My thoughts on the ‘Avios Hotel Sale’ debacle and why I think it happened

By the time you read this, the 2nd ‘50% off hotel bookings’ sale on avios.com will be over.

(The final offer, 40% off Eurostar bookings, is still running until Monday – see this post from yesterday for details.)

I am still trying to make sense of what happened with this promotion.  However, this is what we know to be true:

This sale was an avios.com sale and not a ba.com sale.  Whilst the offers did appear on ba.com as well, they were NOT emailed, tweeted or actively promoted.  You would not have known they were on ba.com unless you followed Head for Points or Flyertalk.

The average avios.com collector has a far smaller balance than the average BAEC collector, reflecting its history as a ‘frequent shopper’ scheme.  (Remember that, whilst we are happy to move our points around via ‘Combine My Avios’, most avios.com collectors do not do this.)

Avios was prepared to lose a little bit of money on these sale offers.  We saw this from the Reward Flight Saver £1 deals – Avios still has to pay the Air Passenger Duty to the Government for these flights, for example.

This is how I think the hotels promotion was MEANT to go:

Someone decided that offering a range of – and this is the key bit – fairly expensive hotels (Four Seasons, Mandarin Oriental etc), at a 50% discount to the Avios points usually required, would be a clever deal.

They imagined that demand would be relatively modest.  After all, a £200 hotel – even at 50% off – would still require 17,500 Avios per night.  For the average avios.com collector, this is quite a lot of points.

Somewhere along the line, though, someone also decided to reduce the cash alternative by 50%.  There is logic here – because there was a sliding scale of ‘cash vs Avios’ prices, it would have been difficult to reduce the Avios element without reducing the cash element.  The big mistake was to not restrict the discount to a ‘100% Avios’ booking.

The sale then launches.  Head for Points probably played a part in the huge flow of traffic it got, because the list of participating cities had been leaked to me earlier in the week and people knew what was coming and were able to line up flights, check for time off etc.

As soon as the scale of the discounts was clear (you could save £1,500 over the cheapest hilton.com price for a week at Conrad Algarve during peak Summer, or get the Four Seasons in Budapest for Valentines Weekend at half-price), people rushed in.  Flyertalk and similar sites also picked up on it.

Because you could book most rooms for 100% cash (or just a token amount of Avios), you could book as much as you wanted.  Had it just been 50% off the ‘all Avios’ rate, the week at Conrad Algarve would have only been bookable for 125,000 Avios points – which would have cut back the number of bookings dramatically.

Let’s look at profit margins.  It is widely known that Expedia Special Rate hotels generate a 25% margin for Expedia.  The typical travel agent hotel commission is 10%.  BA’s hotels are supplied by a wholesale group who would have a margin closer to 25% than 10%, albeit that the wholesaler and BA would be sharing that 25% profit.

Realistically, for every £100 spent on ‘50% off hotels’, BA / avios.com will have lost around £80.  This is based on you getting a £200 room, which would cost BA £180 or so, for £100.

BA EXPECTED to lose this money, of course.  However, they only expected to generate a handful of bookings – because the original plan was to offer low balance avios.com members hotels which required a high balance to book!  In the end, they took a bit of a beating.

Someone then realised, of course, that the second round of the sale was going to be even worse.  The locations in Round 1 were a little esoteric (Vienna, Dubrovnik, Prague, Copenhagen, Berlin, Budapest, Istanbul, The Algarve).  Round 2 was going to include London – letting people freely book 5-star hotels in London for the entire Summer at a 50% discount was going to lead to a huge financial hit.

At the last minute, the discounts were changed.  London was cut to a 15% discount, which was effectively no discount at all.  Most of the other cities also ran sub-50% discounts.

The original wording on ba.com makes it clear that this is NOT what was meant to happen.  It said:

“Today’s Thank You is 50% off Avios for hotel stays until 30 September when making a booking in Edinburgh, Guernsey, London, Florence, Milan, and Venice.  You can also pay with a combination of Avios & Money where you’ll receive 50% off both the Avios and the money.”

No reference at all to ‘up to’ 50% off.  The discount was clearly meant to be a full 50% in all cities.

Remember that everything I wrote above is only my best guess.  However, I have been around this business for long enough to know how it works.

All in all, though, we cannot complain about the Avios sale.  Whilst the first offer (20% off a handful of long-haul economy routes) was woeful, the £1 Reward Flight Saver deals were a huge success.  If you managed to get a hotel at 50% off in the initial round, you also got a fantastic deal.

The nature of the ‘miles and points’ game has always been ‘win some, lose some’ (well, more like ‘win a lot, lose the odd one’).  Nothing has changed!

(Want to earn more Avios? Click here to see our latest articles on earning and spending your points and click here to see our list of current Avios promotions.)

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Comments

  1. Hi Raffles

    I highlighted how awful the offers were to you with the second round of hotel offers.

    I looked at prices for 5 star hotels over a set weekend,in Florence, Venice and Rome, both before and again when the offer was launched.

    Every hotel I looked at ,(with the exception of only 1 hotel in Venice) increased the cash purchase price.

    As for going for an avios and cash payment combination; whilst there might have been a slight decrease in the amount of avios needed, the corresponding cash needed, had also been increased. This meant that it would have cost you more than before the sale started?!

    It was a complete farce.

