Expedia Rewards: Analysis of new loyalty program

Expedia Rewards launched today, March 28, 2011. Loyalty Traveler analyzed the points earn and burn value for hotels and published program benefits.

Earn Expedia Rewards points

Expedia Rewards program base earn rate offers 1 point per USD $1 in Expedia travel purchases. Travel packages including a hotel stay with a total of two, three or four components earn 2 points/$1, 3 points/$1 and 4 points/$1, respectively.

Travel package components include airfare, hotel, car and activities.

• 1 point/$1 spent on hotels
• 1 point/$1 spent on flights
• 1 point/$1 spent on activities
• 2 points/$1 spent on hotel + flight travel package (or hotel + one other package component)
• 3 points/$1 spent on hotel + flight + car travel package (or hotel + any two other package components)
• 4 points/$1 spent on hotel + flight + car + activities travel package

 

Expedia Rewards Elite Plus

Expedia Rewards has an elite member program. Annual Expedia Elite Plus qualification requires 15 hotel nights or $10,000 in annual Expedia travel bookings.  Expedia Rewards members need to book and stay 15 nights or spend $10,000 in Expedia travel during 2011 to earn Elite Plus status that will expire Feb 28, 2013.

A single registered Expedia membership account will be given credit for all bookings made to that account, regardless of who completes the travel. – Expedia Elite Plus terms and conditions.

One of the strongest competitive advantages for Expedia Rewards compared to traditional frequent flyer and frequent guest loyalty programs is the ability for the Expedia account holder to earn points and credit with purchases for other travelers. All you home-based travel agents can book your family trip and earn Expedia Rewards for everybody else’s flights and nights. In this sense, Expedia Rewards is akin to a travel credit card program for travel purchase points and a spend based elite member option, even if you don’t travel all that much.

If I book 15 hotel room nights in 2011 through my Expedia Rewards account, then I will earn Expedia Elite Plus status through February 28, 2013 regardless of the traveler names for the booked hotel rooms. I can’t earn points with traditional hotel loyalty programs in my personal hotel member account without being one of the guests staying at the hotel. 

Elite Plus on Airline purchases: $10,000 in airline tickets and total travel purchases is a high threshold for earning Elite Plus. The threshold is much lower for hotel bookings at 15 nights. Basically the profit margin on airline tickets is very low for Expedia. Most of Expedia’s profits come from hotel bookings according to industry data I have read.

Expedia Elite Plus Benefits and VIP Access Hotels $30 Promotion

Elite Plus members can receive free upgrades, late checkout and other perks with Expedia “VIP Access†designated hotels.

Expedia VIP Access Hotels earn 2 points/$1.

Expedia Rewards offers a $30 coupon on stays of 3-nights or longer at Expedia VIP Access hotels through December 31, 2011 when booked by March 31, 2011. (Loyalty Traveler is disappointed to see such a short booking window.)

Elite Plus members also have a Hotel Price Guarantee. The terms indicate you can get a lower room rate for stand-alone hotel bookings if found on a U.S. based website anytime from time of booking on Expedia until day before arrival.

There might be some real potential for hedging your hotel rates with this aspect of the program. I’ll tackle my ideas on the Expedia Rewards Elite Plus Hotel Price Guarantee in a different Loyalty Traveler post.

Other notable Elite Plus member benefits are exclusive offers and early access to sales.

 

Redeem Expedia Rewards points

Expedia currently only has a hotel coupon redemption chart. The airfare redemption table is not online yet.

The hotel coupon table shows a rather low 1% to 2% rebate value on Expedia travel purchases for standalone hotel, airfare, and car rental bookings with an earn rate of 1 point per dollar.

MasterCard Double Points through August 31, 2011

A special promotion with MasterCard earns double Expedia Rewards base points on hotel or hotel packages paid with MasterCard through August 31, 2011 increasing the potential rebate up to 2% – 4%.

MasterCard Double Points with Expedia Rewards requires promotion registration using Expedia Rewards number.

Hotel coupons are one-time use meaning the best value $1000 coupon can only be redeemed on a single hotel stay. $300 hotel coupon stays will offer far less rebate value through Expedia Rewards than $1,000 hotel coupon stays.

Earning 50,000 points requires as much as $50,000 in travel purchases and a minimum of $12,500 in Expedia travel purchases if earning 4 points/$1 on a four component vacation package purchase. That is only an 8% rebate on $12,500 in travel spend when 50,000 Expedia Rewards points are redeemed for a $1,000 hotel voucher that must be used in one hotel stay.

For comparison, Loyalty Traveler values the hotel loyalty program points earned from many hotel stays at 20% to 30% paid room rate during good promotions and 50%+ rebate during high value promotions.

In real numbers this means I expect to save $20 to $30 on a future hotel stay for every $100 I spend at the hotel during a good loyalty promotion and upwards of $50 in future hotel stay value for every $100 I spend when a high value promotion comes around. And Expedia Rewards guarantees me only 2% future hotel stay rebate value after spending $50,000. That is $2 future hotel stay savings for every $100 in hotel spend.

Expedia Rewards is a fine online travel agency choice for airfare tickets and may provide a good savings on hotel rates with some travel package deals, but the rebate on stand-alone hotel stays bookings is likely to be less compared to the points and benefits offered through the hotel brand’s traditional loyalty program which for me average 20% to 30% on most of my hotel stays in programs like Hyatt and Starwood and Priority Club.  

