Dec292010

Base Points Equivalent Value Method for Hotel Program Comparisons

One of the most stable aspects of the major hotel loyalty programs like Starwood Preferred Guest, Hyatt Gold Passport, IHG Priority Club, Hilton HHonors and Marriott Rewards is the rate for earning base points per US dollar in hotel spend.  

The cost of hotel reward nights changes every year for most programs, but the rate for earning base points in each hotel loyalty program has not changed in a decade.

Base Points Equivalent Value

Base points earn rate provides a stable scale specific to each hotel program. I call this scale the “Base Points Equivalent Value” or BPEV and I will show how to apply this scale for program comparisons and hotel loyalty promotion value analysis.

This first post shows how base points equivalent value correlates fairly well to the cost of hotel reward nights using points across hotel loyalty programs with the notable exception of high category Starwood Hotels being outliers.

In other words, $4,000 in hotel spend will earn sufficient base points for one free night in the highest category hotel reward in most hotel programs. The level of hotel spend to earn a free night is similar across different programs from the low to high range of hotel reward categories using base points equivalent value.

The low end category hotel rewards typically require $1,000 in hotel spend using base points equivalent value. The high-end category hotels for IHG, Hilton, Marriott and Hyatt are all in the $4,000 range.

Hotel Spend Base Points Earning Rate

Assume $100 hotel spend for one hotel room stay.

  • Hilton HHonors = 10 base points per $1 = 1,000 base points
  • Hyatt Gold Passport = 5 base points per $1 = 500 base points
  • *InterContinental Hotels Group Priority Club = 10 base points per $1 = 1,000 base points
  • *Marriott Rewards = 10 base points per $1 = 1,000 base points
  • Starwood Preferred Guest = 2 base points per $1 = 200 base points

* Marriott Rewards and IHG Priority Club have a lower rate of earning base points, 5 points per dollar, for stays at some of their extended stay hotel brands like Residence Inn (MR), TownePlace Suites (MR), Staybridge Suites (IHG) and Candlewood Suites (IHG). InterContinental Hotels brand earn a set 2,000 base points per stay, regardless of hotel spend.

Most hotel programs use 10 base points per $1 including Wyndham Rewards, Best Western Rewards and Choice Privileges.

SPG, Hilton and Hyatt always give a set rate of base points per dollar, regardless of hotel brand.

Hyatt Gold Passport Reward nights = 5 points per dollar base points earn rate.

  • Hyatt category 1 = 5,000 points (equal to base points earned for $1,000 hotel spend)
  • Hyatt category 2 = 8,000 points ($1,600)
  • Hyatt Category 3 = 12,000 points ($2,400)
  • Hyatt Category 4 = 15,000 points ($3,000)
  • Hyatt Category 5 = 18,000 points ($3,600)
  • Hyatt category 6 = 22,000 points ($4,400) 

 

Marriott Rewards = Earn 10 base points per dollar at all hotel brands, except 5 base points/$1 for Residence Inn and TownePlace Suites.

  • Marriott category 1 = 7,500 points (equal to base points earned for $750 hotel spend)
  • Marriott category 2 = 10,000 points ($1,000)
  • Marriott Category 3 = 15,000 points ($1,500)
  • Marriott Category 4 = 20,000 points ($2,000)
  • Marriott Category 5 = 25,000 points ($2,500)
  • Marriott category 6 = 30,000 points ($3,000)
  • Marriott category 7 = 35,000 points ($3,500)
  • Marriott category 8 = 40,000 points ($4,000)

The hotel spend values shown double in cost if all Residence Inn hotel nights.

Hilton HHonors = 10 base points per dollar for Points & Miles earners.

  • Hilton HHonors category 1 = 7,500 points (equal to base points earned for $750 hotel spend)
  • Hilton HHonors category 2 = 12,500 points ($1,250)
  • Hilton HHonors Category 3 = 25,000 points ($2,500)
  • Hilton HHonors Category 4 = 30,000 points ($3,000)
  • Hilton HHonors Category 5 = 35,000 points ($3,500)
  • Hilton HHonors category 6 = 40,000 points ($4,000)
  • Hilton HHonors category 7 = 50,000 points ($5,000)

Hilton HHonors = 15 points/$1 for Points & Points earners (10 base points + 5 bonus points per dollar).

  • Hilton HHonors category 1 = 7,500 points (equal to base points earned for $500 hotel spend)
  • Hilton HHonors category 2 = 12,500 points ($833)
  • Hilton HHonors Category 3 = 25,000 points ($1,667)
  • Hilton HHonors Category 4 = 30,000 points ($2,000)
  • Hilton HHonors Category 5 = 35,000 points ($2,333)
  • Hilton HHonors category 6 = 40,000 points ($2,667)
  • Hilton HHonors category 7 = 50,000 points ($3,333)

 

Starwood Preferred Guest = 2 base points per dollar hotel spend.

