What is the best HOTEL credit card for long-term spending? (Part 1)

Today and tomorrow, I am going to take a look at the four major hotel credit cards – Hilton, Starwood, Marriott and IHG Rewards Club – to see if any of them are worth keeping in your wallet for the long term.

This analysis ignores the value of any sign-up bonus as I am keen to look beyond that and see if any of these cards deserve a permanent place in your life.

This was a complex analysis because the cards offer a different mix of features:

Some offer bonus points when you spend abroad

Some offer bonus points when you spend with the hotel chain that issued the card

Some offer extra benefits for hitting a certain annual spend threshold – and often these benefits are intangible and tricky to value

Two of the card carry an annual fee

You also need to put a cash value on the points earned.  This is my valuation model:

Hilton HHonors – 0.3p per point

Marriott Rewards and IHG Rewards Club – 0.5p per point

Starwood Preferred Guest – 1.5p per point

Credit cards

With Hilton, Marriott and IHG these valuations are based roughly on the points required for a £250 per night five-star hotel.  With Starwood, who charge a disproportionate premium for their top hotels, I have based it on a high-end four star whilst also remembering that you can convert 1 SPG point into 1.25 airline miles.

Apart from Marriott, I have made multiple bookings for all of these chains in 2014 so I am happy with my numbers.  If you don’t agree, it is easy enough to slot in your own valuation.

Today I want to look at the return you get for spending £10,000 on each of these cards.  Tomorrow I will look at the impact of spending £25,000.  I have assumed that 25% of the spending takes place abroad and 5% is in hotels linked to the card issuer.

Full details of the benefits and earning rates for each card can be found in the reviews I link to below (click the blue link for the review).

Return for spending £10,000:

Hilton HHonors Platinum Visa:
Base spend: 20,000 points @ 0.3p = £60
Extra points on £500 of Hilton spend: 500 points @ 0.3p = £1.50
Fee: nil
Extra benefit:  Spending £10,000 triggers a free Hilton HHonors Gold card
Return to cardholder:  £61.50 plus a Hilton HHonors Gold card (0.61% of spend plus the value of HH Gold, this has value as you will receive free internet and free breakfast)

IHG Rewards Club Visa (free version):
Base spend: 10,000 points @ 0.5p = £50
Extra points on £500 of IHG spend: 500 points @ 0.5p = £2.50
Fee: nil, you also receive IHG Gold status – this has no real value however
Return to cardholder: £52.50 (0.52% of spend)

IHG Rewards Club Premium Visa (paid card):
Base spend: 20,000 points @ 0.5p = £100
Extra points on £500 of IHG spend: 1,000 points @ 0.5p = £5
Extra points on £2,500 of foreign spend: 5,000 points @ 0.5p = £25
Fee: £99, you also receive IHG Platinum status – this has only very modest benefits however
Extra benefit:  Spending £10,000 triggers a voucher for a free night at ANY IHG hotel.  I assume you use this at an InterContinental for a room worth £250
Return to cardholder: £130 of points + £250 of free night – £99 fee = £281 (2.8% of spend)

Marriott Rewards MasterCard:
Base spend: 10,000 points @ 0.5p = £50
Extra points on £500 Marriott spend: 500 points @ 0.5p = £2.50
Extra points on £2,500 of foreign spend: 2,500 points @ 0.5p = £12.50
Fee: nil, you also receive Marriott Silver status – this has only very modest benefits however
Return to cardholder: £65 (0.65% of spend)

Starwood Preferred Guest American Express:
Base spend: 10,000 points @ 1.5p = £150
No foreign or SPG spend bonus
Fee: £75, you also receive SPG Preferred Guest Plus status – the benefits of this are intangible (4pm check-out, ‘enhanced’ room)
Return to cardholder:  £150 – £75 = £75 (0.75% of card spend)

The results of this analysis are not great news, to be honest.   The stand-out winner is the IHG Rewards Club Premium card which, even adjusting for the £99 fee, would get you £281 of ‘value’ for spending £10,000.

The other cards do not perform incredibly well.  If you can find a Visa or MasterCard cashback card paying 0.5% or more then – as cash is more flexible than points – I would choose that over the Hilton, Marriott or free IHG cards.

The SPG Amex is especially poor at the level of £10,000 annual spend.  You can easily get 1.5%+ of value from other Amex-branded travel cards (BA Amex 1.5 Avios per £1 plus the value of the 241 voucher at £10000 – albeit with a £150 fee, American Airlines / Lufthansa / Etihad 1.5 miles per £1 on a free card etc) compared to 0.75% here.

Tomorrow, I look at whether a heavy spender of £25,000 per year gets a better return or not as various bonuses kick in …..

(Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.)

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Comments

  1. Colin MacKinnon says:

    Hi Raffles,

    You wrote:

    “value from other Amex-branded travel cards (BA Amex 1.5 Avios per £1, Virgin Black 2 miles per £1, American Airlines 2 miles per £1 etc)”

    Where can I get 2 AA miles per £ – favouring them much more than BA now.

    • Typo, sorry! I was thinking of the VS card.

    • Brendan says:

      You get 1.5 miles per £ using the AA Amex. It’s also supposed to be double that for buying fuel and grocery shopping but not sure if people actually get it!

