I sincerely hope our Hilton lurker is taking notice of the dissatifaction registered on this thread and reporting it back to the HHonors powers that be.

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marc

[This message has been edited by Marq (edited 03-31-2003).]

I still like Hilton. I like the way I am treated. I like their service. I like their upgrades. I like the availibility worldwide. I like the way they address any issues I have immediately. All this commotion about devaluation of points doesn't sit right with me. I have never viewed points(awards) as anything but a bonus. Don't forget, we also get airline miles too. I think I got close to 20,000 airline miles for staying at a hotels that I liked. I challenge those that are leaving HH to find a better home with SPG or someone else. HH warned us about the new point levels and I hear are even making exceptions to the redemption rule. So these changes look to me to go into "real" effect 2004. Just a sign of changing times. I am not happy about the changes but I also am not jumping ship from them either.

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[This message has been edited by lisadiamond (edited 03-31-2003).]

korea71:

You said what I was trying to say but you said it much more elegantly. The points are a bonus. The recognition by the hotel staff that I am a valued guest and their attempts to make my constant nights away from home confortable is the primary benefit.

thanks,
marc

PS Lisa, I apologize for my misguided personal attack

I disagree. Again, I don't disagree with the sentiment - I am unhappy the best deals have been eliminated - but I disagree with the analysis.

To begin with, the recession is actually a sound business justification for devaluing points.

Per room and per property profits must be down, because occupancy is down and rates are down with them. Paid room rates can not be raised because the market will not support such a move. And service reductions to improve margins have to be limited because of the risk of devaluing the brand.

So Hilton must find alternative ways to enhance profits, and devaluing points can add to the bottom line with a relatively low risk factor, the primary risk being alienating most valuable customers. The risk factor is low because (1) the truly most valuable customers are those who pay all the time and rarely redeem, and (2) The alienated customer can probably be won back through targeted or general relief in the form of promos or other program offerings. And regardless of those factors, the risk is equally mitigated because even the disgruntled won't readily find a better value elsewhere.

Also very important to note is that devaluation in a hospitality recession is very much in line with supply and demand. Cash poor consumers are more willing to spend points on rooms than pay cash. Meanwhile the supply of rooms remains essentially the same. So the HHonors redemption cost increases can be seen as merely a natural response to market forces.

In this light, one could view the 50K promos as very good planning rather than a series of mistakes. The 50K promos generated a certain amount of revenue at the time, and now that the paying market is slumped the burgeoning points market is primed with a good supply of currency ready to provide a healthy alternative revenue stream during difficult times.

I hate to sound like an apologist, because I must reiterate: I'm as unhappy as the next person about the devaluation. But my emotions are mitigated when I can see some sound business principles behind them.

Where Hilton lacks most, in my opinion, is communicating with the HHonors loyalist. This has been handled rather poorly, and perhaps has exposed them to more risk than would otherwise be the case.

[This message has been edited by Rut Dog (edited 03-31-2003).]

In my previous posts on this thread, I made the following general points:

I think the 5.1% devaluation is justified (even while painful from our end) by the business and market force arguments I laid out in my last post. Likewise, since market forces have increased consumer demand for points, it makes sense to me to see reductions in bonuses. And I see the airline transfers and the elimination of the airline VIP packages as more related to the problems of the airline industry than anything to do with Hilton.

But this still leaves the problem of the VIP reward increases and the elimination of the multi-night discount. I see the latter as primarily a margin increasing opportunity created by the lack of such discounts in other hotel programs like Starwood. Remember, Hilton execs are in a very tight spot, and margin needs to be increased at the lowest risk possible, and the lack of competition in this area makes this a risk worth taking.

The VIP rewards are more complex, and I've taken advantage of some free time over the past weekend to do a detailed analysis of these changes. It is probably way over-detailed, but I look forward to feedback from those of you that wade through it all.

For those who won’t be wading the details, I offer this summary on VIP’s:

Unfortunately any analysis will do little to mollify lisadiamond and the others who are no longer satisfied with the value added to their spending dollar by HHonors. For me, too, the bottom line is value, and all I can offer is why I think the HHonors rewards still provide a good value for me.

But in order to show why these analyses demonstrate the value of HHonors rewards, I have to digress from the topic of VIP rewards inflation and delve into why I view HHonors not as a loyalty program but as a credit card rewards program. This perspective makes all the difference in the world.

I see now that this post has morphed into a 2000 word essay, too long for a regular post, so I have broken it up into three sections as follows:

[This message has been edited by Rut Dog (edited 03-31-2003).]

HHonors Is Not a Good Loyalty Program

First off, to understand my perspective, you need to realize I don’t view HHonors as a loyalty program, and don’t think it stands on its own as such. IMHO, stay points alone accrue at such a meager pace that you have to travel at diamond levels merely to get enough points quick enough to actually feel “rewarded” for you loyalty.

But if you view HHonors as a credit card reward program, as I do, the value issue, when choosing where to spend your hotel dollars, becomes somewhat moot. The question for me is, “Do the HHonors rewards provide me with the return I look for from my credit card spending?”