    Regards

    Ronster

    • I checked 3 Venice hotels (4-star, not 5-star). It’s fair to say that they were nowhere near 50% off, but the one I booked was about a 30% discount against the hotels.com price (and the hotels,com price was non-refundable – the avios booking costs £25 to cancel, but nothing more). Discounts on the other hotels were at least £150 total for a 4-night stay.

      It was NOT the sale they advertised, but I’m happy with the discount I got. I was working to a budget and for me, it meant I could afford good hotel, good location – without the sale I’d have had to compromise on one or both.

      OK, had the sale been on as advertised I’d have saved even more or been able to afford a better hotel, but at what long-term price? Avios and BA are are allies in this game, I don’t want them to get surprised and take a big loss. If their avios scheme becomes problematic they will just devalue the points or further reduce availability.

  2. Andrew (@andrewseftel) says:

    I’m going to disagree with your conclusion. I think there are grounds for dissatisfaction.

    At worst, Avios were continuing to promote the second hotel sale as 50% off throughout the sale on social media, rather than ‘up to’. This is clearly unacceptable.

    There were problems with website stability early on in the promotions. Rule 1 of digital marketing is don’t bring down your own website.

    Promoting the car hire deal widely as ‘25% off new adventures’ with no mention of car hire until you clicked through. Wtf?

  3. Mrtibbs1999 says:

    I agree with your conclusion here. As much as there is legally grounds for crying about this, I know that we all do pretty well out of this game and so it’s worth leaving it be and moving on.

    Avios know how many people game the system, but still they play ball with us. Their increased financial loss, would only lead to some kind of loss to us later.

  4. Now do you accept the hotels part #1 had glitch [cash] prices? 😉

    They were unbelievably cheap, good luck to all who stand to have a lovely holiday without breaking the bank.

    I find it tough to accept as fair some of the criticisms levelled @ BA: they are a commercial business after all, not a charity. So they got part #1 wrong in terms of cost: absolutely no need to repeat the error with part #2.

    Sure, this meant hotels part #2 was a bit of a damp squib though ISTR some people got decent prices in Italy – probably the few 50%-ers that made the ‘up to 50%’ stack up as truthful.

    Hardly a case of hard knocks or taking the rough with the smooth: simply a few great opportunities to be grabbed if you were quick on your feet, together with less exciting offers that could easily be ignored but were not exactly BA reneging on its side of the deals – since they hadn’t publicly offered the deals in detail at the time they decided to make themt less generous.

    • A ‘glitch’ implies a computer error or similar! I suggest it was done deliberately but without thinking through the consequences.

      • mrtibbs1999 says:

        I think gramatically that is correct, but isn’t glitch a much nicer word than screw up, which is what it turned out to be 😉

        • mrtibbs1999 says:

          Also, I do note that there was still a “glitch/screw up” in relation to Florence. I managed to book 3 nights at the Savoy, peak season for less than £100 a night. The had forgotton to stop the 342 offer at the same time as offering 50%. I worked that out at about a £3-400 loss to them!

  5. I don’t know who lost out here. When I tried to book a hotel, the “compulsory” car hire package came up every time, which even might have been fine if I could have chosen my preferred vehicle category – didn’t work. Therefore I didn’t bother at all and used Hilton points instead.

    I can’t sit in front of my PC all day waiting for the Avios website to work properly – I need to earn some money instead to be able to afford my travels…

  6. I agree with your assessment Raffles and did OK out of this-with the detail you posted of what would be on offer I was able to plan and pre-price, thank you.

    I have 6 nights booked in the Algarve for March @ about 40% of the best price I could find o/s Avios-Avios were already the cheapest!

    So, thanks again,

    Worz.

  7. Great article and interesting prediction as to why it happened in this way. Couldn’t agree more strongly with the last two paragraphs. I had also hoped to book some London hotels at 50% off but it didn’t happen. Never mind!
    The way I see it, if I want to book a room at Four Seasons etc. I should be prepared to pay the regular rate. Anything else i.e. 50% off is a bonus!

  8. Raffles,

    I had some difficulty in finding the 100% cash rooms. I would appreciate in your next sale guides that you post a screenshot of what to look for. It would have been most helpful.

    Keep up the great work!

    • Not all of the hotels offered them. I think it was part of their agreement with BA – if the rooms were available for pure cash it would leave the hotel liable for Best Rate Guarantee claims.

  9. Janeyferr says:

    I was hoping to use the sale to stay in a hotel in London after my Open University graduation ceremony, as a special reward to myself. I’m quite Avios poor but I’m even more cash poor so I would’ve been using full Avios. It’s disappointing, but it was only a few days between being told I’d be able to do it and finding out I couldn’t, so it’s not as though it shattered a long-term dream.

  10. Erico1875 says:

    For me, it was not the end of the world. Initially I expected to get Crown Plaza Roxburgh, Edinburgh for around 11K Avios per night. As it turned out, I spent 10K Avios + £35 per night.. still a pretty decent deal.

    • But you can also get it for 35K IHG points, which I personally would value at less than 10K avios + £35 (IHG points 0.25p, avios 0.66p)

      • I’d value an IHG point at 0.5p, I think 0.25p is mean. This assume you redeem at InterContinentals like London, Paris, New York etc where an equivalent room would be £250, and of course assuming you would have paid £250 anyway.

  11. Very interesting thanks! I managed to get two 1 Pound flights to Madrid and 5 nights in Prague half price, so did well out of it. Thanks for the update..

  12. Off topic but off to Madrid with the £1 return flight offer….With Cash any recommendations for a nice 4 star Hotel in Madrid. Must be central.

    Thanks
    Howard