I call Shenanigans
#46
Join Date: Apr 2005
Programs: Hyatt Lifetime Globalist, SQ PPS Solitaire
Posts: 3,599
In the interest of keeping Diamond the terrific status it is, they should move to a revenue based status. As you would get all your benefits without Diamond, I am kind of surprised that you are so hung up on the card...
#47
Join Date: Jan 2008
Posts: 3,578
Revenue based status is a terrible idea. Adding revenue as an ALTERNATE qualification tier is a GREAT idea, as I have said many times. Making a $ requirement just drives people away to the cheapest alternative. UA was cited as an example earlier regarding loyalty...well, UA has succeeded in driving me away from them after this year. No longer will I fly UA at all costs, because I have to spend an average of 10 cents per mile to keep my status. That is not loyalty, that is idiocy. I would have to basically spend $500 per round trip ticket from LAX-NYC and do that 5 times to be silver or 10 to be gold. If you are spending 500 to fly to NYC from LAX regularly, you are a sucker. Now, I know there are the arguments of that being a standard fare for business, short notice, etc. Fine. I guess if all you want in your "loyalty" scheme are OPM travelers who usually don't even get a say on where/when/what airlines they go on, great. Sounds like a great way to squeeze the most money out of a captive audience. I have news for you though...when those people's OPM dries up...they will NOT keep flying you at 10 cents a mile. Normal people don't spend $500 to fly across the US. The same goes for hotels, which leads me to the Hyatt specific point.
Now, the same holds true for Hyatt. If you think I am not valuable because I don't stay 50 nights a year in the PH SYD, you are deluded. There is a reason there are about 40 PHs and hundreds of other "low brow" properties. Margin is the key, not just spend. Hotel nights are a perishable good...once a room goes empty one night, it is a lost good that can never be sold. Selling an otherwise empty room is profitable, period. I love all the high dollar attitudes around here, most of which are earned on OPM. Having other people be Diamond isn't going to diminish your benefits, so relax. This idea that if more people are Diamond, then no one will ever get a suite upgrade, etc, is ridiculous. They are hardly giving away the status and if you think the number of people who are doing 25 one night cheap mattress runs just for the stay credits is substantial, you are an idiot. Also, for those FEW people who do, they are obviously not staying enough on normal stays to impact anyone else. Revenue REQUIREMENTS are TERRIBLE. I have spent $10k at Hyatt in some years and not made Diamond. Now, THAT is absurd to me. Giving someone Diamond who spends $10k a year (for example) is a good idea in my opinion, because anyone who spends an average of $200 a night times 50 nights, has MORE than earned their keep. REQUIRING someone to spend $10k a night to get Diamond is moronic.
Now, the same holds true for Hyatt. If you think I am not valuable because I don't stay 50 nights a year in the PH SYD, you are deluded. There is a reason there are about 40 PHs and hundreds of other "low brow" properties. Margin is the key, not just spend. Hotel nights are a perishable good...once a room goes empty one night, it is a lost good that can never be sold. Selling an otherwise empty room is profitable, period. I love all the high dollar attitudes around here, most of which are earned on OPM. Having other people be Diamond isn't going to diminish your benefits, so relax. This idea that if more people are Diamond, then no one will ever get a suite upgrade, etc, is ridiculous. They are hardly giving away the status and if you think the number of people who are doing 25 one night cheap mattress runs just for the stay credits is substantial, you are an idiot. Also, for those FEW people who do, they are obviously not staying enough on normal stays to impact anyone else. Revenue REQUIREMENTS are TERRIBLE. I have spent $10k at Hyatt in some years and not made Diamond. Now, THAT is absurd to me. Giving someone Diamond who spends $10k a year (for example) is a good idea in my opinion, because anyone who spends an average of $200 a night times 50 nights, has MORE than earned their keep. REQUIRING someone to spend $10k a night to get Diamond is moronic.
