Biggest shock to come?: When maximum peak Honors price ends
Oct 13, 2017, 9:16 am
#1
FlyerTalk Evangelist
Original Poster
Join Date: Oct 2008
Posts: 11,586
Biggest shock to come?: When maximum peak Honors price ends
The February changes to Honors came with a very loose commitment that the previous maximum peak category point prices would be kept the same. At this moment we should not be in a worse position than before February in terms of max points due.
Specifically, the commitment reads:
I have asked our Ambassador to clarify when this is going to change but I have received no reply to date.
In my opinion this is a huge devaluation that is yet to happen and they are deliberately not telling us when this going to change. I would hope that is significant enough change that they need to inform members.
If I understand it correctly, new hotels are not subject to this so they vary wildly, its the ones which were in the system before the February changes took place. As it notes, you should never pay more than 95,000 per night for a standard room, at any point this could be subject to the fixed price per point which would be an enormous devaluation. A category 1-10 is still a 1-10 in those point requirements. The "benefit" is that it can be cheaper in certain dates where the points price is below the peak price based on the fixed point value. Previously, hotels had to play with premium pricing to incentivise point bookings. So, there wasn't really an issue to fix as the Honors reward was severely out of kilter with the room rate, they adjusted the premium room rates to undercut standard (where premium is based on a fixed points value and reimbursement for the property).
Perhaps I am overstating the potential issue, but don't we need to know when this is going to change?
Specifically, the commitment reads:
What is changing about Hilton Honors award redemptions? Will it now cost me more Points to redeem?
While a reward night can still be booked the same way it always has been, we’re now introducing a Points slider to give our Members more flexibility to use nearly any combination of Points and money. In addition, the pricing of award redemptions is now more flexible. That means when our hotel rates are lower – during off-peak periods, for instance – our Point redemption price can go lower than before. Additionally, we are currently using the hotel’s peak redemption price from the old model as the continued maximum threshold for redemptions using Points & Money Rewards™. For example, a Category 10 previously topped out at 95,000 Points, and in late February 2017, those hotels will still not require any more Points than that.
While a reward night can still be booked the same way it always has been, we’re now introducing a Points slider to give our Members more flexibility to use nearly any combination of Points and money. In addition, the pricing of award redemptions is now more flexible. That means when our hotel rates are lower – during off-peak periods, for instance – our Point redemption price can go lower than before. Additionally, we are currently using the hotel’s peak redemption price from the old model as the continued maximum threshold for redemptions using Points & Money Rewards™. For example, a Category 10 previously topped out at 95,000 Points, and in late February 2017, those hotels will still not require any more Points than that.
In my opinion this is a huge devaluation that is yet to happen and they are deliberately not telling us when this going to change. I would hope that is significant enough change that they need to inform members.
If I understand it correctly, new hotels are not subject to this so they vary wildly, its the ones which were in the system before the February changes took place. As it notes, you should never pay more than 95,000 per night for a standard room, at any point this could be subject to the fixed price per point which would be an enormous devaluation. A category 1-10 is still a 1-10 in those point requirements. The "benefit" is that it can be cheaper in certain dates where the points price is below the peak price based on the fixed point value. Previously, hotels had to play with premium pricing to incentivise point bookings. So, there wasn't really an issue to fix as the Honors reward was severely out of kilter with the room rate, they adjusted the premium room rates to undercut standard (where premium is based on a fixed points value and reimbursement for the property).
Perhaps I am overstating the potential issue, but don't we need to know when this is going to change?
Oct 13, 2017, 10:18 am
#2
A FlyerTalk Posting Legend
Join Date: Jul 2002
Location: MCI
Programs: AA Gold 1MM, AS MVP, UA Silver, WN A-List, Marriott LT Titanium, HH Diamond
Posts: 52,575
If the max redemption goes away, and HH points effectively become worth 0.5 cpp at all times, then I'm going to need 50+ pt/$ on a pretty much an ongoing basis to continue to stay there.
Marriott Plat or SPG Plat 75 gets 20-25 cents in raw award value back per $ spent *and* gets better on-property treatment than an HH Diamond.
That 20-25 cents value (in my own estimates) is because aspirational awards are still out there in those programs. Travel Packages and ultra-luxury hotels made accessible with points at solid values against typical paid rates.
If HH kills off the aspirational end of award redemptions, turning it into a simple transactional program, then the only "hook" is to try to bury me with even more points. The lack of real Diamond recognition at hotels means HH would need to stay on the high side in terms of raw award value, which ultimately means nonstop promotions (hello, IHG!!).
