We often get asked the question if hotel loyalty programs are even worth it for the average customer given the mediocre earnings and sometimes lack of promotions (such as in Hyatt’s case).
Many hotel loyalty programs pretty much reached the point where the earnings of loyalty currency based on the individual revenue spend alone are so mediocre that it simply doesn’t pay off for the average customer to bother with it.
In order to make a loyalty program work one needs to really look at the hard benefits provided by the membership which in most cases requires to carry an elite tier. The elite tier benefits can in many (if not most) cases be worth much more than the points you earn from the hotel rate you pay for your stay as you can use an array of perks to figure out the actual worth of being a member:
- Internet Access
- Late Check-Out
- Welcome Bonus (per stay)
Especially the Welcome Bonus can make a huge difference in how many points the member actually earns per stay.
With the introduction of ‘World of Hyatt’ for example the chain completely eliminated the 1000 bonus points amenity per check-in (in fact they eliminated ANY welcome amenity). This is a big loss in terms of points especially for road warriors with many single night stays or individual check-in’s over the year. Someone with 30 Check-ins per year was able to score 30,000 Points which is a free night at Hyatt’s top of the line (Category 7) Park Hyatt properties in either New York, Sydney or Tokyo.
Another ridiculous offer is Marriott which gives 500 Marriott points for their Platinum Members as welcome amenity. To put that in perspective, a decent mid range Marriott Hotel paid by points costs anywhere between 25,000-35,000 Points a night and those are not even top range properties.
I find the Welcome Bonus worthwhile though when it comes to Starwood (500 points per stay for Platinum) and Hilton (1000 Points for Diamond) given their award charts. It’s possible to get a really decent hotel night with the welcome bonuses alone over the year.
Take the following SPG example from a stay at a random Starwood property such as the Westin Los Angeles Airport:
- Hotel Stay: $100 Rate
- Points Earnings 200 Starpoints + 50% Platinum Bonus: 300 Starpoints
- Platinum Amenity: 500 Starpoints
Total Starpoints earned: 800
- Hotel Stay: $100 Rate
- Points Earnings 200 Starpoints
Total Starpoints earned: 200
Not so bad for the Platinum, right? Even without a promotion going on (and Starwood is still pretty good with promotions, especially the Select Member Exclusives available several times a year).
Unfortunately the calculation looks much different for a basic member without status who only collects 2 Starpoints per USD spent at the hotel which would net in a quarter of the points earned on the same revenue. I dare to say that unless the base member intends to make a run for status it’s completely worthless to go for the loyalty points here. Such a guest should hunt for the best rate available through an OTA such as Orbitz (see my comparison article from earlier this year).
The same pretty much (and even more so due to the lack of proper promotions) goes for World of Hyatt where earnings got so dismal it isn’t even funny anymore.
You are able to find decent Hyatt properties for 12,000-15,000 points a night (Hyatt Regency Tokyo, Grand Hyatt Bangkok, Grand Hyatt Taipei) but those can usually be booked for ~$160 a night. Yet you have to spend approximately US$3000 to get to that point. Again, this is a calculation for base members not taking status bonus and benefits into account, bringing us back to the point why it makes less and less sense for non-status (even non top tier) members to go for certain loyalty programs. A 5-7% cashback is less than half compared to what one is able to get immediately using certain discount coupons and loyalty currency from OTA sites such as Orbitz.
Who is the ‘average base customer’ ?
Pretty much anyone who isn’t familiar with the game of loyalty programs or remotely interested in it. People who stay at the hotel, take up a random room at a random rate (might even be quite a horrible rate) and take whatever shoddy room they get from the front desk. Sometimes they get lured into signing up for a loyalty program by front desk person because the property or chain runs a signup challenge for their employees. The benefits for such customers in the long run are slim to none.
I want to repeat what I said in my previous article:
Always watch your bottom line. If you feel like you can squeeze the loyalty programs for what they offer you in benefits then fine. Should you feel you come up short though then it might be time for another strategy.
It’s always possible to keep a status such as Hilton Honors Gold which can be had via a 4 Stay fast track (John wrote about it here) or by applying for a credit card in some markets and keep it on the side for stays where you feel a status is beneficial. I consider Hilton Gold the most valuable and easiest to obtain mid tier status of all the programs.
Some customers (especially those located in the U.S.) might be able to get a bit of a head start in signing up for one of the credit card products that are out there in the market. Many of those come with an annual free night and status benefits that more than cover that rather low annual fee (Hyatt & IHG cards from Chase come to mind).
These programs pretty much only work via promotions to boost the points balance unless you can find other means of racking up more points such as having a credit card or get occasional points credits when facing issues at a hotel (see our various Compensation Clinic cases).
I really don’t like to assign a face value for miles and points. One of the most asked questions is ‘What is a mile/point worth?’ and maybe we will try and publish a guideline for that at some point but such things are situation and location dependent. I was once able to book a Hyatt Place for 5000 points while the rate was over $400 a night. At another occasion I found a 20,000 point redemption and the rate for that property was $80. There is simply no blueprint for that sort of thing and I usually tend to tell folks not to overvalue their points balances. Burn them when you feel it’s right.