#48
Join Date: Apr 2005
Programs: Hyatt Lifetime Globalist, SQ PPS Solitaire
Posts: 3,599
antonius66: CASM, cost per available seat mile for United in the first quarter of 2013 was at 14.9 cents. United breaks even when they make on average 14.9 cents and you are not willing to even make 10cpm? I don't think United is missing you much.
#49
Join Date: Jan 2008
Posts: 3,578
Well, if UA is always selling seats at 15cpm, then I would never be able to buy tickets for things like LAS-ORD for $150, or IAD for $200. Once the seat is left empty, it is $ lost forever. Same with hotels. We cannot all, or more importantly, WOULD NOT, pay $700 to fly cross country or pay $3000 a night at a suite at the PH Zurich. Guess the rest of us should just pack it in and stay home since we are worthless to businesses everywhere. The plebes like us are just stealing valuable hotel rooms and airline seats from the REAL customers who are apparently fighting for such limited space to throw their money at companies like UA and Hyatt.
#50
Join Date: Jan 2012
Location: Osaka
Programs: Hyatt Explorist, Hilton Gold, UA
Posts: 3,158
deleted
Last edited by OsakaWino; Jul 25, 2013 at 10:48 am
#51
Join Date: Jan 2012
Location: Osaka
Programs: Hyatt Explorist, Hilton Gold, UA
Posts: 3,158
In the real world, "dirtbag elites" can be very valuable to an airline or hotel chain; sorry that you might think we are soiling your space; maybe a less egalitarian chain would suit you better.
Last edited by OsakaWino; Jul 25, 2013 at 10:55 am
#52
Join Date: Apr 2005
Programs: Hyatt Lifetime Globalist, SQ PPS Solitaire
Posts: 3,599
If you do not include calculations for profit margins for unsold seats/rooms, both well above 90%, then your calculations are meaningless.
In the real world, "dirtbag elites" can be very valuable to an airline or hotel chain; sorry that you might think we are soiling your space; maybe a less egalitarian chain would suit you better.
In the real world, "dirtbag elites" can be very valuable to an airline or hotel chain; sorry that you might think we are soiling your space; maybe a less egalitarian chain would suit you better.
Unsold rooms/seats are sold over price not over perks. And people who demand both should think hard again why that can't work. It's wrong the same way you derive your 90% margin logic. If that logic was right, why doesn't do Hyatt only do last minute sales? The whole business has then a 90% margin? Doesn't need much thinking that's not working.
#53
A FlyerTalk Posting Legend
Join Date: Dec 2000
Location: Potomac Falls, VA
Programs: AA Plat 2MM, MR Gold, Avis Pref
Posts: 41,109
I can legitimately use my corporate code for leisure travel
Next answer
I think FT shows that most of us (lets use > 50% of business travelers) are not limited to the hotel that they must stay at for business travel. I do not see that as an accurate statement at all. While you may say where's my data, I will retort with where is your data that the biz traveler has no choice where to stay?
Here we go again with margin
Avg spend is meaning less
It's the margin you need to look at
in your example, the Gross margin is 5%
In a $50 room its reasonable that the property could make $5 and have a 10% margin and would be in a better situation.
Since I have no idea how this is calculated I have a question or two
Is that 14.9cpm what it cost to sell every seat that flew for the quarter or was it what it cost to fly every pax who paid or flew for the qtr?
UA breaks even you say 14.9 cpm but does this include freight and other services such as fees where they clearly make money.
If 100% of the seats are sold, does it still cost 14.9 cpm to break even?
So if they only sold tickets at the break even price or higher, do you think they could break even on every flight?
Next answer
4aks, TrojanHorse, I can see that my subtle jab at SMK77 in response to his suggestion to reduce others' benefits was a bit too subtle. Didn't you guys read the last line of my post? I purposely separated it from any other sentences so that it would stand out.
Many times, the business traveler has no choice as to where he stays. Those hotel nights are already guaranteed. I spend my own money and have complete discretion as to where I stay. But again, I do not advocate taking away points/credits from business travelers, even though I no longer travel for business. The point was that it's easy to offer cutting others' benefits when there's no impact on your benefits.