  2. Britbronco22 says:

    You forgot to include the 2k per year you get for free on the Marriott card if you keep it active. No harm in keeping this card.
    Also if you deduct the fees it’s not fair to claim the BA Amex earns 1.5% as you should deduct the £150 fee to be consistent.
    Last time I checked Hilton also provides Silver with no minimum spend requirement, I have received upgrades for Silver before, so not totally worthless.

  3. I know this is about long term spend, but Hilton give a voucher for a free weekend night after £750 spend. That’s better than a poke in the eye with a sharp stick.

    • Every year? I don’t think so! AFAIK it’s an introductory bonus.

      • Yes, but it’s still worth having in the first year.

        • Sure, but the thread title is ‘What is the best HOTEL credit card for long-term spending? (Part 1)’.

          In my book, ‘first year’ does not mean ‘long-term spending’. I have the HHonors card, had the first year hotel night and see no future nights for £750 spend coming up.

  4. Andrew (@andrewseftel) says:

    1) Would you ever use these cards at the hotel chains? They will all take Amex, so most people here would use an Amex card with a better rewards rate. You could probably make the same argument for foreign spend if you had e.g. a Clarity card.

    2) The IHG Black Visa is heavily swung by the £250 for the free night. No doubt that’s a fair cash price, but the value might well be lower, especially if you’ve (presumably) got quite a few points with IHG.

    • IHG points never expire so you don’t necessarily need to discount the value.

      Technically I should have valued the free night at £200, I suppose, since the ‘cash and points’ trick lets you buy 50k IHG for $350 which would cover any free night – although that does not skew the overall conclusion. And only a few people know about the ‘cash and points’ trick ….

  5. mrtibbs1999 says:

    Where can I get the IHG card from Raffles? I’m very interested in getting one?

    • They were meant to be relaunched on 23 June. Old cardholders have got the new one but they are delaying reopening applications for reasons no one quite understands.

      • mrtibbs1999 says:

        That’s very strange. Hopefully we will find out the reason soon.

      • How odd. I applied for the new hhonors card on 1 July and have been accepted, seems odd that barclaycard are delaying the relaunch of ihg, which was supposed to be ready earlier

        • I’ve had trouble with the Barclays site registering my new HHonors card due to site problems. Not bothered trying this last week.

          • I too have had problems with the HHonorcard change over, to the extent I had to phone up to make a payment,. Really annoying and they still haven’t answered my emails.

          • I’ave been trying to apply for a hhonors card the last two days but getting no where. The site keeps popping up with a sign saying no new applications accepted until July 1st…

          • Good I am not the only one that has problems, I was going to give them a call and check.

      • George says:

        Latest on the IHG cards from Barclaycard via Tweeter is September

        https://twitter.com/Barclaycard/status/486054767588696065

        I guess Priority Club veterans can claim exclusivity for the summer months now!

  6. I found the summary useful , even if my AAdvantage AmEx only gives me 1.5 AA miles per £.

    Andrew makes two good points. I would only use a hotel credit card for introductory bonuses. Other cards give a better return
    .
    Now if any of these cards charged 0% for foreign spend, that could be a different matter, but I’m not holding my breath.

  7. Very nice summary, on that front can I ask which cards give >= 0.5% cash back? I am still on the look out for a visa card with good returns. even one with fee free foreign spend….

  8. lostantipod says:

    I do the same sort of analysis and reach pretty much the same conclusion, but with different assumptions. This led me to keep my Hilton card but give up my Marriott card, and when the time comes, I’ll reapply for a new account bonus :).

    There are some other factors I take into account as well. The Hilton Gold status and the Platinum status from the PCR Black Visa drive a points multiplier on stays , which has some value (and I also assume more stays p,a, based on my work travels, so this has more weight on the £ outcome). All these cards also attract a 3% FX fee when used overseas, which I also take into account as an “opportunity cost”, because there are FX fee-free cards out there. Finally, I would add that the Hilton Gold membership can result in the occasional upgrade which is of some nominal value (eg. Gold status helped me blag my way up from a single-bed room I had booked on points – my mistake , although the website was not clear on this – up to a standard newly renovated room)

  9. What's the Point says:

    I am always a bit surprised that IHG, Hilton and Marriott don’t offer AMEX cards in the UK.

    • …. especially as Barclays has now started issuing Amex cards. I expected the relaunched Hilton and IHG cards to be a double pack, but no.

  10. As per a previous commentor, I wouldn’t use any of these cards for overseas spending given the high fees (happy with my Halifax Clarity credit card for that!)

  11. The HHonors Gold card works for me as four x breakfasts per day is worth a fair bit (2 x adults and 2 x kids) – especially on our Florida trip. The points earned with the £10K spend also help here as a couple of Hilton resorts offer the Points + money option so we can get a room for $40+8000 points (for example). I don’t the card for overseas spend though due it’s 2.99% loading.

  12. Lostantipod says:

    Your capital one analysis is not like for like – this thread is about long term spend and excludes first year benefits in arriving at its answers. I don’t recall what They were, but the IHG card came with first year benefits on top of the analysis used at the start of the thread.

    • SingingDwarf says:

      My comment does include detail of long term spend – it does not concentrate on first year benefits only.

      I did however forget to include the annual fee in my calculations. In my defence, it was late though!

      As they say, cash is king! Hotel chains devalue points frequently, usually by more than inflation devalues cash!