GUWonder

That $71 sounds like the charge for that property when it is not nearly fully-booked. $71 covers most or all of the variable costs the property would have for the use of a room night that would otherwise go unused. [Hotel room nights are a perishable item -- either they are used before "expiration" time/date or they have no residual positive value whatsoever.] A FFN also may result in additional paid hotel services being used, thus generating additional revenue for the hotel.

Free night arrangements are not really a bad deal for the hotel property itself -- they are actually a pretty good deal for the hotel properties -- but they are a tougher deal for Corporate to swallow under some circumstances, which is why there are award capacity controls of some sort or another.

$500 per night is not the rate that are the result of block bookings and negotiated rates at the PH Beaver Creek, so apparently even the hotel property finds it to its advantage to ask for far less than $500 per night under a variety of circumstances. A lower rate would be a better comparison to the $71 per night.

Besides all of the above, these promotions do bring in additional guests to hotels on regular paid rates. The value of that is obviously significant or Hyatt would not be running these promotions for so many years now.

stevens397

So again, if the PH DC gets even $71, how does Hyatt make it work on two $70 stays at Hyatt Place getting a free night? What could Hyatt's cut on the Hyatt Place nights (the $70) be, at most?

Of course, none of us are complaining

crystak

Then again, I believe the majority of Hyatt's customers don't do mattress runs.

VA1379

Not every stay during the FFN promotion is at a sub-$100 rate, and most non-FT customers will not go hotel hopping in breaking up a multi-day stay into one night stays at different properties. Also, not every FFN earned is redeemed. There is some breakage, but Hyatt keeps the fees collected from stays that produced the unredeemed FFNs.

Of course this time there is an option to choose bonus points, but in the past, you had a lot of breakage from people who could not use their FFNs in the promo period.

peteropny

I really don't know the mechanics of "payments" for the FFN earned. Perhaps the property that you have the paid stay at pays "something" to Hyatt for the FFN credit much like the points? In the past, the associated credit card (usually Mastercard) contributed something to the cost.

FWIW, $70 is a really good rate for mattress runs - mine are a little more than that on average.

90minfromJFK-CDG

Yes, it was completely sold out when I was there. MLK Day weekend.

Oops, just noticed that peteropny answered your question above. I was pretty surprised to see such a high rate on my folio and even more surprised to see the result on my GP balance...

parioli

While back at a Hyatt--do not remember which one--they told me $40.

DCBob

Well, I would dare say you are not an accountant (but I am). It's pretty simple, actually.

The profit from a promotion like FFN takes into account the additional revenue gained from selling more rooms (that would otherwise be empty) on an aggregate basis measured against the cost involved for aggregate redemptions. If the aggregate revenues exceed the aggregate costs, the promotion is profitable for the company. The fact that some guests' individual strategy (mattress runs) will result in a loss is irrelevant as long as there is an overall profit.

The best way to understand this is to look at a casino operation. Some gamblers win big and this results in a loss to the casino, but the majority of gamblers lose money and the result is a profit to the casino.

NewMexFlyer

Two night FFN stay Jan12, online PDF receipt show 37.01 room rate. Nothing on the receipt from check-out.

Firewind

And the backdrop is that the earning and redemption periods are occupancy nadirs of the year, sometimes abject nadirs. Market share. Ancillary revenue.