Many times, the business traveler has no choice as to where he stays. Those hotel nights are already guaranteed. I spend my own money and have complete discretion as to where I stay. But again, I do not advocate taking away points/credits from business travelers, even though I no longer travel for business. The point was that it's easy to offer cutting others' benefits when there's no impact on your benefits.
Great! You stay 25 times a year with Hyatt and Hyatt loves you to bits for that. Let's assume for a moment that you always stay 1 night and you have already shared that your average spend is 100 USD. So Hyatt got 2,500 USD in business from you. They want you to come back! You are loyal and you keep spending with them. That's great.
Avg spend is meaning less
It's the margin you need to look at
in your example, the Gross margin is 5%
In a $50 room its reasonable that the property could make $5 and have a 10% margin and would be in a better situation.
Is that 14.9cpm what it cost to sell every seat that flew for the quarter or was it what it cost to fly every pax who paid or flew for the qtr?
UA breaks even you say 14.9 cpm but does this include freight and other services such as fees where they clearly make money.
If 100% of the seats are sold, does it still cost 14.9 cpm to break even?
So if they only sold tickets at the break even price or higher, do you think they could break even on every flight?
#54
Join Date: Jul 2002
Location: Virginia, USA
Posts: 4,511
UA is a huge airline. Hyatt, compared to other chains, has a relatively small footprint and many 80s-era properties. Adding a revenue requirement to its top elite tier would only make it less competitive. Marriott or Hilton, on the other hand, could probably get away with it.
#55
Join Date: Apr 2005
Programs: Hyatt Lifetime Globalist, SQ PPS Solitaire
Posts: 3,599
Is that 14.9cpm what it cost to sell every seat that flew for the quarter or was it what it cost to fly every pax who paid or flew for the qtr?
UA breaks even you say 14.9 cpm but does this include freight and other services such as fees where they clearly make money.
If 100% of the seats are sold, does it still cost 14.9 cpm to break even?
So if they only sold tickets at the break even price or higher, do you think they could break even on every flight?
UA breaks even you say 14.9 cpm but does this include freight and other services such as fees where they clearly make money.
If 100% of the seats are sold, does it still cost 14.9 cpm to break even?
So if they only sold tickets at the break even price or higher, do you think they could break even on every flight?
This is the total cost for United to offer all the seats that were up in the air in the first quarter. United would need to fill 100% of the seats and make 14.9 cpm to break even.
Keep in mind that this is the average for every flight mile offered in totality. This cost is just an indicator and goes across all aircrafts, all flight lengths an and all classes of service.
Hence, it's not a good measure to calculate prices per flight but is only giving an overall picture. Zooming into the actual flight it is clear that the cost in First Class will be higher than in Economy, the cost for a mile offered on a long haul flight will be less than a short-haul flight etc.
In the big picture, United is saying to its Premier customers: We give you status if you make us at least 10cpm which is again, the average of all the flights the Premier customer has taken. On average, United still has to make 14.9cpm to break even. If all Premier customer just hit the 10cpm, United need the other customers to pay more to average out at 14.9 for break even.
#56
A FlyerTalk Posting Legend
Join Date: Dec 2000
Location: Potomac Falls, VA
Programs: AA Plat 2MM, MR Gold, Avis Pref
Posts: 41,109
You are correct:
This is the total cost for United to offer all the seats that were up in the air in the first quarter. United would need to fill 100% of the seats and make 14.9 cpm to break even.
Keep in mind that this is the average for every flight mile offered in totality. This cost is just an indicator and goes across all aircrafts, all flight lengths an and all classes of service.
Hence, it's not a good measure to calculate prices per flight but is only giving an overall picture. Zooming into the actual flight it is clear that the cost in First Class will be higher than in Economy, the cost for a mile offered on a long haul flight will be less than a short-haul flight etc.