Even then, it's all a little less fun than it once was.
Marriott Plat or SPG Plat 75 gets 20-25 cents in raw award value back per $ spent *and* gets better on-property treatment than an HH Diamond.
That 20-25 cents value (in my own estimates) is because aspirational awards are still out there in those programs. Travel Packages and ultra-luxury hotels made accessible with points at solid values against typical paid rates.
If HH kills off the aspirational end of award redemptions, turning it into a simple transactional program, then the only "hook" is to try to bury me with even more points. The lack of real Diamond recognition at hotels means HH would need to stay on the high side in terms of raw award value, which ultimately means nonstop promotions (hello, IHG!!).
Even then, it's all a little less fun than it once was.
Oct 13, 2017, 11:59 am
#5
A FlyerTalk Posting Legend
Join Date: Jul 2002
Location: MCI
Programs: AA Gold 1MM, AS MVP, UA Silver, WN A-List, Marriott LT Titanium, HH Diamond
Posts: 52,575
It wasn't long ago that I had a redemption well over 1.25c - 4 nights at the DT Times Square in the final days of the older version of the AXON award. (2013)
Go back to 2009 and I had a couple solid redemptions in Europe and the Middle East in the 1.2-1.5c range.
Go back to 2002 and you could get over 2c on an ALON or GLONP (6-night awards at top hotels in the system for 100,000 points).
So the bottom has fallen out of HH points over the years, but with the cap in place there are still lots of opportunities to get more than 0.5 cpp.
In the future, the only real variable to points will be locations with high taxes or fees.
By contrast, Marriott and Starwood have remained structurally the same programs for 15-20 years. Valuation ebbs up in weak dollar periods and down with category creep. But by and large, they haven't had to overhaul and wholly devalue those programs like HH has 3 times in that same period.
Oct 13, 2017, 1:46 pm
#6
Join Date: Jul 2017
Location: Ohio
Programs: Hilton Diamond, Marriott Titanium, Hyatt Globalist, American Platinum, Southwest A-list
Posts: 98
If the max redemption goes away, and HH points effectively become worth 0.5 cpp at all times, then I'm going to need 50+ pt/$ on a pretty much an ongoing basis to continue to stay there.
If HH kills off the aspirational end of award redemptions, turning it into a simple transactional program, then the only "hook" is to try to bury me with even more points. The lack of real Diamond recognition at hotels means HH would need to stay on the high side in terms of raw award value, which ultimately means nonstop promotions (hello, IHG!!).
Even then, it's all a little less fun than it once was.
If HH kills off the aspirational end of award redemptions, turning it into a simple transactional program, then the only "hook" is to try to bury me with even more points. The lack of real Diamond recognition at hotels means HH would need to stay on the high side in terms of raw award value, which ultimately means nonstop promotions (hello, IHG!!).
Even then, it's all a little less fun than it once was.
I think it is quite possible for a Diamond member (who selects points and points) and uses the AMEX Surpass card to pay for Hilton stays to earn close to 50 points/dollar. Before any promos, this Diamond member would earn 32 points/dollar (20 points/dollar for selecting points & points with the Diamond point bonus, added to the 12 points/dollar for Surpass Hilton Spending). If Hilton offers the typical Double points promo, this member would earn 42 points/dollar; 52 points/dollar with a triple points promo.
With the Hilton Honors program drifting towards a pure transactional system, it will become increasingly difficult to find outsized point redemption values (>0.5 cents per point). Yet, with an effective kickback of 20-25 cents per dollar spent (i.e. earning 40-50 points per dollar spent), I personally find plenty of value in HHonors and will continue to stay with the program. But, like you say, it's just not as fun as it used to be
Oct 13, 2017, 1:53 pm
#7
A FlyerTalk Posting Legend
Join Date: Jul 2002
Location: MCI
Programs: AA Gold 1MM, AS MVP, UA Silver, WN A-List, Marriott LT Titanium, HH Diamond
Posts: 52,575
I think it is quite possible for a Diamond member (who selects points and points) and uses the AMEX Surpass card to pay for Hilton stays to earn close to 50 points/dollar. Before any promos, this Diamond member would earn 32 points/dollar (20 points/dollar for selecting points & points with the Diamond point bonus, added to the 12 points/dollar for Surpass Hilton Spending). If Hilton offers the typical Double points promo, this member would earn 42 points/dollar; 52 points/dollar with a triple points promo.
