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Seniors on the Go: Hotel loyalty program payouts

By Ed Perkins, Tribune Content Agency

Frequent flyer programs almost always generate a lot of controversy and complaints, along with a lot of ink and pixels; hotel programs not so much. And that may seem a bit odd, given that typical hotel frequent-stay loyalty programs are often easier to use and more rewarding. Fortunately, our good friends at IdeaWorks just published a detailed study of the payback offered by what it calls the four “leading” global hotel systems.

The overall take-away from the study is that the “payback” from the four hotel loyalty programs — the value of the rewards, as compared with what you have to pay to earn them — ranges from a low of 6.1 percent with Starwood SPG to 9.4 percent on Marriott Rewards, with IHG Rewards at 8.6 percent and Hilton HHonors at 8.9 percent coming in a bit below Marriott, but well above Starwood.

These days, almost all hotel loyalty programs work on the same basis: You earn “points” based on how much you spend at a hotel and you use points to buy award rooms for point “prices” roughly related to the standard rates. Even the budget chains — which formerly used a simple “a free room for every eight to 12 paid nights” formula — have pretty much gone to the dollar-based system.

IdeaWorks calculated the payout as you might expect: Last July, researchers made booking queries for a party of two travelers, for one night, for 18 specific weekend and midweek dates between July and February 2016 in eight large metro areas: four in the U.S. and two each in Asia and Europe. They compiled the lowest point level award and the corresponding flexible room rate for each test booking and aggregated the results for chain-wide averages.

As usual, the aggregate or average results included some wide variations:

  • At a few hotels, where room rates were high and point values relatively low, payouts ran as high as 24 percent (Hilton Beijing Chaoyang) and 20 percent at Fairfield Inn, Times Square.
  • At the other end of the scale, payouts at hotels with high “point” prices and low room rates were as low as 2.5 percent (Chicago Sheraton) and 3.1 percent (Hilton Chicago).

The researchers based calculations on entry-level earnings and awards schedules. Most programs, including the four tested, allow for generous bonus point-earning rates for elite-level loyalty members, and some programs also offer valuable award extras to those elite members. Also, the calculations did not include any points earnings through use of co-branded credit cards.

IdeaWorks had previously compiled similar data on airline frequent-flyer programs, concluding that payouts ranged from 5.5 percent to 8.6 percent on major airlines. In addition, the hotel researchers found award room availability ranged from “always” at Hilton to 91.4 percent at IHG, 96.7 percent at Marriott, and 98.1 percent at Starwood — far higher availability figures than for the frequent flyer programs of American, Delta and United.

Although IdeaWorks did not include the other giant multi-brand chain, Wyndham, or any of the independent chains such as Best Western and LaQuinta, a cursory look at those programs shows payouts in the same general range as the four chains in the study. And, at least as far as I can tell, the brand with the most U.S. locations, Motel 6, doesn’t have a loyalty program.

Other take-aways from the study:

  • Membership is free, so you might as well sign up for the program at any hotel at which you plan to stay. Even just being a member often provides some advantages.
  • If your travels are mainly road trips rather than flights, your hotel program could be important.
  • If you fly a lot, Starwood’s bonus points-to-miles programs with several big airlines can more than offset its relatively low hotel payout.

In the few cases where you can make a choice between earning airline miles or hotel points, you’re generally better off with the hotel points. The big exception is when you use airline miles for business or first-class travel, in which case the air miles usually outweigh the room awards.

(Send e-mail to Ed Perkins at eperkins@mind.net. Also, check out Ed’s new rail travel website at Rail-Guru.com.)

Oct. 27, 2015

(c) 2015 TRIBUNE CONTENT AGENCY, LLC.

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