In the big picture, United is saying to its Premier customers: We give you status if you make us at least 10cpm which is again, the average of all the flights the Premier customer has taken. On average, United still has to make 14.9cpm to break even. If all Premier customer just hit the 10cpm, United need the other customers to pay more to average out at 14.9 for break even.
This is the total cost for United to offer all the seats that were up in the air in the first quarter. United would need to fill 100% of the seats and make 14.9 cpm to break even.
Keep in mind that this is the average for every flight mile offered in totality. This cost is just an indicator and goes across all aircrafts, all flight lengths an and all classes of service.
Hence, it's not a good measure to calculate prices per flight but is only giving an overall picture. Zooming into the actual flight it is clear that the cost in First Class will be higher than in Economy, the cost for a mile offered on a long haul flight will be less than a short-haul flight etc.
In the big picture, United is saying to its Premier customers: We give you status if you make us at least 10cpm which is again, the average of all the flights the Premier customer has taken. On average, United still has to make 14.9cpm to break even. If all Premier customer just hit the 10cpm, United need the other customers to pay more to average out at 14.9 for break even.
So in that 14.0 cents per mile to break even, is that to assume there is no fee or other ancillary income?
#57
Join Date: Apr 2005
Programs: Hyatt Lifetime Globalist, SQ PPS Solitaire
Posts: 3,599
So aren't we saying the same thing? It's Margin (whether its Gross or profit, I don't know) that runs the show. So I'm saying, the price you pay should not be the qualifier for elite status when you can have a bigger margin on a much lower price. You can also have the same or greater profit on a much lower price.
My margin for 25,000 USD turnover is 10%, hence Hyatt is making 2,500 USD.
The margin for our 3,000 USD turnover elite would have to be more than 85% to beat that. Mission impossible.
And I would still think that the overall margin for a customer buying 400 USD rooms at Park Hyatts is better than at a Hyatt Place where customers spend 100 USD.
The one thing not counted here is fees, Fees are what 95% profit? What is the actual cost of a fee? Minutes of CSR time maybe? Baggage may have a more tangible number per pound of bags = $X of cost.
So in that 14.0 cents per mile to break even, is that to assume there is no fee or other ancillary income?
So in that 14.0 cents per mile to break even, is that to assume there is no fee or other ancillary income?
As United offers First, Business and Economy Class, the 'real' cost for an Economy seems to be at 10 cents and that's what they are asking for in terms of Elite qualification. The only tricky part with that is: if you fly other carriers and earn PQM, you don't add any money to your balance: Fly 50.000 miles on UA for 10 cents and 50.000 miles on SQ with no value, you are not making 1K.
#58
Suspended
Join Date: Aug 2008
Programs: Everything is refundable
Posts: 3,727
Almost: Your profit consists out of two components: margin x turnover.
My margin for 25,000 USD turnover is 10%, hence Hyatt is making 2,500 USD.
The margin for our 3,000 USD turnover elite would have to be more than 85% to beat that. Mission impossible.
And I would still think that the overall margin for a customer buying 400 USD rooms at Park Hyatts is better than at a Hyatt Place where customers spend 100 USD.
My margin for 25,000 USD turnover is 10%, hence Hyatt is making 2,500 USD.
The margin for our 3,000 USD turnover elite would have to be more than 85% to beat that. Mission impossible.
And I would still think that the overall margin for a customer buying 400 USD rooms at Park Hyatts is better than at a Hyatt Place where customers spend 100 USD.
Being paid a fee to manage a Park Hyatt on behalf of a real estate company in comparison to getting a franchise fee plus fee offering a reservation systen like Hyatt Place is like comparing apples and oranges.
#59
Moderator: GLBT Travelers & Hyatt Gold Passport
Join Date: Jan 2000
Location: CVG
Posts: 15,300
We've received several RBPs on this thread. It's veered off considerably from the original subject and most are now personal commentary and attacks. As such, I'm locking this thread.
Peteropny - co-mod - Hyatt
Peteropny - co-mod - Hyatt