Expedia Rewards Sample Earn and Burn Chart from Website

http://www.expedia.com/daily/highlights/rewards/expediarewards/sample.asp

MasterCard payment for double points through August 31, 2011 creates the potential for 8 points per dollar and 16% rebate (sample #3) on Expedia spend. Throw in a VIP Access hotel with a four component Expedia vacation package and pay with MasterCard (sample #4) and you peak at 9 points/$1 or a potential 18% rebate on your travel purchase with Expedia Rewards.

Expedia Rewards compared to Hyatt Gold Passport 10,000 bonus points after 5 nights

Assume $100 per night on two 5-night stays = $1,000 spend.

• Hyatt Diamond member = 2 x 1,000 points Diamond amenity = 2,000 points.
• Gold Passport Base points = 5 points/$1 x $1,000 = 5,000 points.
• Gold Passport Diamond elite bonus (30%) x $1,000 = 1,500 points.
• Hyatt Promotion (April 1-June 30) = 5 nights for 10,000 points + 2 nights x 5,000 points for 7^th and 9th nights = 20,000 points.

28,500 Gold Passport points worth $427 to $855 in hotel stay rewards based on estimated value of Hyatt Gold Passport points in the range of $15 to $30 per 1,000 points. This sample for Hyatt shows a 42% to 85% rebate value compared to an 8% rebate value with Expedia or a maximum 16% during the MasterCard promotion.

Paying $1,000 on Expedia earns only 1,000 points for standalone hotel bookings. That offers no rebate at all on my $1,000 in hotel spend since I need 3,500 points just to redeem for a $25 hotel coupon.

Expedia Rewards is still a great consumer bonus when booking independent hotels not affiliated with a hotel loyalty program where the guest would otherwise not earn any points with future travel value.  

The Hotel Analysis

Unfortunately, hotel rooms purchased on Expedia frequently involve a trade-off for the frequent guest. 

Expedia bookings earn no points in most hotel loyalty programs. Even elite benefits do not apply for stays with a major chain where you have elite tier status when booked through Expedia.  You may still receive benefits at the discretion of the hotel.

Why hotels do not give points for third party online bookings.

American Airlines or United Airlines are owned and operated as one major corporate company. The company employs the workers, owns and leases aircraft and facilities and in most cases manages the frequent flyer program. Airlines benefit regardless of the channel where you buy your ticket. The price of a ticket is generally the same on Expedia as it is on the airline site. Expedia does not make much money on airline tickets relative to its profit margin on hotels.

Hotels are different from airlines in that many independently owned hotels align or brand with a parent hotel chain like Hyatt or Best Western. The hotel loyalty program acts primarily as a marketing partner for the hotel.  The hotel owner pays for this marketing arrangement, generally a percentage of room revenue. The hotels employ their own workers, manage their own site financials, and participate in a hotel loyalty program in an association of hundreds or thousands of other independently owned hotels.

Bookings made through Expedia are something like a 15% to 25% booking fee in terms of room rate going to Expedia rather than to the hotel. Hotel loyalty programs like SPG and Priority Club are marketing organizations geared to move hotel bookings to lower-cost direct channels that reduce the overall cost of selling hotel rooms and improve profit margins. Hotel loyalty program points and benefits are high value rebates direct to the customer. The customer is happy with the value added benefits of the hotel stay and the hotel makes more money than selling the room through Expedia who takes a significant portion of the room rate.

Expedia gets you the same room price most of the time, but the hotel loyalty benefits are not the same since a much larger portion of the room rate is going to Expedia compared to a direct booking with the hotel. You as the frequent guest have already cut the hotel’s profit margin by booking through Expedia. The hotel may not want to incur more expenses by giving you hotel loyalty benefits like a room upgrade, points, free breakfast or internet access.

FlyerTalk discussions indicate Marriott and Hyatt often recognize a member’s elite status on third party bookings, but this is no guarantee.

Earning hotel program loyalty points is generally not a benefit with any hotel loyalty program for third party bookings through an online travel agency like Expedia.

Is Expedia Rewards a loyalty program gamechanger?

Expedia Rewards might be incentive for me to move bookings to Expedia rather than Orbitz or Travelocity, however, the low rebate value of points means I am unlikely to move bookings away from hotel brand websites unless there is also an exceptional cash savings to the Expedia rate. I find my hotel stay point bonuses generally exceed a 10% future stay rebate and often are 25% or more of the paid room rate when used for a future hotel stay.

Therefore, Expedia Rewards is not a significant game-changer in hotel loyalty programs when it comes to booking hotels where there is the option to earn traditional hotel loyalty points. The value of points in Hyatt Gold Passport, Hilton HHonors, IHG Priority Club, Starwood Preferrred Guest and Marriott Rewards are generally much more valuable than Expedia Rewards points when booking your own hotel stays. Expedia Rewards is great when booking hotel stays and flights for other people through your own account.

Expedia Rewards is a good value for extra travel points from airfare purchases and travel packages where the hotel and airline savings provide an instant rebate value on travel cost. Airfare purchases on Expedia without the risk of lost benefits provide a bonus credit in your Expedia Rewards account in addition to your frequent flyer account miles.

Just remember Expedia Rewards hotel bookings may leave your traditional hotel frequent guest account shortchanged!