According to the first Switchfly Hotel Reward Payback Survey released Oct. 21, Marriott Rewards returned an average of 9.4 percent from room night spending as value that can be used for a future stay. That means Marriott Rewards members earn, on average, $9.40 in value toward a future stay for every $100 spent. Marriott Hotels are owned by Marriott International (NYSE:MAR).
|Image courtesy Marriott|
The Hilton HHonors program returned the second-highest value at 8.9 percent, followed closely by the InterContinental Hotels Group’s (NYSE:IHG) IHG Rewards Club at 8.6 percent. The program ranked the lowest was Starwood’s Preferred Guest (SPG) program, which returned 6.1 percent reward payback. Hilton Hotels are owned by Hilton Worldwide Holdings (NYSE:HLT), while Starwood Hotels are part of Starwood Hotels & Resorts Worldwide (NYSE:HOT).
Several major programs that were not included in the survey were Hyatt (NYSE:H) Hotels’ Gold Passport program, Preferred Hotel group’s IPrefer, Carlson Rezidor Hotel Group’s Club Carlson and Omni Hotels’ Select Guest program, among others.
During July 2015, IdeaWorksCompany conducted 1,440 reward queries, including 360 queries per hotel loyalty program distributed among a chain’s three leading brands. For Marriott Rewards, that comprised Marriott Hotels, Courtyard, and Fairfield Inn & Suites. Queries for each program were performed for the same 18 dates ranging from July 2015 through February 2016, and an identical list of U.S. and global destinations.
For each query, the lowest reward price in points was recorded along with the corresponding price in U.S. dollars.
Dividing the room price by the number of points per query provided a simple valuation of the point currency used by individual programs, but all points are not created equal. For example, Hilton HHonors’ usual accrual rate is 10 points per dollar spent at a hotel, though members who choose the "Double Dip" option can earn 15 points per dollar. Sheraton SPG provides two Starpoints per dollar spent. The results returned from dividing the room price by the number of points were then adjusted to consider those different rates of point accrual for the programs, and the net result was the average “reward payback” for each program.
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A math teacher of mine was fond of illustrating the relative value of averages by saying, “You can drown trying to wade across a lake an average of three feet deep.” The same illustration can be applied to “average reward value”: the real value is determined by when and where you want to stay and how much that stay will cost. IdeaWorksCompany recognized that in its survey and provided a comparison of the extremes.
The best reward payback under the hypothetical scenarios was for a February 2016 stay at the Hilton Beijing Chaoyang. While booking a room for Feb. 18 would cost $479, it could also be booked for a very modest reward night price of 30,000 points. At Hilton HHonors’ standard accrual rate of 10 points per dollar spent, a guest would have spent $3,000 to accrue the 30,000 points needed. Members who used the “Double Dip” option and earned 15 points per dollar would only have spent $2,000 to earn the necessary points.
The worst reward payback was at the Chicago Sheraton Hotel and Towers. A Feb. 6 stay would cost $150 in cash, or 12,000 reward points. At the standard SPG accrual rate of two points per dollar, that means a guest would have spent $6,000 to accrue the points necessary for the stay.
The take-away lesson is to do your homework. Do the basic math for the hotel chain you’re using, take into account your particular earning style, and determine the value you’re getting for your points.
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