Hilton HHonors members prefer to use points for hotels rather than miles

The article “Are you a Hotel Loyalist?” by Laura Michonski in BudgetTravel.com blog this past week has an interview with Jeff Diskin, Senior V.P Global Customer Marketing with Hilton Worldwide. The article is really basic stuff, but two details caught my attention. One is the observation that fewer HHonors members are redeeming points for airline miles. The other is the expansion of Points & Money Reward availability beginning October 1, 2011. HHonors Points & Money Reward analysis will be covered in a separate post.

Redeeming Hotel Points for Hotel Stays more popular than redeeming Hotel Points for Airline Miles 

Laura poses two reasons for why there might be less interest in redeeming hotel points for airline miles.

• Travelers see better value in free hotel rooms.
• Airline miles are not as easy to use as hotel points.

I agree with both of these reasons, although I think there is a simpler reason for less interest in exchanging Hilton HHonors points into airline miles.

The fact that HHonors members are showing a preference for using points for hotel stays rather than airline miles is not surprising to me. HHonors is near the bottom in points-to-miles exchange rates when compared to other hotel loyalty programs.

Hilton is one of the best programs for earning miles from hotel stays with its Double Dip policy allowing HHonors members to earn both airline miles and hotel points for the same hotel stay. Picking up 500 miles per stay in most Hilton brands earns miles far more quickly than redeeming HHonors points for airline miles.

HHonors exchange rate for most airlines is fixed at 10,000 HHonors points = 1,000 miles. Programs like American AAdvantage, Frontier, Hawaiian, South African Airways and Virgin Atlantic exchange at a rate of 10,000 HHonors points = 1,500 miles.

HHonors Diamond members:

• earn 20 points/$1 with Points & Points earning or
• 15 points/$1 and 500 miles/stay with Points & Fixed Miles earning (Hampton Inn and Homewood Suites only 100 miles/stay for most airline partners).

Assume $4,000 in hotel spend for 20 hotel stays and a preference for United Mileage Plus miles

HHonors member can earn 10,000 United Mileage Plus airline miles as a Points & Miles earner with 20 hotel stays.

Choosing Points & Points instead earns an additional $4,000 x 5 points/$1 = 20,000 points. Converting the extra 20,000 points into miles nets only 2,000 United Mileage Plus miles compared to 10,000 miles earned with Points & Fixed Miles or 4,000 miles earned with Points & Variable miles.

HHonors Poor Points-to-Miles Exchange Rate for United Mileage Plus

• $4,000 in hotel spend earns 80,000 HHonors points for HHonors Diamond member = 8,000 United Mileage Plus miles.
• $4,000 in hotel spend earns 60,000 Marriott Rewards points for Platinum member = 17,000 United Mileage Plus miles.
• $4,000 in hotel spend earns 40,000 Wyndham Reward points (no elite program in Wyndham) = 16,000 United Mileage Plus miles.
• $4,000 in hotel spend earns 12,000 Starwood Preferred Guest points for Gold/Platinum members = 6,000 United Mileage Plus miles. Most airline partners with SPG have 1:1 points-to-miles exchange rate, except United, Continental and US Airways. SPG members could use SPG Airline Direct Deposit and earn 1 UA Mileage Plus mile for every Starpoint and earn 12,000 UA miles in this example.

HHonors Better Exchange Rate with American AAdvantage still not so great

• $4,000 in hotel spend earns 80,000 HHonors points for HHonors Diamond member = 12,000 American AAdvantage miles.
• $4,000 in hotel spend earns 12,000 Starwood Preferred Guest points for Gold/Platinum members = 12,000 American AAdvantage miles.
• $4,000 in hotel spend earns 40,000 Wyndham Reward points (no elite program in Wyndham) = 16,000 American AAdvantage miles.
• $4,000 in hotel spend earns 140,000 Club Carlson points for Concierge member = 23,000 American AAdvantage miles.
• $4,000 in hotel spend earns 60,000 Marriott Rewards points for Platinum member = AA is no longer a Marriott Rewards airline partner as of July 1, 2011.

A more interesting data point is whether HHonors is seeing a higher percentage of members choose an earning preference of Points & Points rather than Points & Miles when compared to previous years?

If the trend line is showing HHonors members prefer to earn Points & Points more than Points & Miles for Double Dipping compared to previous years, then there is an insightful data point showing hotel points are gaining in popularity over airline miles in Hilton HHonors.

The high bonus miles offers for co-branded credit cards may also have reduced the desire for members to redeem HHonors points for airline miles. Picking up 50,000 to 100,000 bonus miles for a new credit card enrollment certainly looks like a better deal than exchanging 500,000 to one million HHonors points to accrue the same number of airline miles.