If the answer is yes, then simply stay at whatever hotel provides the all around best value, and sleep soundly knowing that while staying at Best Western (and eating your paid breakfast!), you are earning points towards a free HHonors stay

I’ve posted a few times in this forum and MilesBuzz how I measure the return on my credit card spending. I’m behind in my admittedly laborious bookkeeping, but let’s just stay that my reward usage leaves Discover and all the other cash back cards in the dust. You can search to find my historical figures, but they are always over 2% cash back equivalent (CBE), regularly averaging out at over 5%.

I posted previously in this thread that the devaluation for regular stay rewards is about 5.1%, not including the multi-day discounts. Since this will vary greatly depending on one’s redemption patterns, let’s just use 6% for discussion purposes, and 5% as my CBE. If my CBE is reduced by 6%, I’m still earning 4.7% which is well within acceptable value ranges for me.

And at this point I should mention that the 5% CBE has not included any VIP rewards. Since VIP rewards still provide a substantial points discount off of regular rewards, their usage (starting this year for me) will only make the CBE return look that much more attractive, even at the inflated rates.

[This message has been edited by Rut Dog (edited 03-31-2003).]

VIP Rewards Discount Analysis -- GLOx

That said, let’s discuss the devaluation as it pertains to VIP rewards. The simplest analysis is as follows:However, the other way to look at these is by the amount of discount they provide off the standard points “rates”. I think it’s not very helpful to look at these rewards without comparing them to the standard rewards. They are supposed to be a VIP discount (we know that’s a joke – just get a card and you’ve got Silver), but they are a discount nonetheless, and the discount is off the standard rates.

I’ll mention right now that the new scheme effectively eliminates ALON and TEEN, as the inflated version of these rewards offers no cost advantage over GLOx, and in fact is less valuable in the case of the Pointe resorts of Phoenix. So really, just consider them gone.

That’s the bad news. The good news, if you look at discounts off of regular redemption rates, is that the GLON2 reward is a good deal for Cat. 5’s, and the GLONP2 is actually a better deal than the GLONP when compared against their respective standard rates.

So, let’s take a look at the numbers of the GLOx series from a discount perspective:Usage of these rewards at Classic and Select properties is still at a discount, but is not quite as much as before. Still it isn’t all that drastic: the Classics had been 39% off and are now only discounted 29%, while Selects were 23% and are now 17%. That’s too bad, but you can still beat both of these, just like under the old scheme, with point stretchers (40% discount), which are much more likely to be booked at Classic and Select.

But the biggest draw of this series has always been the blanket use of GLONP at any Premium property in the world, and I for one am happy that at least under the new scheme, this the 23% discount has actually gone up to 27%. Unfortunately, the 27% discount is off of an reward that went up 23% (standard 6 nights premium), but at least the new VIP reward is still less than the old standard reward.

This doesn’t wipe out the devaluation, but in the new landscape it still means this is a very good value. I look forward to using it some day in Singapore or Hong Kong. http://www.flyertalk.com/forum/smile.gif

Hasta La Vista ALON and TEEN

Meanwhile, the golden egg of HHonors has always been the ALON/TEEN rewards, which are essentially the same rewards. The catch is that the ALOTEEN, as I’ll call it (no pun intended), is limited to a select number of primarily premium properties. Regardless, the golden egg is gone, as you will see below.

First note that two Premium properties, the Pointe resorts in Phoenix, have selected to be 5’s, not 6’s, under the new scheme.

Also, the DT San Diego Golf Resort, previously the only Classic in this group of properties, will be a 4. Therefore, when weighting an average for the group of properties, I’ve eliminated the DT simply because under the old scheme the ALOTEEN was no better a deal here than the GLON, and under the new scheme the GLON2 actually is a better value.

( I have always wondered why Hilton put this property in the special TEEN reward, not just because it doesn’t make points sense, but I also don’t think it compares by reputation with the other properties. Not that it’s a bad place, but really, if you were going to San Diego on this reward, would you stay here or Torrey Pines? Unless you’ve family in Poway, I’d say the Torrey Pines takes it hands down. Please DTSDGR fans feel free to correct me on my impression, but the fact that it doesn’t need a special reward remains, and as such I will keep it out of the average.)

Devaluing the Pointe’s and removing the DT, here’s how the ALOTEEN rewards stack up:The new scheme brings the Cat. 6 property rewards in line with GLONP, and, in the case of the Cat. 5’s, the GLON2 is actually cheaper than the TEEN2. When including the DTSDGR, 3 of the 9 properties offered under ALOTEEN can be had for less with GLON2. For this reason in particular I hope Hilton is on top of this and won’t be having people redeem these rewards when cheaper alternatives exist. And for simplicity’s sake, Hilton should just delete the ALOTEEN rewards from the catalog, period, to reduce confusion.

In Hilton’s defense, this chart clearly shows what an incredible (perhaps outrageous) value the 8 premium properties were at nearly half “price” under ALOTEEN. Why have a reward that is more discounted than Point Stretchers? Hopefully, the silver lining will be that Point Stretchers will appear at these properties, which previously, to the best of my knowledge, never offered them. Whatever the future may hold, if you haven’t gotten the message yet: Book an ALON or TEEN while you still can!

