redemption is where it kicks in and it certainly has skyrocketed. However if you are earning 3 times as much or even twice as much in points per stay, is there really much of a difference? Up until last night I was up in arms and despite being with Hilton since 2002 (as well as other programs), I was all but done. Then I decided to take emotion out of it and bring it right to the spreadsheet.

    Now again, this is strictly just my spending, but with Hilton and the new horrible devaluations, I was still ahead with Hilton Honors than I was with SPG or Marriott making the same stays (which are about 36 per year). Now to reiterate, this makes the assumption that one has the credit card for all three matching programs.

    So my question is this, despite the horific devaluing of the program itself, SPG is still considered by many the gold standard by which all other cards and programs are measured and my spreadsheet (I have checked it three times now) still says I get more out of Hilton than any other. The emotional side of things gets me all jacked up and ready to quit, but in reality if point redemptions raise higher and point earnings raise higher, it becomes a wash. Meaning if the credit card offering 10 points per dollar spent came out on the same day as the massive point shift, it might have been more tolerable.

    This is all strictly my opinion, but my thought is since Hilton made the giant move now and it still works out slightly in our favor thanks to the card and over 25 points per dollar spent, then when other companies devalue again (and we all know they will), Hilton could not possibly think of doing it again and the decision to stay worked out.

    I dont think there is a right or best program for everybody, just my findings on our experience and despite the awful devalue, us still coming out ahead with HH than we would have with any other that we have found.
     
  2. MX

    MX Gold Member

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    It's fairly predictable that a devaluation would affect both accumulation and spending of points. You don't need spreadsheets to illustrate this concept. Does it mean that a constantly devaluing currency can be used the same way as one with a stable or predictable value? Absulutely NOT, primarily because there's always a lag between accumulation and spending of points. Point users only have an incentive to accumulate points, if they have a reasonable assurance that points will have the expected value by redemption time.
     
  3. TheTourVan

    TheTourVan Active Member

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    I actually disagree a bit. First the spreadsheet was there to tell us based on OUR spending and stays scheduled, if we were better off with Marriott or SPG.

    Second, to think that any business (loyalty points or otherwise) will not have a change in value over time would be a tad bit odd based on examining both history of time and/or any currency in the world.

    Nobody likes a devalue and I am certainly not "sticking up for it", but if a devalue also means more earnings potential is available OR that they are merely catching up with the rest of the world, I am not sure that it is the devil of all devils that people are making it out to be.
     
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  4. Mapsmith
    Original Member

    Mapsmith Gold Member

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    I look at redemption versus earning by looking at similar properties.
    (I am only plywood in both hhonors and SPG)

    I can usually book a Sheraton Four Points for abut 3,000 to 6,000 points per night
    I can usually book a Hampton of Garden Inn for 10,000-20,000 per night.
    (Both vary according to locale of course)

    Sheraton AMEX gives me 1 point per dollar.
    Hilton AMEX gives me 3-6 points per dollar.
    If it takes 3-6 times as many HHAMEX points to redeem as SPG AMEX points, and the earning at HHonors is 3-6 times as much as at SPG.

    It seems like a wash.

    Then you have to look at location.

    Unfortunately, HHonors wins there as there are simply more HHonors properties than SPG.

    But given my druthers, SPG all the time. They just need to get more properties where I go.
     
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  5. MX

    MX Gold Member

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    I agree. If any currency issuer (e.g. a state or central bank) wants to discourage savings, they will start debasing their currency. The same logic applies to the HH "loyalty" program. Devaluations will discourage users from accumulating HH points. Of course people can continue staying in Hilton hotels, and collect points unintentionally. ;)
     
  6. Wandering Aramean
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    Wandering Aramean Gold Member

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    If all you cared about were the hotels with over-water bungalows or similar then the devaluation was very real. If you have a more balanced view of travel needs it isn't quite so bad.
     
  7. NYCUA1K

    NYCUA1K Gold Member

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    You'd be surprised...

    Neither the world nor micro/macroeconomics is static. To expect that a loyalty program will not make adjustments when the world and business models are changing is to ignore the dynamic nature of the world we live in. Room rates have gone up, meaning that more points are earned with each stay; there are credits cards that now award as many points (Citi Reserve) as or more (AMEX Surpass) than what one gets from the spend on the stay itself; churning is another source of points for those who can use it well; virtually every credit card out there nowadays earns points on virtually every type of merchandise. The resulting mountains of points made it "cheap" to redeem for free stays at high-end hotels, which, of course, people were targeting preferentially for a reason that should be obvious: why go for low-end properties when high-end ones are so "cheap" ?! This thus set up a dynamic in which people were earning points left and right and redeeming them at some of the most luxurious properties in the world, which, as a result, were making no real money even though they were usually booked full. You must already have guessed where this was going: The loyalty programs (not just HHonors) decided to make a "rates correction", mostly at high-end hotels, known as "devaluation". As I had demonstrated, the purpose of the HHonors "devaluation" was to make sure that guests will spend some money even on reward stays. How so? The only reward option that still makes high-end properties like W=A or Conrad affordable after D-Day is Money+Points.