  • SPG category 1 = 2,000 points (Fri/Sat = $1,000) or 3,000 points (Sun-Thu = $1,500)
  • SPG category 2 = 3,000 points (Fri/Sat = $1,500) or 4,000 points (Sun-Thu = $2,000)
  • SPG Category 3 = 7,000 points ($3,500)
  • SPG Category 4 = 10,000 points ($5,000)
  • SPG Category 5 = 12,000 points ($6,000); peak season 16,000 points ($8,000)
  • SPG category 6 = 20,000 points ($10,000); peak season 25,000 points ($12,500)
  • SPG category 7 = 30,000 points ($15,000); peak season 35,000 points ($17,500) 

The Starwood Preferred Guest table illustrates the common complaint about SPG with extraordinarily high redemption cost for high category hotels. The high cost of reward nights for category 5, 6 and 7 hotels are outliers among the average cost of $4,000 to $5,000 in base spend to earn a free night at the highest category hotels. The high cost of high-end hotel rewards necessitates high value promotions as an essential component for making SPG competitive to other programs.

 

IHG Priority Club = 10 points per dollar, except Staybridge Suites and Candlewood Suites 5 points/$1

  • Holiday Inn / Holiday Inn Express = 10,000 points ($1,000); 15,000 points ($1,500); 25,000 points ($2,500)
  • Candlewood Suites = 15,000 points ($1,500)
  • Staybridge Suites = 20,000 points ($2,000)
  • Crowne Plaza / Hotel Indigo = 25,000 points ($2,500)
  • InterContinental Hotels = 30,000 points ($3,000) or 40,000 points ($4,000)

Base points equivalent value shown will be higher if hotel stay pattern includes Staybridge Suites and Candlewood Suites earning just 5 base points per dollar. IHG’s Staybridge Suites and Candlewood Suites make up a much smaller overall percentage of IHG hotels compared to Marriott Rewards Residence Inn and TownePlace Suites for Marriott among the hotel brands offering lower base point earn rates.

 

Loyalty Traveler Analysis:

The main thing to remember is the hotel spend values shown above are the maximum hotel spend needed to earn a free night for the hotel category reward. As a loyalty program member and consumer my goal is to reduce the $3,500 in hotel spend needed for a Marriott Rewards category 7 hotel reward night by as much as possible.

The two primary ways to earn points at a better rate are promotions and hotel loyalty elite status. The combination of base points from hotel spend, bonus points from loyalty promotions and bonus points for elite level membership lower the hotel spend needed for a reward night using points.

For example: I am a Starwood Preferred Guest Platinum member. Last month I stayed at the Sheraton Sunnyvale on a $79 room rate. I received $79 x 2 base points + $79 x 1 elite bonus point + 500 platinum amenity bonus points = 737 points (plus complimentary breakfast at the hotel restaurant Faz).

$79 hotel spend = 737 points without any other promotions. The cost shown in the chart above at $5,000 in hotel spend to earn a free hotel night at a category 4 Starwood Hotel is greatly reduced to just $1,075 at the rate I earned points for the Sheraton Sunnyvale hotel stay. The chart is showing hotel spend amounts using only base points equivalent value. Real travel at Starwood Hotels earns bonus points for elite status and promotions. I actually earned 9.3 points per $1 in hotel spend just for elite status.

The 2011 Q1 weekend nights promotion offers double points every night and 500 points per night for Thursday through Sunday nights. An $80 rate on a Friday night as a general SPG member earns 740 points ($80 x 2 base points/$1 + 80 bonus points (double points) + 500 points (Friday night).

SPG Platinum elite member on an $80 hotel rate earns 1,320 points ( 740 points  + 500 points platinum amenity + 80 points elite bonus).

The cost to earn a Starwood category4 hotel reward night at 10,000 points has decreased from the $5,000 base points spend level shown in the table above to just a little over $600 in Starwood hotel spend.  

Base Points Equivalent Value Hotel Reward  Category Comparisons

Hilton HHonors has the best earn rate for top end hotel reward nights of these five major hotel loyalty rewards programs. HHonors points & points earner will earn top reward category 7 hotel free night after just $3,333 in hotel spend. 

Starwood Preferred Guest category 5 hotel is a similar market segment hotel to Hilton HHonors category 7 hotel in many major cities like San Francisco where the W San Francisco is category 5 and Hilton San Francisco is category 7. Peak season SPG category 5 hotel night can take $8,000 in hotel spend to earn 16,000 points. This is more than double the hotel spend for a similar hotel market segment reward with Hilton HHonors.

