Loyalty Saves Money on Hotel Travel
Example #1
Look for the return of Hyatt Gold Passport's Faster Free Nights in late 2009. This offer allows loyalty program members a free night after every two paid stays, usually with the stipulation of MasterCard payment.
Hyatt Hotels Gold Passport frequent guest loyalty program last offered Faster Free Nights in the final quarter of 2008. Hyatt Gold Passport also offered the Faster Free Nights promotion from September to November 30, 2007.
I took advantage of this offer in late 2008 with two nights at the Hyatt Regency Denver and the Grand Hyatt Denver when rates were under $75 per night a few days before New Year's Eve. I redeemed a free night from these stays for a $600 value bi-level townhouse room at the Hyatt Highlands Inn in Carmel, California.
Spend under $200 to earn a free night and use the free night for a hotel room with a lowest published rate of $600 per night. That is Hotel Value for the Frequent Guest.
Here is a mindset shift for being able to maximize loyalty programs.
Assume I have no hotel travel planned for vacations and business travel has been eliminated for the remainder of 2009.
In February 2010 I have a trip to Australia.
Using Hyatt Gold Passport's Faster Free Nights promotion I can book 14 one-night stays in Hyatt hotels. I can spend every weekend regionally in California in hotels, within 125 miles of my Monterey home, where I have the choice of 15 qualifying Hyatt Hotels corporate-branded eligible hotel properties for the Gold Passport Faster Free Nights promotion.
Over the course of three months during the Faster Free Nights promotion assume I go shopping in San Francisco and see museums and be entertained for about $1,400 in hotel costs.
This $1,400 in hotel spending, if done correctly to maximize the Hyatt promotion, would provide me with 7 free reward nights at any Hyatt hotel in the world and if I didn't already have elite status, I would also earn Hyatt Gold Passport Platinum elite status after 5 stays.
The point is that if Sydney (or Tokyo, or some other incredibly expensive city) is my destination, but the price is prohibitive, I can use Hyatt's hotel loyalty program to travel a lot locally and earn free hotel nights for a reasonable investment of money and time spent at hotels. I take a "staycation" and maybe just shop or sit in bed and watch TV or take a swim. I don't even need to spend the night in the hotel as long as I personally check-in to the hotel.
I get to travel regionally and pay low rates (because I only travel when I see low hotel rates worth buying). I earn free hotel nights and elite status while staying in hotels and enjoying a break locally from the day to day routine.
In the end, I get 21 hotel nights.
14 paid nights locally in my home region booked at low rates.
7 free nights I redeem for the ultra-pricey Sydney Park Hyatt.
Total cost for 21 hotel nights is less than the cost just paying for 7 nights in the Sydney Park Hyatt.
Hyatt Gold Passport loyalty saves money.
Loyalty Traveler Bottom line
Most regions of the US will have a Hyatt hotel, particularly airport hotels, where weekend rates are about $100/night. Spend $1,400 now and your Hyatt loyalty saves money by receiving free a $2,000 luxury hotel room in Sydney or Aruba, or some expensive vacation resort. The alternative is a hit or miss low cost 2-star or 3-star hotel for $150 to $200 per night for a drab hotel week when you could get over 20 nights in consistently nice Hyatt Hotels.
I know where my loyalties take me. Hotel loyalty saves money.
Cost-Benefit Analysis of Hotel Stays
Cost is only one side of the equation in a cost-benefit analysis. The benefits of participating in a loyalty program are harder to value because you have to accrue a lot of anecdotal evidence. My background of hundreds of hotel nights and flights and years of studying travel websites on the internet gives me the anecdotal data needed to analyze loyalty program benefits across several airline and hotel programs. Loyalty Traveler shows you how to estimate the value of benefits you will receive as an elite loyalty program member.
I take travel seriously. As a travel rates researcher, I take the time, as do many travelers, to study the prevailing hotel rates for the place I plan to visit and when necessary I study the airfares. I know I get a better deal than most travelers. As a former classroom teacher I frequently ranked students in percentiles and deciles and ordering comparisons for various purposes. I now apply that kind of methodology to hotel travel and quality ranking based on various assessments like hotel price, location, facilities, climate, ambience, pool, wow factor.
Loyalty travel is a means to an end for regular upscale hotel lodging at a more economical price.
The Hotel Travel Principle
Traditional Hotel Travel Planning for 2 one-week vacations per year
Vacation consists of 6 nights in a resort hotel.
The traveler books one night at a hotel the night before flying on vacation for $100
$250 per night is the room rate for the cheapest resort room.
The hotel's preferred rooms go for $350-450 per night.
$250 x 6 nights at one luxury hotel or resort = $1,500 + $100 for airport hotel.
A 7-night luxury hotel trip costs $1,600.
Traveler taking 2 trips per year spends $3,200 hotel + $384 (12% hotel tax) = $3,584 for 14 hotel nights.
The 14 hotel nights were for 4 hotel stays (2 nights airport hotels, 12 nights resort hotels).
Loyalty Traveler Style Frequent Guest Hotel Planning
Stay 30 hotel nights per year at an average cost of $100 per night (add 12% tax).