    The folks who complain about "devaluation" forget that thousands of properties within the Hilton portfolio saw very little change in redemption rates.
     
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  8. mattsteg
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    mattsteg Gold Member

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    I'd venture that it's not so much a matter of balance of travel needs, but rather an evaluation of where poi TS are advantageous vs other currencies.
     
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  9. NYCUA1K

    NYCUA1K Gold Member

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    I do not buy that assertion at all, and the way to see why not is to think of loyalty points as currency, which they are. Now substitute money for point in your sentence and you will see that no one has ever been deterred from making money because of fear that a future economic downturn would decrease the value of the currency. People's travels will happen whether or not loyalty programs exist, meaning travelers will continue to stay at Hilton or Hyatt or SPG properties. Therefore, knowing what I now know about what can be accomplished with loyalty points, I would not leave points on the table (or in the bed) at any property for fear of what the future may do to the value of those points, which can be thought of as being susceptible to the same types of economic uncertainties as any currency.
     
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  10. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Certainly those who have written here or on FT about their million point balance have hopefully learned a lesson here.
     
  11. MX

    MX Gold Member

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    National currency is a monopoly and mandatory to use (i.e. legal tender). If it had to compete, it wouldn't stand a chance. In the early years of USD especially, the feds had to expend much effort to pursue and stamp out any competition. That's how the Secret Service was born. The role of economic downturns is not important to the present discussion. But just for the record, currency debasement is much better associated historically with economic booms rather than downturns.
     
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  12. Counsellor
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    Counsellor Gold Member

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    You can't compare based solely on number of points. That's like saying that it's better to be paid in Czech Koruna because you get 20 of them where you'd only get one US dollar.

    I value SPG points at about 3 cents apiece because of their versatility.
    I value Marriott Rewards points at one cent apiece (unless being used for a Travel Award).
    I used to value HHonors points at about .67 cents each, but after the latest devaluation/category inflation I value them at .33 cents each.

    As to earnings, I'll use me as an example (since it's my benefits I'm concerned about).

    As to Marriott Rewards, I'm Platinum and hold the Marriott Rewards Chase credit card, so I earn 20 points per dollar spent at a Marriott (somewhat less at Residence Inns, but let's go with full service). To me, that has a buying power of 20 cents.

    I'm Gold in Starwood and hold the SPG AMEX, so I get 5 SPG points per dollar spent. To me, that has a buying power of ~15 cents, perhaps much higher depending on how I use them.

    I'm Gold with HHonors, and hold the Citi HH card. If I get 27.5 points per dollar spent, to me that's slightly less than 10 cents in buying power.

    So, for me it's Marriott, then Starwood, and then Hilton. Do I stay at each of the chains? Yes, depending on where my travel takes me. But the order of preference is as was stated.

    Before the devaluation, Hilton and Marriott were very close in yield. I've been an HHonors member since the program started in the late 1980s, and I do have a stash of HHonors points, which I spent down somewhat when the devaluation was announced. I now have award redemption stays booked with Hilton for later this year and will still patronize Hilton when it's necessary or advantageous. But I don't value the HHonors program as much as I used to.

    YMMV, of course.
     
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  13. NYCUA1K

    NYCUA1K Gold Member

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    You use the points to book hotels or miles to book flights, something that you can do with USDs or Yens or Yuans. That makes points or miles currency. The economic downturn is simply the types of uncertainties that may require a company to take measures like devaluing their points [something that Greece or Spain or Portugal could not do to boost their economies because they gave up their own currencies to join the Euro world! Currency devaluation is a good tool for boosting trade and economic activity because it makes one's exports cheaper].

    Is that some kind of anti-Keynesian economics. My sense is that you got it backwards. The purported "devaluation" of HHonors points has not in the least bit discouraged me from accumulating points. On the contrary, it has made me start to look for creative ways to accumulate even more points because that is one way to fight something like that over which one has no control...the other way is to jump ship and move to Hyatt only to find out that things are even tougher over there...

    Keynesian economics: saving money makes sense in a booming economy (Americans never learned to save!), whereas spending should be encouraged during a recession. The current recession has lasted so long because the stimulus package (ARRA) was too small and, because of the tough economy, people are not spending, which depresses demand, which keeps companies from hiring or producing more, in a classic catch-22. If currency debasement discourages savings, then now is the time to debase the "green back" because we want the government, the people, and companies to spend!
     
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  14. marcwint55

    marcwint55 Gold Member

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    I have a feeling that many of us do care more about the over-water hotels when using points. From my experience those redemptions tend to be the best value. The cheaper hotels in my opinion are very often a waste of points unless one really does not have funds available. I find the same with many airline programs also, as points used for international first class are saving more dollars than domestic coach flights on a percentage basis.
     
