Nov092010

The Promotion Variable Part 3: Hilton HHonors 2009-10 Case Study

Hilton HHonors makes a good case study example for illustrating the dynamic changes in promotions in the past two years.

In mid-2009 all the other hotel loyalty programs offered high value promotions as hotel occupancy and room rates plummeted globally.

Hilton HHonors made no attempt to match the free night offers of the other chains.

2009 Q-1 Promotion Hilton HHonors Double Base Points

Terms and Conditions

Offer valid for stays completed between January 6 and April 6, 2009, at participating hotels. To participate, you must first register before you make your reservation. Offer is not applicable to any bookings made prior to the promotional period. “Double Base points” means you will receive a bonus equal to the number of Base points earned during a stay. Bonus points earned on Base points do not count toward VIP tier qualification.

Oops!

In January 2009 Hilton HHonors issued a press release announcing its first quarter 2009 promotion as double base points. The press release incorrectly overstated the promotion bonus as 10 base points per dollar and 20 bonus points per dollar for a total 30 points per $1. Five days later Hilton HHonors released a follow-up stating the initial press release was incorrect. HHonors members selecting Points & Miles would earn 20 points per $1 (10 base points and 10 bonus points) and Points & Points earners earned 25 points per $1 (10 base points and 15 bonus points).

If I only consider the additional bonus points earned above the normal earning rate, then I see this offer is 10 bonus points per $1 in hotel spend. I spend $100 and I earn an extra 1,000 HHonors points, regardless if I choose earning bonus miles or bonus points. The promotion bonus is simply 1,000 bonus points for every $100 in hotel spend.

My promotion bonus points are 20,000 points if I spend $2,000. This is the base points equivalent to $2,000 in hotel spend for the HHonors Points & Miles earner or $1,333 base points equivalent for a Points & Points earner.

The bottom line is there is no arbitrage to be played with promotions multiplying base points. The promotion is simply one where the more you spend the greater your bonus will be.

Promotions based on hotel nights or hotel stays can be strategically planned to maximize the bonus for less money.

 

Hilton HHonors 2009 Q-2 Promotion – 1,000 Bonus Points per Night

Here is the promotion that came in second place at the Frequent Traveler Awards last week for Best Hotel Earning Promotion of 2009. I strongly disagree with the voters’ choice.

HHonors 1,000 bonus points per night Promotion Value – April 13 – June 30, 2009 (no earning limit)

HHonors promotion value is simply $67 to $100 per night for 2009-Q2. This means the 1,000 points per night bonus is earning the HHonors member the equivalent in bonus points he or she would earn in base points after spending $67 per night (Points & Points earner) or $100 night (Points & Miles earner).

Here are the promotion values for the other big hotel chains in the second quarter (May-August) 2009.

That is why this HHonors 1,000 points per night promotion made me laugh to consider its overall second place finish in the Frequent Traveler Awards when these other hotel loyalty promotions were happening at the same time.

Later in 2009 Hyatt Gold Passport tops all these promotion values with their Big Welcome Back free night after every two stays combined with airline miles or G Bonus points while counting all hotel stays double for elite membership credit.

Hilton HHonors 2009 Q-3 Waldorf Astoria Collection and Conrad Hotels promotion

3 nights = 10,000 points

These were a variety of promotions HHonors had going in mid-2009. The Waldorf-Astoria 3-night stay offer was one of the better points earning offers from Hilton in 2009.

Triple bmi miles from April –June 2009 was probably the highest value promotion from HHonors in 2009.

The competitive advantage for Hilton HHonors is its airline miles partners and the ability to earn some serious mileage while also earning HHonors hotel points. Hilton lets members ‘Double Dip’ to earn both points and miles with every hotel stay. This was pretty much exclusive HHonors territory until 2009 when SPG and Hyatt ran some airline miles promotions combinable with points-earning and free night promotion bonuses.

Hilton HHonors has the most airline partners of any hotel loyalty program for earning miles and miles transfers.

