Millions of frequent travelers who stay with chains such as Hilton and Marriott this month will find their loyalty points won’t earn them as many free hotel nights as in the past.
To varying degrees, Hilton, Marriott and Starwood have revamped their loyalty programs so that it’s likely that booking a free award night will require more currency. The changes come as hotel rates rise, especially in big cities. Starwood’s changes will have the smallest impact on consumers.
For frequent traveler William Humphrey, Hilton’s changes are so profound that he’s switched his business to Starwood and is in the process of burning his 535,000 Hilton HHonors points. He says the program’s changes make his points worth seven award nights, down from 15.
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“In short, Hilton has clearly stated that my past loyalty is worth less and less to them each time they make these radical program changes, and my purchase behavior changes are the only logical response,” Humphrey says.
He’s also stopped using his co-branded American Express Hilton charge card. He may also shift some business to Kimpton and Omni hotels, “where recognition, not points, are the true rewards of loyalty,” he says.
“In a lot of instances people will shift loyalty,” says Seth Miller, a former consultant who traveled frequently and who now blogs about travel and loyalty points.
Switching companies, however, may not solve the problem because other hotel companies are also changing their rules.
Marriott: More points required for 36% of hotels
The changes coming this spring to the Marriott Rewards program will push 36% of the hotel giant’s 3,900 hotels into higher-tier categories. Just 1% of Marriott International’s hotels are being moved into lower-tier categories, which would make the hotels cheaper for members. The remaining 63% of hotels will remain in their existing categories.
Many factors go into deciding whether a hotel should be moved up or down, such as pricing in a particular city and the popularity of a particular hotel with members, says Marriott spokeswoman Laurie Goldstein.
Additionally, Marriott will add a new, ninth category for its most expensive hotels, such as the JW Marriott Essex House in Manhattan. “Category 9″ will contain 12 of Marriott’s most sought-after properties, almost all of which are located in the world’s priciest vacation cities – New York, Paris and London. A night in these hotels will cost 45,000 points per night, up from the 40,000 currently required for the highest-tier hotel.
Goldstein notes that nearly three-quarters of all hotels (73%) fall in the less-expensive categories (one through four).
To take advantage of the current rates, members must book their redemption stays by May 15, Goldstein says. They can book up to 50 weeks in advance and book even if they don’t currently have all required points in their account.
Hilton: Sweeping changes including peak-season pricing
The 34 million who belong to the Hilton HHonors program face a variety of changes that go into effect March 28, as outlined on Hilton’s website.
The program, for instance, is adding a 10th category for its most-expensive hotels that prices some hotels at 95,000 points per night.
The newly opened Conrad New York in Lower Manhattan, for example, is now a top-tier Category 9 hotel, requiring as much as 80,000 points per night, up from the current 50,000. The pending changes also require members to burn more points when booking stays during peak periods.
Members hoping to cash in their points for a holiday trip to New York might fare the worst, judging from Miller’s analysis of Hilton’s changes, in which he identifies the “60 best changes” and the “40 worst changes.” More than half of the “40 worst changes” are Big Apple hotels – nine Hampton Inns, five Hiltons, four Doubletrees and four Hilton Garden Inns, according to his analysis.
Hilton spokesman Scott Carman notes that the changes give members new benefits, such as a fifth night free when they book four nights using loyalty points. The additional benefits, he says, “help us to stay competitive” with rival programs.
“Even after the program changes, Hilton HHonors members spend less for a free night than any of the major competitors,” Carman says, citing frequent traveler Gary Leff’s “View from the Wing” blog.
But while Leff notes that Hilton “is the cheapest for the lowest redemption category,” with a free night coming as quickly as spending $333 vs. $750 for Marriott and about $1,000 for the others, he also notes that the room may not fit everyone’s idea of a desirable award room.
When consumers pick loyalty programs, however, they consider a number of factors beyond how how lucrative rewards are in exchange for spending, Leff writes. Key considerations include whether a chain has hotels in places they travel, how well the hotels treat elite travelers and whether the hotels match their budget. Given all the factors, Leff says considers Hyatt’s loyalty program No. 1 and Starwood second when it comes to the best top-tier programs.
Starwood: Cash and points option gets pricier
Starwood decided not to overhaul its program in a major way this year, says loyalty chief Chris Holdren.
“We know that one of the things that members value is consistency. It is real currency. They worked hard and traveled a lot to earn the points,” Holdren says. “We approach a change of that magnitude very cautiously.”
The last time Starwood made major changes to its points program was in Feburary 2007, when it added a new, seventh category for its most expensive hotels, such as the St. Regis Bal Harbour in South Florida.
But Starwood has made it more expensive to use its “Cash & Points” program designed for members who don’t have enough points to book their desired vacation. These transactions typically account for a small percentage of SPG redemptions.
Still, he says, “members were frustrated” with the program because too few hotels were offering stays through it or they were offering only a limited number of lower-end rooms. Now, with the changes, he says that members say they’re finding more hotel options and more room types – including the best ones with oceanfront views.
The catch? Price hikes. A night in a Category 4 hotel, for instance, now costs 5,000 points and $75 in cash, up from 4,000 points and $60 cash. A night in the least expensive Starwood hotel will now cost 1,500 points and $30, up from 1,200 points and $25 cash.
The cash and points required for SPG’s most desirable locations (Category 7) did not change; for all other categories, the price was raised by between 16% and 25%.
At first, members were upset. But now, he says, “we’re seeing member feedback come back around as they’re seeing around the world hotels that didn’t offer [the option] before.”
More change expected for loyalty programs
This year’s shakeup could signal bigger changes ahead for programs that emphasize points, as opposed to recognition or experiences.
During USA TODAY’s second annual hotel CEO roundtable in January in Los Angeles, Wyndham Hotels CEO Eric Danziger said that chain is at the beginning of a five-year plan to overhaul its current loyalty program. One factor fueling change: As an increasingly global company, “the way in which you recognize people is very different” depending on a region’s culture, he says.
Carlson Hotels, parent of the Radisson chain, also sees change ahead.
“We will see over the next years a whole evolution of loyalty programs in our industry,” said Thorsten Kirschke, COO of Carlson Hotels. “The element of surprise is becoming an increasingly important thing. It’s not anymore the dull compiling of points which then nobody can use because there are blackout [dates], and you get frustrated rather than becoming loyal.”
The recent changes underscore how hotel companies are squeezing more money from consumers, writes Brian Kelly, who writes thepointsguy.com blog.
“The real takeaway here is that with a few exceptions like Club Carlson, no matter which hotel brand you give your loyalty to, you’re going to have to spend a lot more money – whether it’s in terms of the outlay just to rack up the points or the cash copay on a cash & points redemption – to earn enough points to stay at a hotel you want.”
Readers: Will the changes make you switch hotel companies?
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