With the Hilton Honors program drifting towards a pure transactional system, it will become increasingly difficult to find outsized point redemption values (>0.5 cents per point). Yet, with an effective kickback of 20-25 cents per dollar spent (i.e. earning 40-50 points per dollar spent), I personally find plenty of value in HHonors and will continue to stay with the program. But, like you say, it's just not as fun as it used to be
With the Hilton Honors program drifting towards a pure transactional system, it will become increasingly difficult to find outsized point redemption values (>0.5 cents per point). Yet, with an effective kickback of 20-25 cents per dollar spent (i.e. earning 40-50 points per dollar spent), I personally find plenty of value in HHonors and will continue to stay with the program. But, like you say, it's just not as fun as it used to be
But they gotta keep it up in that range to keep me interested. Going back to 32/$ would sting. 16% return in a system where there's no real elite recognition at the properties would lag well behind the competition.
This year, I've liked the straightforward 3x promos at HH. Marriott's promos often make me roll my eyes...stay a bazillion nights and get 20k or whatever.
SPG used to be more creative but it's been a while since they've had a really good one (for my stay patterns, anyway). Hyatt...ahhh...moment of silence for FFN...
Oct 13, 2017, 9:13 pm
#9
Join Date: Jul 2017
Location: Ohio
Programs: Hilton Diamond, Marriott Titanium, Hyatt Globalist, American Platinum, Southwest A-list
Posts: 98
I completely agree. Just because one can book an award valued at <0.5 cents per point, that certainly doesn't mean one should.
If I see an award room valued so poorly, I would either pay cash (assuming the cash rate is acceptable), or simply stay at another hotel.
Oct 14, 2017, 10:22 am
#10
FlyerTalk Evangelist
Join Date: Jan 2005
Location: home = LAX
Posts: 25,933
Of course, much of the time it's way cheaper, like not much over $100 tomorrow night (but still 30000 points).
But you have to say to yourself "I'll avoid HH redemptions except when I find good value" to do all your HH redemptions at good value.
Oct 14, 2017, 10:53 am
#11
FlyerTalk Evangelist
Join Date: May 2001
Posts: 10,970
Southwest took the fun out of loyalty programs when they went to a $ based dynamic pricing system. More airlines are following but I think part of that is also due to the lack of competition.
Hopefully the landscape on the hotel front is a little different so other programs, especially the merged MR+SPG program, do not go this way.
Still, at the end of the day, we are at their mercy.
Hopefully the landscape on the hotel front is a little different so other programs, especially the merged MR+SPG program, do not go this way.
Still, at the end of the day, we are at their mercy.
Oct 14, 2017, 1:40 pm
#12
Join Date: Feb 2003
Location: On strike
Posts: 8,135
My only HH redemption this summer was HI Portland (OR) East, which seems to always be 30000 points, but that night (2 days after the eclipse) it was asking $200ish cash before taxes, so that's around 2/3 cpp.
Of course, much of the time it's way cheaper, like not much over $100 tomorrow night (but still 30000 points).
But you have to say to yourself "I'll avoid HH redemptions except when I find good value" to do all your HH redemptions at good value.
Of course, much of the time it's way cheaper, like not much over $100 tomorrow night (but still 30000 points).
But you have to say to yourself "I'll avoid HH redemptions except when I find good value" to do all your HH redemptions at good value.
If someone has millions of points and/or little future expectation of redeeming for hotel stays, then the calculus is different. Me, I prefer to save points for occasions when I can get good value. (Yes, there's a risk of eventual program devaluation, but I'll accept that over the certainty of a bad redemption today.)
Oct 14, 2017, 3:05 pm
#13
Join Date: Jan 2007
Location: Somewhere in Europe
Posts: 3,362
The new Hampton in Edinburgh (Not yet open) seems to be capping out at 30k even when rooms are selling for £284 (The WA is £331 and has reached its current cap of 80k so in theory the Hampton should be way more than 30k if there is no cap on new hotels). The dates checked were Feb 23rd 2018 which is the date of the Scotland v England match in the six nations. Probably one of the busiest dates here outwith the festival and new year period.
I haven’t checked any other new properties, if I have time on Sunday I’ll take a look.
Oct 14, 2017, 9:57 pm
#14
Join Date: Jul 2013
Posts: 812
@hugolover: unfortunately this is already happening (please see the discussion in the Announcing Four New Hilton Honors Perks thread). Since June 2017, Hilton Honors has been increasing the maximum number of points required for redeeming standard room rewards at a number of properties without any notice.