The miles earning opportunities were great with Hilton HHonors, however, the points promotions remained weak in 2009.

Hilton HHonors 2009 Q-3 Promotion 10,000 bonus points after 5 stays; limit 10,000 points

The 10,000 points limit really limited the value of this offer to five stays during the promotion period.

 

Finally Hilton HHonors brought an A-game points promotion to members in the final quarter of 2009.

Hilton HHonors 2009 Q-4 Promotion 25,000 bonus points every Four Stays, up to 75,000 points

This was a serious promotion in a year of mediocre offers from Hilton HHonors.

 

The Big Category Shift

Two weeks after this promotion was released to members Hilton announced it was shifting hotels in its reward categories in January 2010. Hilton HHonors increased the reward night cost for more than 80% of its 3,600 hotels by 5,000 to 10,000 points.

I think Hilton HHonors suffered far more bad press from their hotel reward category moves than the company expected.

 

Hilton HHonors 2010 Q-1 Promotion Free night every four stays, limit of 3 free nights.

Hilton HHonors announced the only free nights offer for 2010 first quarter beginning in January.

Suddenly Hilton HHonors was playing the real hotel promotion game that all the other hotel chains had been playing with members in 2009. 

The value of this offer was the long time period for redemption of free nights and no hotels excluded for free nights.

 

InterContinental Hotels Group Priority Club staged an open attack on Hilton HHonors in the fallout of the massive HHonors hotel reward category shift in January 2010. 

As if Loyalty Traveler blog taking on Hilton HHonors wasn’t enough, the game changed when a powerhouse hotel chain like InterContinental Hotels Group gave HHonors members 20,000 points for just revealing their HHonors account balance.

How did Hilton HHonors respond?

Hilton HHonors followed up the 2010 first quarter free nights promotion with an even better “no limit” on free nights offer. 

Hilton HHonors 2010 Q-2 Promotion Free night after every four stays with no earning limit

This was probably the best promotion from Hilton HHonors in a decade.

Hilton HHonors has game again. I dump on Hilton HHonors regularly. My complaints are not that there is anything substandard with Hilton brand hotels. I spent five years as Hilton HHonors Diamond, but after a couple of years with poor promotions while Hyatt Gold Passport was giving away free nights for every two stays and SPG had recurring Stays Count Double meaning as few as 13 nights per year secured top-elite SPG Platinum, I finally decided the grass was greener elsewhere in the hotel loyalty world.

Hilton HHonors 2010 Q-3 Double Base Points (July 7 – Sep 30, 2010)

After six months of free nights Hilton HHonors went back to double points or miles for the third quarter of 2010. This was a mediocre promotion. To restate: Double points offers simply mean the more you spend, the more bonus points you earn so there is limited leverage opportunity to pay for low-cost rooms and redeem for high-priced rooms.

2010 Q-4 Hilton HHonors Promotion – Double base points and quadruple points for Sunday stays.

The slide below shows the earning difference by including a Sunday night in your Hilton stay.

2010 is the year Hilton HHonors flexed its muscle with steroid-strength promotions.

Hilton HHonors promotions of 2009 and 2010 illustrate the variability in promotion value in earning hotel loyalty program points.

Hilton started off slow and then offered 9 months of high value promotions in late 2009 and the first half of 2010. Since summer 2010 the promotions have moved back to spend based offers that are inherently less lucrative for low-spend frequent guests.

Although I was HHonors Diamond for many years, I always earned my status through hotel stays. I never have had a Hilton HHonors status match.

I wonder if Hilton HHonors will status match me back into the fold?

Final hotel folio Loyalty Traveler review for Hilton HHonors:

Hilton HHonors had the most improvement in hotel loyalty promotions for 2010 with back-to-back free night offers.

2011 will be an interesting year to watch Hilton HHonors for its promotional value.

Related Links:

The Promotion Variable in Hotel Loyalty Programs – Part 1

The Promotion Variable in Hotel Loyalty Programs – Part 2

Frequent Traveler Awards Commentary by Loyalty Traveler

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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