This Chicago hotel offers the worst rate of return for reward redemptions (Photo: Sheraton)
Not all frequent guest programs are equal when it comes to rates of return for reward points, according to a new analysis.
The new Switchfly Hotel Reward Payback Survey from IdeaWorksCompany is based on more than 1,400 queries for reward stays from the four major loyalty programs — Starwood Preferred Guest, IHG Rewards, Hilton HHonors and Marriott Rewards. The company looked at the lowest available price in reward points and the corresponding dollar cost for the room, and adjusted the point value “to consider the different rates of point accrual for the programs.”
The result was a set of percentages that represented the average “payback” level for the four programs — i.e., a rate of 8.0 percent would mean the member was getting back $8 in value for every $100 spent on room rates.
The study found that Marriott Rewards topped the list with an average payback rate of 9.4 percent, followed by Hilton HHonors at 8.9 percent and IHG Rewards at 8.6 percent; Starwood’s SPG was the laggard with a 6.1 percent payback rate.
The report noted that while average payback rates are one thing, individual reward requests are another. The best value for program points comes when room rates available on a specific date are high and the point price is low. For individual reward requests, IdeaWorksCompany found that the payback rate ranged from a whopping 24 percent to a measly 2.5 percent.
The 24 percent rate was in Hilton HHonors, for a $479 room at the Hilton Beijing Chaoyang that cost 30,000 Honors points. The 2.5 percent return was for booking a Starwood Preferred Guest reward stay at the Chicago Sheraton & Towers at a point cost of 12,000 for a $150 room.
The company predicts that hotel giants will eventually make reward pricing for individual rooms more closely linked to rates, as some airlines like Southwest have started to do with award travel and air fares.
Which hotel program are you most involved with? Do you think you get good value when it comes to redemptions? Please leave your comments below.
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