A possible 4 hotel stays pattern:
| | Fri Nov 16 | Sat Nov 17 | Fri Nov 30 | Sat Dec 1 |
Hilton Garden Inn, San Francisco Airport | $79 | | | |
Hilton Financial District, San Francisco | | $169 | | |
| Hilton Santa Clara | | | $83 | |
| Hilton Fremont | | | | $69 |
The average room rate of these 4 one-night hotel stays is $100/night.
The $169/night Hilton San Francisco hotel is a higher category hotel and a room upgrade at this upscale hotel can easily be a $400/night value.
There is a good chance that these 4 hotel stays earned a free night or thousands of bonus hotel points in the Hilton HHonors hotel frequent guest loyalty program above the 6,000 base points and bonus points received by any HHonors member choosing an earning preference of "Points and Points".
An HHonors Diamond elite status member will likely earn at least another 1,000 HHonors points per stay for 12,000 points earned.
| 4 stays at $400 hotel base rate paid. $400 x 10 points/$1.00 = 4,000 base points. |
| Points and Points earning preference for HHonors = 50% bonus of base points = 2,000 points. |
| Diamond elite 50% bonus on base points = 2,000 points. |
| Promotion will likely offer between 1,000 and 5,000 points per one-night stay or a free night after 4 stays. We will assume the low end for this sample analysis. Assume 1,000 additional bonus points earned for some HHonors eligible promotion = 4,000 points. |
| 12,000 HHonors points earned for $400 in hotel activity. |
| Extrapolate this stay pattern through a year and repeat 7 or 8 times. 12,000 HHonors points x 7 = 84,000 points (in reality, probably 120,000 points will be earned with better bonuses than sample) $400 x 7 = $2,800. |
28 hotel nights for $2,800 + spend $550 to buy 55,000 points and get 175,000-point hotel stay reward. Stay in a major city center or at a top category 6 Hilton resort for 6 nights as a top elite HHonors Diamond member and likely receive a $500/night room with a complimentary upgrade. $2,800 hotel base rate + $336 (12% hotel tax) + $550 (Buy 55,000 HHonors points) = $3,686 for 34 hotel nights, including a $3,000 resort vacation in a preferred category room through a complimentary upgrade based on elite status. |
Free Night Rewards
Use hotel frequent guest loyalty program planning to earn elite status and maximize promotional bonuses for free night rewards.
| Earn elite status and maximize promotional bonuses |
| 1. Add up the number of vacation nights and/or stays in hotels you plan to take during the calendar year (of 2009) |
| 2. Add up the number of business nights and/or stays in hotels you plan to take during the calendar year (of 2009) for hotel stays in your primary hotel loyalty program. (Business travelers often must stay in a chain different from primary hotel loyalty program preference. |
| 3. Your goal is to accumulate around 25 to 28 hotel stays or 50 nights in a calendar year to reach a top-tier elite status. Hyatt and Starwood = 25 stays or 50 nights; Hilton = 28 stays, 60 nights, or $10,000; IHG Priority Club = 50 nights or $6,000; Marriott = 75 nights. |
4. Check out the rates for hotels within a couple hours drive from your home and calculate how much it would cost to stay at regional hotels to accrue the additional hotel nights and stays for top elite status. |
When you must be in a location for business or a function, then you may need to pay the going rate. Flexibility allows a frequent guest to choose the best priced option.
You need to have the time and resources to spend 30 to 40 nights per year in a hotel and plan to spend $2,000 to $4,000 for hotel stays. A strategic hotel travel plan can allow you to stay in upscale and luxury hotels and generally receive complimentary upgrades to the finer rooms of the hotel during your stay. A frequent guest can receive hotel room upgrades during hotel stays that add 100 to 200% value to the paid room rate. Frequent complimentary upgrades that are $100+ added value will be common at high-end hotels if a loyalty plan for elite status is developed and followed.
A leisure traveler taking 3 to 4 weeks of one-week vacations per year and 7 to 14 days of other hotel nights can easily earn top elite status in one of several hotel loyalty programs.
It is possible for a frequent guest with 30 hotel nights during the course of a year to earn high elite status in the hotel chain's loyalty program. High elite status will have the benefit of complimentary room upgrades at most hotels, particularly large upscale hotels with many categories of rooms and room types. A low $100 to $150 reserved rate for a standard room at a AAA-rated 4-Diamond or 5-Diamond hotel may be upgraded to a higher category room that would have cost $250 to $400 to reserve for another guest without your elite status.
Why would a hotel upgrade me when I am paying a below average hotel rate?
The economics of the hotel industry and my stay pattern is that I am not taking a room the hotel would be able to sell that day for its full rate. Hotels generally do not sell out unless there is a special event or conference.
At many hotels, 90% or more of rooms are a standard, base room and guests can be moved around between rooms. There is often a preferred hotel side for the better view, and frequently corner rooms are a larger room style. The bigger rooms and better views are often reflected in the hotel room rate for these categories of rooms.
Loyalty Program elite members receive preferential treatment because the hotel industry operates on mostly one-time guests. Hotel chain loyalty shown by a frequent guest is rewarded with complimentary room upgrades as a standard industry practice.
While you and I might be paying a below average rate than other guests, we are much more likely to be a returning guest for the hotel chain. Long-term satisfaction is likely to improve the hotel and corporate profit margin by keeping us loyal to one particular hotel chain.
That is why hotels upgrade elite guests even when the guest is paying a below average room rate.