The Starwood Preferred Guest member needs high value promotions to earn comparatively more bonus points with SPG to be competitive with the base points advantage the Hilton HHonors member earns with Hilton stays.

SPG is sometimes a competitive loyalty rewards program on the basis of reward nights, even for high category hotel rewards.

Promotions offering 500 to 1,000 Starpoints per night are high value offers for SPG members. 1,000 bonus SPG points is a $500 base points equivalent value compared to 1,000 bonus HHonors points being just a $100 base points equivalent value. Hilton HHonors has to offer 2,500 to 5,000 bonus points per night to match the SPG rate for the typical promotion bonus.

The Promotion Variable — How Much is this Hotel Loyalty Promotion Worth?  

Hotel loyalty programs roll out new promotion offers every few months to reward members.  25,000 points after four stays, a free night after three stays, or quadruple bonus points for Sunday stays are examples of some of the promotions this past year. 

One of the main questions I ask myself as Loyalty Traveler is “How can I compare the value of two different promotions objectively within a program like Hilton HHonors or between different programs like Starwood Preferred Guest and Marriott Rewards?”

Calculating base points earned correlated to hotel spend is much easier than calculating promotion bonus points earned based on hotel spend. There is a wide variability in promotion bonuses earned among loyalty members of the same program due to different hotel stay patterns resulting in highly variable points earning.

My next Loyalty Traveler post will compare Q1 2011 promotions from Hilton, Marriott and SPG using the base points equivalent value method and a variety of hotel stay patterns.

http://loyaltytraveler.boardingarea.com/2010/12/30/comparing-2011-q1-hotel-loyalty-promotions-using-base-points-equivalent-value/

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.

More articles by Ric Garrido »

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Comments

  1. Would you recommend the Hilton HHonors program for someone who could get a maximum of Gold status primarily via spending $20K with limited/some hotel stays? That seems to be the best hotel value for non-platinum elite status, but just wondering your opinion. Thanks

  2. Hilton HHonors sounds like a reasonable program for someone earning elite on credit card spend.

    Someone spending fewer than 20 nights a year should probably just go for the best deal at the time of hotel stays and not worry about loyalty to any program. Follow the best promotions to maximize free nights earned.

    Elite is valuable if you are getting a breakfast and free internet benefit and some upgrades.

    Otherwise there are plenty of deals to be found if you just want the best value hotel.

  3. Just to make sure I am understanding your suggestion correctly–
    Use Hilton HHonors Amex or Surpass to earn elite gold status via $20K credit card spend for free stays/b’fast/internet/possible upgrades
    But for hotel stays <20 nights, choose the best deal unless there is a good Hilton points promotion? Thank you.

  4. Excellent analysis but one important variable was left out if the purpose is to chose a good program to use.

    Your blog was about redemption value for those staying in hotels. But for those like me, who accrue most of their points through credit card spending, the answer is much clearer. SPG and Hyatt are clear winners due to the lower number of points needed for a room. And of the two, when I have to advise someone, I point them to the Starwood AMEX because of Starwood’s Cash and Miles program, where high quality hotels can be had for 40% of the standard reward plus some cash – the best way I know to stretch miles.

    But again, your comments vis-a-vis value for those accruing points solely by hotel stays, was right on the money. Happy New Year!

  5. Steve – I tend to ignore credit cards in my analyses. That is a variable that complicates the numbers and I think it is easier to look at the hotel programs separately from credit cards.

    An individual can add his/her credit card earning to my analyses.

  6. SC – earning elite status is my main suggestion whether by credit card or hotel stays.

    Hilton HHonors is fine if you are happy with the program and enjoying your stays.

    Since you do not need stays to maintain status, you have the freedom to go with the best hotel deal for your destination regardless of brand.

    For example, I need a hotel stay tonight with Starwood to get elite status for 2011, but the Hyatt five miles away is a hotel I prefer over the Sheraton I plan to stay. They both offer breakfast.

    I am only staying at the Sheraton for an elite stay credit.

  7. Steve@post 5:

    Good point on SPG, but it is highly dependent on where you travel.

    I like SPG as much as anyone, but when I’m taking my son to Disneyworld for 10 days for example, the hotel hopping for us is much better at Hilton, since the hotels are more numerous and cheaper and better located. Plus last year the Hilton “stay 4, get 1” with those $39 rooms was hard to pass up.

    All the hotel chains certainly have their places, and for me, at least, the individual decision varies almost completely on current promo and credit card factors.

    After all, there’s not much of a benefit for Diamonds at a Hampton Inn.

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