azepine00

Its not the reimbursement value that hotel needs but spg marketing power when you book paid stays... in order to earn those 10k points you spent a few grand at spg hotels.

azeckel

As someone else posted, it is tiered based on occupancy. At low occupancy and with near zero marginal cost, literally $20 is better than leaving the room empty for the night. Also consider that a good number of guests opt to pay for additional services that wouldn't get captured by an empty room. Food, parking/spa (where applicable), etc. I was told by an SPG sales rep that at higher occupancy (> 80% I think) the hotel gets reimbursed at a rate that is the average of sold rooms for that night.

Not the only reason, but the reimbursement rate is one of the things we have to thank for resort fees. Vacation properties see higher incidence of point redemptions and use the fees for revenue capture.

As to what the hotels pay for points, I think it's less than $0.01. I say this because you can use points to pay your folio at a rate of 75 per $1. It doesn't make sense that they would be giving away more points per dollar than they take back in.

CPRich

I don't think the reaction was to being able to find such a pair of options. It was to actually paying the points when given the two.


And to pile on - an empty room earns a lot less than $55/night.

MightyTravels

The hotel development business plans usually call for rates between $55-$90/night to break even (albeit at high occupancy). So if you see hotel rates higher than that it is basically a sign that some hotels have pricing power (usually because of a brand). Anything on top of these rates is 'pure profit' (again at high occupancy).

$55 is likely what a lot of folks pay at many hotels (airline employees, government employees, chain employees). So $55 isn't an unusual rate for many hotels.

UA-NYC

Sometimes one just needs to pay cash on vacation / on a personal stay, no matter how hard that may be...

Zorak

Is it though? I've occasionally wondered what the cost is to the hotel to turn over a room in terms of labor, utilities used, supplies, amortized wear and tear, etc. and this gave me an excuse to Google it.

One sample result:

The Cost of a Filled Room / Bill Geoghegan

This quotes anywhere from $15 to $50 depending on the property, another says $12-$75, understanding that these are all sort of hand-wavy numbers that depend on a lot of factors that can be specific to locale/market and so on.

So below some price point they actually do lose less by leaving the room vacant.

The linked page does echo the other point you brought up:

Anyway this kinda stuff can be interesting sometimes

longtimeflyin

I was at the Hotel Grand Bretagne. It was far more than that /night.

ltravel

I own a hotel room at a Hyatt and a Waldorf Astoria. I get paid about 40% of the room rate when someone rents out the room (not including tax or resort fees) When someone books the room with points, I get paid 40% of $99. I would guess that means the hotel gets $99 for the points.

MilesTalk

When transferred to the right programs for the right premium edemptions, they can be valuable, but don't ignore the 5th night free on awards combined with the ability to use during peak periods. For example, over New Year's eve in Sydney and in a prime convention hotel during SXSW in Austin. I'm talking 12 cents a point value....