Not all rewards programs are created equal. With hotels after guests to book direct, one would think they would be offering competitive loyalty programs to draw guests in and retain them, but a new study shows that the number of loyalty points needed to book rooms is only going up, with some exceptions.
The third annual "CarTrawler Hotel Reward Payback Survey" was conducted by IdeaWorksCompany and analyzes what guests earn back from hotel bookings. The study sifted through 1,350 reward queries from six reward programs: Best Western Rewards, Hilton Honors, IHG Rewards Club, Marriott Rewards, Starwood SPG and Wyndham Rewards. As part of the process, the lowest reward price in points was recorded alongside the corresponding room price in U.S. dollars.
So which hotel brand rewards loyal bookers the most? The study found that Wyndham Rewards returns an average of 16.7 percent from roomnight spending as reward stay value. This was three points higher than Wyndham Rewards’ numbers from 2016 and 211 percent higher than the lowest scorer, Starwood SPG, which awarded loyalty members 5.4 percent of roomnight spending. Marriott Rewards came in at second place with 8.8 percent, while Hilton Honors came in third at 7.5 percent. Best Western Rewards was competitive with Hilton Honors at 7.4 percent, while IHG Rewards Club was in fifth place at 6.7 percent.
The number of points awarded to guests per booking is an important metric to study, but the value behind reward points is also unequal. The report stated that Hilton Honors usually awards 15 Honors Points per dollar spent at a hotel, while Starwood SPG awards 2 Starpoints per dollar spent at a hotel. However, individual Sartwood SPG points are worth 0.023 cents, while individual Hilton Honors points are valued at 0.005 cents. The report took these factors into consideration, finding an 80,000-point bonus for the IHG Rewards Club Select Credit card (worth 0.007 cents per point) had a total reward value of $560.
With this in mind, the best possible reward payback can be achieved when room rates are high and reward point thresholds are low. The Wyndham New Yorker represented the highest reward payback in the report, with 50.7 percent for a booking made for Oct. 14, 2017. In this instance, the room cost $610 or 15,000 rewards points, and earns guests 10 points per dollar spent (in addition to bonus points).
The second most rewarding property was the Hospitality House — New York City, which operates using Best Western Rewards. On a room rate for $640 (or 36,000 points) the hotel provided a rewards payback of 17.8 percent. By comparison, the program that provided the least in returns was the Westin New York Grand Central, where Starwood SPG would return 1.8 percent of rewards payback for a room rate of $231, or 25,000 points.
Lastly, the study looked at rewards credit cards, where the story almost flips. Here the Starwood Preferred Guest American Express card provides the highest reward payback at 2.7 percent for every dollar of everyday purchases, with Wyndham Rewards’ Visa just behind it at 2.5 percent. IHG Rewards’ Club Select Credit Card brought up the rear at just 0.7 percent reward payback, but cardholders under that system also receive a 10-percent payback on all point redemptions and automatically quality for Platinum elite status in the IHG rewards club, so it’s important to consider the other perks.
Guests still need to exercise discernment when choosing a rewards program. Wyndham and Wyndham Grand topped the list in most areas with regards to rewards payback, but the brand’s global footprint is limited to just 135 locations. In addition, IHG Rewards Club affords a 100-percent bonus for members able to achieve it’s “Spire” tier, so frequent travelers may get more mileage out of that option.
In all, travelers begin to experience enhanced benefit after 10 nights, achieving a higher status under most of these programs. Differentiation is going to become very important if the business cycle begins to trend downward, and travelers can be expected to seek out the differences in programs where even a few percentage points can matter. The report’s closing statement puts it best: “Very few everyday choices in life yield paybacks that can range from 2 [percent] to 51 percent.”