Hotels.com's reward system is internal cash back. Your "free" night is base on the cost of the 10 nights that accumulate that free night. So if you stay at 10 budget hotels your free night credit might only be $50.
You also do not get the non-reward amenities of a chain's program.
But for travelers who due to business, locale, travel pattern and destinations cannot be commuted to one program it is a good alternative.