Major Hilton HHonors Devaluation In Making – New Award Categories

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Hilton HHonors sent the following innocent sounding email earlier today. When program sends you an email about changes to the program and points that you should learn about them, they are rarely, if ever, for the better.

hilton-hhonors-email

What do you think about this change and it is going to affect you? Leave your comment below.

Let’s read this email. The Premium Room Rewards are 99% of the time very unwise option requiring often double, triple or quadruple number of points per night compared to the regular awards. There are occasional glitches, however.

Premium Upgrade Rewards never make any sense if you have any status with Hilton HHonors.

Points & Money Rewards are sometimes a decent deal, but this option was already devalued last year after its introduction.

Of course, there is no mention of these new drastic changes more than an advise to check “important changes” on Hilton’s website.

Hotels Per New Categories

hilton-hhonors-number-of-properties-per-award-category

Approximately 75% of Hilton’s properties are in the award categories of 4 and 5.

Point Requirements per Award Category

hilton-hhonors-categories-old-new

So, Hilton is introducing 3 new award categories and only the first three will have fixed number of points required throughout the year.

New Seasonal Award Pricing

The number of points required for a free night will greatly vary from month to month within a category. I think that we can expect that within a category most of the nights will be at the higher than lower end. This is just my educated guess based on how these programs tend to work. They can i.e. advertise lower 30K award night for category 7 but vast majority of the months will be available only at 60K level per night.

hilton-hhonors-seasonality

Hilton has released a tool that you can use the check the prices of hotel awards from month to month. You can access it here.

hilton-hhonors-seasonality-tool

I calculated the average number of points required for the new category 10 properties (70K to 95K per night) and the average point requirement for the next 12 months is 86291 points/night.

New Award Chart Effective March 28, 2013, at 12:01 CMT

Download (PDF, 1.21MB)

Hilton has made available a PDF of all their properties and their future award categories. Unfortunately, they have not included the current categories of these properties.

You have until midnight on March 27, 2013, to book under the old point requirements as far out as Hilton’s reservation system allows and award availability exists. All the bookings made starting 12:01AM CMT on March 28 will revert to the new chart.

Fifth Night Free Vs Current VIP awards

Hilton is apparently going away with the VIP awards that were only available at Silver, Gold, and Diamond level, and introducing Fifth Night Free. The sweet spot at the VIP awards was at the 6 nights that gave you 25% discount. The new fifth night free is 20% discount at 5 nights.

Category 10 properties

Here’s the list of new category 10 properties and the required number of points required per month under the seasonal fluctuation. You can see the average number of points requires for each of the properties and the change from the current award chart.

hilton-bomb

Then, I decided to compare the change in VIP awards to 5th night free using these averages. The average number of points required per night have gone up more than 100% in some instances.

hilton-hhonors-vip-vs-5th-night-free

You have to also bear in mind that these were calculated using the averages. The number of points required during the “high” season, when people tend to redeem, is likely on the highest end and the percentage devaluation higher.

Current Hilton’s Sweet Spots

I have written about the good deals on Hilton’s award chart previously. Hilton’s program has been heavily skewed for aspirational awards in places in Koh Samui, Maldives, French Polynesia, and Seychelles.

Now, the number of points required for a “free” night is going up from 50% to 80% (or even more) depending of you redemption patterns

Why programs devalue the points?

The outstanding points on Hilton’s balance sheet represent liability. The quickest way to lower the future liability and to book a one time gain is to tweak the award charts.

Let’s assume that Hilton sold $100 million worth of points to Citi last year and booked a profit of 40% of those sales leaving a future liability of $60 million. Now, they change the award charts and the way people use and redeem points. This could lead to a reduction in future liability 50% and Hilton could book a one time gain of their loyalty program of $30 million.

These figures are entirely fictional but represent how these are carried on the books and how the future liability can be lowered.

Conclusion

For those that are redeeming on the high end, the devaluation of Hilton HHonors points can be greater than 100%. These aspirational awards have been the bright spot of the program, but have required the loyal Hilton guest often save for quite some time to reach the required number of points for these awards as they require 6 night stay.

I will try do to a more comprehensive analysis tomorrow and to include category 7, 8 and 9 properties as well.

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  • jose carvalos

    The Premium Room Rewards are 99% of the time very unwise option
    requiring often double, triple or quadruple number of points per night
    compared to the regular awards. There are occasional glitches, however.

    Premium Upgrade Rewards never make any sense if you have any status with Hilton HHonors.

    Not true. I’ve seen many premium rooms at a lower point cost than standard. Upgrade rewards guarantee a room where as “any status” does not.

    • http://loyaltylobby.com/ John O.

      I have written about these few times.There has been glitches like the Penthouse at the Hilton Residences in Colombo at greatly reduced rate, but most of the times these are really horrible value.

      The same goes for Premium Room Rewards. You would do much better by taking the Nor1 offer for upgrade for cash or negotiate something on the spot at the hotel.

  • MD

    I earned over 1 million Hilton points last year. When I looked at the Hilton resorts that were available and the cost in points, I was very disappointed and I “moved” to another hotel chain. This just confirms that I made the right decision. Now they are devaluing these points even further. I hope the market punishes them. I know I am done with Hilton.

    • http://loyaltylobby.com/ John O.

      Hilton’s sweet sport has been the very high end properties that are now doubling in price. The lower end awards have never been a good deal with Hilton.

  • Brandon

    I need to burn, burn, burn some points. I already shifted away from staying at Hilton properties and now have that decision cemented.

    • http://loyaltylobby.com/ John O.

      It never make sense to “bank” points for way too long. Sooner or later (often sooner with these “loyalty” programs”) you get basically screwed.

  • Michael

    I am diamond by stays and cc, time to shift. The seasonal thing is a lie, the top hotels are allthrough the year 95K. Unless they come up 20 points per dollas spending! I hope people will stay too in other chains, they deserve to feel a decrease in income.

  • Leo

    This devaluation is the last straw. This is a loyalty program (not a CC program), and Hilton just devalued my (past) loyalty out from under me. They’ve lost my trust, and my loyalty. I will shift all my future Hilton business (where a property location is not the critical/deciding variable) to SPG and Hyatt. Bye Hilton!

  • Rich

    I guess it makes sense to book before 28 March as it looks like Hilton points reservations
    go as far out as Feb 2015!

    • http://loyaltylobby.com/ John O.

      Absolutely. Just writing a piece about this.

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  • Jen

    Hi John, I am looking at Hilton Bentley Miami/South Beach, it is currently a Cat7 hotel, but its redemptions rate is far above 50k. What did I overlook?

    • http://loyaltylobby.com/ John O.

      Likely a premium room reward. If the hotel doesn’t have their standard rooms, the higher category rooms are available at usually at VERY high point rates.

  • Jen

    Ohh, it is a suite. LOL

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  • Mari

    I have started a petition on Change.org called: Hilton Honors Stop Restructuring Points

    Please check it out and sign on! Maybe we can still turn this Titanic around!

    • http://loyaltylobby.com/ John O.

      You can always try, but better is to vote with your wallet in case that you are not satisfied with the program.

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