IdeaWorks Switchfly that publishes airline reward survey once a year (which I have covered at least once here on LoyaltyLobby) has now expanded to do a similar study for four hotel loyalty programs.
They have tried to come up with a value attached to a point and a “payback” in terms of room rates and number of points required for a free night.
Here they have calculated “theoretical” payback value by dividing the number of points required for award by the number of earned at the Best Flexible rate.
Rewards Point Value
Here they have divided the Best Flexible rate by the number of points required for an award.
Here are the best and worst values found on the study.
Here’s the press release:
This study overestimates the value of a point. The value is calculated based on the Best Flexible Rate (anyone ever book those?) divided by the number of points required for a free night.
We can all come up with examples when the paid rates are throughout the roof while award nights still are available. Using the inflated rate that probably nobody pays to come up with a best payback ratio is simply ridiculous.
I do believe, however, that the study is right that the Hilton HHonors, Marriott Rewards and IHG Rewards Club are roughly at the same level when promotions are not counted in and that SPG awards are 50% more expensive.
The study pushes an opinion that it would be better for the loyalty program to dynamically price the awards. Surprise! Surprise! The company behind of this study is providing such a solution for the travel industry.