Though the golden egg is gone, let’s remember that only get these deals at 8 properties. There are many other Premium/Cat. 6 properties around the world worth visiting, and the GLONx2 rewards still provide a decent opportunity to visit these at a very reasonable points rate.

[This message has been edited by Rut Dog (edited 03-31-2003).]

Wrap Up

In conclusion, I’m really glad I wrote all this out, as it makes things much clearer for me. I hope some of you find it at least somewhat helpful.

This analysis does make me confident that HHonors is still a viable and valuable credit card rewards program. Whether or not your future paid travel plans include a paid stay at an HHonors hotel, your future can include some nice reward stays, and there are still some very good reward deals to be had out there.

Rut Dog, very good microeconomic analysis. One issue overlooked (of course your comments are welcome) is the marco side.

Hilton are making a devaluation of points with a very long amount of time to use these points before the devaluation takes place which is during the actual recession stage. Hense on a macro-side, when the economy booms again, which it will more than likely at the point when the devaluation begins, they will make even more money.

From another poster challenging SPG x Hilton,
I've looked at SPG, it was tempting, but I stayed with Hilton. When I'm overseas, I do book Six Continents as they give me a good value for my buck, especially when I stretch my money as far as possible. However, I try whatever means possible to book Hilton when out of the country, compare price and make a decision. Only in Hong Kong has the Sheriton come into play in my decisions. I feel the Sheriton charges too much in BKK with all the choices available in that brilliant city.

If I have award points, I usually alternate between the two, Six Cont and Hilton. Inside the USA and Canada, it's always Hilton.

SHADO

No one is happy with the devaluation, and the new point levels required.

But having said that, I disagree with your perspective that HHonors should not be viewed as a loyalty program.

While I understand your points, they too easily overlook why I am a Diamond member of HHonors in the first place.

1) I get consistently high quality service nationwide and woldwide at a vast array of properties.

2) I have a true, dedicated VIP response team a phone call away to meet any special needs I may have.

3) I have a VIP management team available a phone call or e-mail away. One can not overstate the uniqueness and importance of this fact. Name any other travel loyalty program that guarantees it's top tier members 100% satisfaction - the rate I and most diamonds have achieved for many years.

4) Uncooperative property problems aside, I always receive the best room (available) in the house, breakfast for myself and my party at no charge, lots of free bottled water, snacks, lounge access, etc.

So, while my ability to take my family on free vacations will be severely reduced next year, and that's a shame, When I have to stay at a hotel, the Hilton family of properties still treat my loyalty as if it is appreciated - very appreciated. For the true frequent traveler, that is still priceless.

Have to agree with NJDavid. I started out as a Hilton hater 15 years ago with some bad experiences and through this board and, retrying the system again as a gold and now diamond, I have been very pleased with the Hilton/Conrad/Hampton/Doubletree experience. Lots of properties, no problems getting reward stays when I want (even as a gold this wasn't a problem, even during busy seasons), and wonderful treatment at most properties.

Some US Hiltons need a lot of work in renovations but worldwide (and most US locations I have stayed). I have had great rooms at reasonable prices, always free breakfast and quite often GREAT breakfast buffets, and welcome amenities that have included wine, champagne, massive fruit bowls, and delicious chocolate truffles.

I have come to the conclusion that I prefer the status part of the program and the reward stays are just an added bonus . . .

Wow, lots to digest there in the last few posts! Rut Dog, great analysis! I do think you missed the big picture of why many are so upset with the devaluation. You note that the single award night devaluation is only around 5%. If that were the extent of the changes, I don't believe there would be too much complaining. I would venture to say that my leisure stay pattern of 70-75% one night stays, discussed earlier, is highly unusual, yet my analysis suggests my HHonors points were devalued 20%. Most people stay multiple nights at the same location and thus took advantage of the multi-night discounts. From the comments, many people saved their points specifically for A/GLON awards and didn't redeem for much else. The multi-night discount and A/GLON changes are what people are upset about and the devaluation is very real....and certainly more than the 5% you note and the 20% for my situation. All in all, your analysis is very useful. Thanks for putting it together!

As far as HHonors not being a loyalty reward program, I have to disagree. It is what keeps me coming back to Hiltons and without it I would be forced to simply consider room price and nothing else, and likely stay elsewhere.

I'm not sure I agree with the sentiment expressed by BlondeBomber that the status part of the program is preferred. My view is that status (HHonors, SPG, whereever) is greatly overrated. I believe it once held more value, but my more recent experiences suggest that I am not being treated any better than someone who walks in off the street without a reservation or someone who uses Priceline. The rewards (free rooms) are where it is at and I calculate the expected value of the points I would achieve on each stay to determine if I am better off staying elsewhere for less total $$$. I will say that the best benefit of HHonors Diamond is the apparent lack of controls on award redemptions. If HHonors were to change that, it would seriously upset the apple cart and I would likely re-evaluate where to take my business.