Last month we learned that Hilton is rolling out new redemption options: cash and points and use of points towards room nights above just the standard entry-level rooms.
Both of these seemed like big advances for Hilton, though I did say at the time the question of value would be in the details. How many points would we save by spending cash? ANd how many extra points would it take to get a better than basic room?
Starwood pioneered cash and points, Priority Club followed a couple of years back. It’s a way to stretch the value of your points, and in both of those programs it’s generally better to use cash and points when available than it is to use just points for a standard room.
For me, if I don’t have status with a hotel chain and am using points at a resort property, I don’t really want just a basic room and would prefer to spend more points to get a better view or a larger room. For a city hotel it often won’t matter much, but for a longer stay vacation it can make a real difference for my enjoyment. Starwood, Hyatt, and Marriott have all offered the option to spend more points for a better room. Hilton is joining that group, and leaving Priority Club behind as the major program lacking this option.
Loyalty Traveler does a nice writeup on the value of Hilton’s new cash and points and premium upgraded room redemption offers based on the two hotels that appear to have these options loaded so far.
What he finds is that when redeeming a hotel for an upgraded room award, point values are hovering around three-fifths of a penny per point and seems to vary dynamically with the retail cost of the upgraded room. Unlike Starwood, where a specific room upgrade might cost 1500 points, the upgrade with Hilton varies by the retail price of the more expensive room type.
Now, three-fifths of a penny per point is about average for a Hilton HHonors redemption. It’s not a great value, and if this trend continues across other properties it’ll be a nice feature to have but hardly a game changer. At hotels where the regular award rate is a better value, the incremental points cost for an upgraded room is going to look like an exceptionally poor value.
Cash and points on the other hand so far looks to be a winner, though with the caveat that we don’t have many data points yet. Loyalty Traveler sees cash and points getting a better per-point return than straight redemptions. I’d hope so, and expect so, that will be the key to whether this is a useful option or not.
We’ll need to see more properties roll out with the redemption options to understand the economics and value propositions better. So far both new features appear positive, though the upgraded room redemption option perhaps a bit of a disappointment from a value perspective. Time will tell if that initial impression remains correct.