Part 1: Buying and transferring hotel points for hotel stays

Most major hotel loyalty programs sell hotel points to frequent guest members. Occasionally you will find hotels where it is simply cheaper to buy the points and redeem a points reward for a hotel stay than pay the published rate.

Loyalty Traveler researched the major hotel programs for points purchase rules. There are eight hotel loyalty programs allowing the purchase of hotel points and I will compare and contrast the features of six different programs with some tables. (Choice Privileges sells up to 20,000 points per year. Best Western Rewards allows members to buy points at $10 per 1,000 points. I left these two programs out of this analysis).

Hotel Programs selling hotel points

• Best Western Rewards
• Club Carlson
• Choice Privileges
• Hilton HHonors
• Hyatt Gold Passport
• InterContinental Hotels Group (IHG) Priority Club Rewards
• Marriott Rewards
• Starwood Preferred Guest (SPG)

Accor A|Club and Wyndham Rewards do not sell hotel loyalty points to members through their websites.

There are limitations to buying points explained in this post and there are some disadvantages like reward stays do not count for promotions in most cases and reward stays do not qualify for elite status credit with most programs. Hilton, Choice and Starwood do count reward stays for calendar year elite qualifying stays and nights.

Background

Last week Club Carlson announced it launched the option for members to buy Club Carlson hotel points. Looking over the cost of hotel points in Club Carlson revealed a good purchase rate for consumers in my opinion. As I created a table for Club Carlson hotel reward categories I thought about the relationship between the cost of points and hotel categories across different programs.

There are several factors that come into play when evaluating the value of buying hotel points.

Hotel rates are dynamic. A hotel that may have room rates at $150 one night might charge $400 the next night. Rates fluctuate and change depending on day of week, holidays, conferences and many other factors. Hotel programs factor the cost of points and price points high enough that it is typically not cost efficient or even allowed by program rules to buy points for repeatedly redeeming hotel rewards stays using purchased points.

Hotel Reward Rates are mostly a fixed standard reward cost. Major hotel loyalty programs group hotels into categories for redemption purposes.

• Hyatt has six categories, from 5,000 points to 22,000 points per night.
• Hilton has seven categories and higher end Waldorf Astoria hotels from 7,500 to 80,000 points per night.
• SPG has seven categories and higher reward rate hotels in category 7 from 2,000 to 70,000+per night.
• Marriott has eight categories in Marriott brands and five tiers in Ritz-Carlton from 7,500 to 70,000 points per night.
• Club Carlson has six categories of rewards from 9,000 to 50,000 points per night.
• IHG Priority Club groups award level by hotel brand with some brands having tiered levels from 10,000 to 40,000 points per night.

Hilton HHonors Premium Room Rewards are a major move into dynamic reward price for hotel rewards. The cost for these new HHonors rewards are tied to the published room rate for the stay. Unfortunately the exchange rate for points-to-cash-savings is not that good for many HHonors Premium Rewards. Redemption value tends to be $3 to $6 per 1,000 points. The 30% rebate on Premium rewards booked by January 31, 2012 is a major promotion offer for better redemption rate for Premium Room rewards for Points & Money and Premium Room reward hotel stays.

Discount Hotel Rewards – Fewer Points

Most hotel loyalty programs offer some discount reward rates for selected hotels.

• Club Carlson Points + Cash
• Hilton HHonors Point Stretcher Rewards (Dec. 5 – I do not see any PS dates listed after Dec 2011)
• HHonors Points & Money and
• HHonors Premium Room Rewards for more points.
• HHonors VIP Rewards (15% to 25% discount)
• IHG Priority Club Rewards PointBreaks
• IHG Priority Club Last Minute Reward Nights (Loyalty Traveler Dec 1 post)
• IHG Priority Club Points & Cash
• Marriott Rewards 5th night free
• Marriott Rewards PointSavers (reward cost is one category less and 5th night free applies to PointSavers too)
• Marriott Hotel+Air Travel Package
• SPG Cash & Points
• SPG 5th Night Free
• SPG Nights and Flights
• SPG 50% off rack rate (1,000 points = $35)

The fact that hotel published room rates are dynamic pricing and reward redemption rates are fixed pricing means there are nights with opportunities to get better value by redeeming hotel points than paying the published rate. Hotel room rates change rate nightly, yet the cost for a free night using points remains the same. You may be able to book the hotel for less money buying points and redeeming an award night at a hotel when hotel rates are high.