  15. marcwint55

    marcwint55 Gold Member

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    I would certainly agree that spending during a recession is helpful to the economy and one can take advantage of bargain opportunities, but rather than saving during a booming economy, I would suggest investing as saving without investing brings much less benefit unless we are in an extreme deflationary period.

    I do agree that the devaluation of points makes one try to get more points to achieve their goals, but the resentment certainly lingers for quite some time.
     
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  16. marcwint55

    marcwint55 Gold Member

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    I spent all of my Hilton points just in time, although had I not learned about the devaluation they may still have been sitting there.
     
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  17. NYCUA1K

    NYCUA1K Gold Member

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    Oh, absolutely. "Savings" is a loose word in this context, but money in a pouch stashed in one's mattress is not what I had in mind when I used it. Whatever one can do to make one's excess money grow faster during a boom still represents "savings" and that is what many, if not most, people do.

    I have no resentment whatsoever because (a) I do understand that changes are inevitable and one must adapt, and (b) I was warned in a fascinating document called T&C that the rules of the game can be changed without notice...
     
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  18. MX

    MX Gold Member

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    That's in line with the current Fed policy. They've kept interest rates at zero, and created an expectation of currency devaluation through printing $3~4 trillion to buy up gov't debt. Both were intended to discourage new savings and encourage spending of any existing savings. By contrast, during the (first) great depression cash was king and actually became more valuable in terms of its purchasing power.
     
  19. TheTourVan

    TheTourVan Active Member

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    I dont really think I did that in my post however. I compared the number of points earned vs the number of points it costs for redemption. Which in our usage comes out to no where near the value you are putting on each one of the programs offerings. That is why there is no right program for everybody.

    To give you an example, lets say a new person is reading this board and wants to get involved. They sign up for Amex starwood and Citi HH.

    HH - Gold and 27.5 ponts per
    SPG - 4 points per

    Now while that may look over the top, one must also look at what it costs to redeem these points which is where the individuality in the programs come into play. For our needs, HH costs for redemption is about 4-6 times that of SPG. That comes out to 16-24 compared to 27.5

    Now add to the mix the other spending on the CC such as 6 per for travel and 3 per for everything else rather than 1 for 1 and you can see that it is not just cut and dry like some want to make it. For you the 3 cents a piece for a Starpoint because of its "versatility" works for you, for us, we dont find them nearly as valuable.
     
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  20. mtlfire

    mtlfire Gold Member

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    As long as they give advance notice. Nothing like a "forced" two weeks in the Maldives :D
     
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  21. NYCUA1K

    NYCUA1K Gold Member

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    If it is "valuation" that concerns you or anyone else, the OP got it right: Hilton is still more affordable than the other programs even after D-Day. What "devaluation" of HHonors points did was to bring their value down toward that of SPG Starpoints, complete with making money+points the most attractive reward option. "Devaluation" just made HHonors almost like SPG -- i.e. just as less affordable. I did the math with the objectivity of a scientific experiment.Check it out and decide. It is how loyalty points should be compared because it uses what each program thinks its points are worth, and not what some blogger claims they are worth...
     
  22. NYCUA1K

    NYCUA1K Gold Member

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    M7VO
    vs. M7VO
    You just gave examples in which currency debasement was or is associated with an economic downturn and not a boom. Some consistency would help to advance your thesis, which remains unclear...
     
  23. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    How exactly would I try to get more HH points to achieve my goals?

    Spend more of someone else's money on reimbursable travel? Sorry, not an option, I don't have a travel sugar daddy.

    Spend more of my own money on Hilton travel? Sorry, not going to happen. I try to spend cash where it makes sense and points where that makes sense.

    Spend more on credit cards? Hardly beneficial to spend more than I need to (unless we count manufactured spending). And I'd rather have 2 UA miles than 5 HHonors points for my $1 dining charge now.

    Shift more spending to my HHonors card? That doesn't just create more Hilton points, it also creates less United/... points.

    No, I am NOT going to work harder to find more creative ways to counteract Hilton's devaluation.

    Same here. The timing worked for me. Now I work on using up points in other hotel programs. And the part of my CC spend that previously went to the HHonors Amex has shifted to other cards.
     
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  24. TheTourVan

    TheTourVan Active Member

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    Our math came out similarly to yours. I understand that everybody hates getting the incredible deals that were had before, as do I, but all of these programs seem eerily similar now and this devaluation seems spot on to do just that. Sure points are worth less, but they are easier to earn, so it becomes a wash.
     
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  25. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Let me insert some words here to illustrate how I read this:

    Sure points are worth less than before, but they are easier to earn than before, so it becomes a wash.

    I assume that's not what you meant.
     

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