When I wrapped up my recent series on frequent flyer mile valuation, I planned to follow it up with a series on hotel points, eventually. Well, with all of the recent “reward restructuring” – say, if Delta’s miles are called “SkyPesos”, what do we call Hilton HHonors points now? LLira? DDrachma? ZZimbabwebucks? – now seems like a pretty good time to run the numbers, and see just what a hotel point is good for these days. Coming up with an objective value for the major hotel programs’ points will allow us to compare different promotions and offers that would otherwise stump us as “apples-to-oranges” problems. So, let’s examine the question: what hotel rewards program has the most valuable points currency?
Okay, all of you out there rolling your eyes and mouthing “Starwood,” just be patient (Spoiler alert: you’re right, but not by as much as you think). Just like we did with the airlines, our first step is to come up with a methodology for calculating hotel point value. Let’s talk a little bit about the nature of hotel loyalty programs, and what we won’t be including in our analysis.
If you thought the pricing of frequent flyer awards was complicated… hotel loyalty programs can look like quantum differential calculus by comparison. Hotel programs have more price levels for their awards, and the prices often fluctuate based on seasonal demand. On the plus side, many programs have great points & cash options (Starwood) that can be fantastic uses of your points. Some programs (Starwood) will give you a free bonus night when you redeem points for a longer stay. Some programs (Club Carlson) will only give you the bonus free night if you have their co-branded credit card. Some offer special redemption rates (Hilton) for credit card holders, but only at certain properties, and at certain times of the year, and for a certain number of nights, and the rooms are only available by calling a 1-800 number that is answered by an overworked customer service rep eager for her next smoking break, who will route your call into a fantastical telecom bounce house of random transfers and dropped connections, until you reach somebody named “Zagreb” three hours later, who will think you are calling to sign up for a subscription to Sports Illustrated.
So there are many reward options out there. I’m going to stick with the KISS philosophy, and look at the value received from booking a single free room for a single night.
We’ll start by looking at how much cash you’re saving (the price of the room), and divide it by how much you’re paying in points. For example, if you can get a $200 hotel room by redeeming 20,000 points, then it looks like you’re getting a penny a point in value; but just as with airline miles, it’s not quite as simple as that.
When you pay to stay in a hotel room, you’re earning reward points with the hotel’s loyalty program, and often bonus points too, depending on which credit card you use, and whether or not the hotel is running a promotion. But when you stay in a room for free on a reward, then (Soup Nazi Voice) No Points For You. When you crash on the pillow-top bed in your Deluxe King room and fire up the in-room pay-per-view (oh, yeah, sure you don’t), you’re not just paying a certain number of points for the night. You’re also forgoing a certain number of additional points that you won’t be earning.
There’s something else you give up with a free room: an additional step towards qualifying for the hotel’s elite status. Ah, elite status. At the highest levels, it means complimentary upgrades to the Ambassador’s Suite, where friendly native girls gently massage away your travel stress while mixing Mai Tais and feeding you imported figs (hey, just check The Points Guy’s Instagram feed). But the low- and mid-tier statuses have value too, because they can save you real money in the form of free internet and free breakfasts. How much are perks like that actually worth, though? Won’t it be a pain to actually put a dollar value on entry-level status?
Not at all. The hotels tell us themselves what their status is worth. We’ll look at valuing hotel elite status in the next episode, and lay out our methodology. Same Frugal-Bat-Time, same Frugal-Bat-Channel.
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