 

Cost to Buy Points for Reward Nights Tables

The tables below show the cost of buying points for a hotel night at the different category levels in each hotel loyalty program selling points (except Choice Privileges).

 

Loyalty Traveler’s Summary of Hotel Loyalty Program Rules to Buy, Receive and Transfer Points

 

Buy Points

Each program shows the Calendar Year Maximum Purchase Limit and Cost to Buy Points

Club Carlson = 40,000 points ($7 per 1,000 points).

Hilton HHonors = 40,000 points ($10 per 1,000 points) NOTE: member may buy unlimited points for immediate reward stay redemption at time of booking.

Hyatt Gold Passport = 40,000 points ($24 per 1,000 points).

IHG Priority Club Rewards = 50,000 points ($11.50 per 1,000 points).

Marriott Rewards = 50,000 points is maximum one member may earn with purchased and gifted points. ($12.50 per 1,000 points).

Starwood Preferred Guest = 20,000 points is maximum one member may earn with purchased and gifted points. ($35 per 1,000 points. Current sale is 20% discount through Dec 31, 2011 $28 per 1,000 points).

 

Receive Points (gifted)

Club Carlson = 40,000 points (buy and receive combined in one account for calendar year limit)

Hilton HHonors = member may receive unlimited points transferred from any other member at rate of $25 per 10,000 points.

Hyatt Gold Passport = 40,000 points, member may receive maximum 40,000 points as gift and buy 40,000 points for self.)

IHG Priority Club Rewards = 50,000 points, member may receive maximum 50,000 points as gift and buy 50,000 points for self.)

Marriott Rewards = 50,000 points (Buy and receive combined in one account for calendar year limit)

Starwood Preferred Guest = 20,000 points (Buy and receive combined in one account for calendar year limit)

Hyatt and IHG Priority Club are only two hotel programs allowing a member to buy maximum annual limit of points for own account and also receive maximum annual limit as a gift from another member.

 

Transfer Points

Club Carlson =  unlimited and free through Member Services.

Hilton HHonors = any member is allowed to transfer points to another member for a fee, $25 per 10,000 points, except any single member is allowed free transfers for additional points gifted and transferred after 200,000 points ($500 in fees) in a calendar year. Point transfers must be in 10,000 point blocks.

Hyatt Gold Passport = may transfer between any two members the minimum points needed for a reward
redemption. Two members must sign transfer request.

IHG Priority Club Rewards = 50,000 points in a calendar year at $5.00 per 1,000 points.

Marriott Rewards = may transfer between two spouses/domestic partners the minimum points needed for a reward redemption, rounded to nearest 1,000 points.

Starwood Preferred Guest = free transfer between members with same residential address for at least 30 days. SVO Vacation members may transfer points between accounts regardless of address.

There is more variability in rules for the “point transfer between members” aspect of hotel programs. Club Carlson has liberal policy of free transfers between any two members. SPG has a less restrictive policy than most programs if you share the same address. Hyatt is a fair policy allowing any two members to transfer the minimum points needed for a reward stay. Marriott Rewards terms state transfers are limited to spouses/domestic partners and only the minimum level for a reward redemption. Priority Club has the most restrictive policy with a relatively high fee and an annual transfer limit any member may give or receive.

Hilton HHonors appears to have a restrictive policy in charging a $25 fee for transferring 10,000 points. The advantage to HHonors is the rule allowing a member to receive unlimited points and for a member to gift/transfer unlimited points. Basically a person with 1,000,000 HHonors points can transfer them all to someone else for $500. That would be a lucky recipient.

A more commonly useful strategy is crowdsourcing a network of friends to score a nice HHonors getaway. Set up a gift registry with HHonors for something like a college graduation present or wedding honeymoon and gifts of 10,000 HHonors points can be transferred for $25. Get a response from 20 to 50 HHonors members and that HHonors account can be filled with 200,000 to 500,000 points for $500 to $1,250 distributed among a large group of people. Your friends and family don’t have to think too hard about a gift and a week of free hotel rooms is a nice gift to receive.

This kind of opportunity is only matched by Club Carlson and they currently allow you to do it for free.

Part Two of this study into buying and transferring hotel points will look at real examples of how to apply these points purchase and transfer rules to hotel stay rewards.