My chat with the head of Hilton Honors about their radical changes

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Hilton Honors will make a major announcement today about changes to the programme which will take effect this Spring, starting later this month.

I spoke with the head of Hilton Honors last night and we talked through the changes for half an hour.  The devil is in the detail, of course, but on the face of it – at least in the short term – it seems positive.

(First change – the second ‘H’ has gone from what was Hilton HHonors!)

This is the big change – Hilton is introducing a radical version of ‘points and money’ which is unlike anything else we’ve seen.

There are two elements to this and it is easier to explain if I look at them separately.

Hilton_Honors new logo

Firstly, for every standard room redemption, you will be able to pick a combination of cash and points.  This will be driven by the points value and the Hilton HHonors member cash rate.

Let’s assume that a particular hotel is selling for 50,000 points or £200.  You will be able to pick any combination of the two as long as you use at least 5,000 points.  You can pay 50,000 points or £200 or 25,000 points + £100 or 5,000 points + £180 etc.

The key reason for doing this is to allow members with small points balances to get some value from their points.  A key secondary reason, I think, is to drive more direct bookings rather than via Expedia etc, since obviously you can’t use this facility via a third party.  This may turn out to be smart – it is similar to what BA has done with ‘part pay with Avios’.

Here is the second change.

The maximum points price for a room will be no higher than it is today.  However, off peak points prices will fall sharply.  This effectively puts a floor under the value you will get for a Hilton point.

You will remember in our review of the Gran Hotel Montesol yesterday that it was selling for 95,000 points or €600 in August but 95,000 points or €270 in May.  Under the new system, it will remain 95,000 points in August but the May price will fall to, I imagine, something around 50,000 points.  You will then be able to pick your preferred combination of 50,000 points, €270 or something inbetween.

So far, so good.  I honestly cannot see any downside in the short term.

The risk is in the long term.  Hilton is scrapping redemption categories entirely.  Whilst Gran Hotel Montesol will have a maximum price of 95,000 points this year, there is no reason why it cannot quietly drift out to 120,000 or 150,000 points next year.  Without any category caps to act as a constraint, it could easily happen and before you know it you have a purely revenue based redemption system on your hands.

I doubt Hilton would do this, because I think it understands the value of offering ‘outsized’ redemptions at various hotels (such as Montesol in August), but the risk is there.

There are other changes coming too:

free points pooling amongst friends and family

the option for selected Diamond members to pause their membership for a year for any reason, possibly during a period of redundancy, changed travel patterns, maternity leave etc

for US members, the option to redeem points for merchandise from amazon.com

These changes are further down the line.  The move to ‘points and money’ redemptions will take place first, in late February.

For probably the first time ever following a scheme change, I am not encouraging members to burn their points quickly!

The only thing that gets worse is that the current ‘points and money’ redemptions – which were not often available – are being scrapped and replaced with the new system.  If you were looking at a ‘points and money’ reward then I would make sure you book that over the next 3 weeks or so.

The rest of us can wait to see how the new model unfolds.  An off-peak example I was shown gave a value per point of 0.5p – if that is really where it ends up, and remembering that you would be able to get that value on any standard room on any night – then the scheme will be much improved.

I will write more on this in the coming days when I have seen the official details.

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Comments

  1. Richmond says:

    I booked 3 nights in Hawaii today just in case. If they go down, I can rebook it at better rate.

  2. Scallder says:

    OT (apologies), however as Section 75 is brought up on here a lot, I thought it was worth mentioning and there’s no bits bit today (and further apologies if this has been brought up on the site before).

    I found out a few days ago (having read about (Money section of Saturday’s The TImes) it rather than through a personal case), that section 75 isn’t automatic for supplementary cardholders. It may apply if an additional cardholder uses it to pay for something for the main cardholder, however if the additional cardholder is using their card to buy something for them, then they’re not covered by s75.

    So in that instance, using PayPal might be a better idea for any items over £100 as may be some form of recourse given s75 won’t help you. Something to think about if booking holidays/flights etc as i know a number of people on here (myself included) flip between a number of cards throughout a year for various reasons.

    • the real harry1 says:

      Additional cardholders

      If somebody else such as your partner has a credit card and has added you as an additional cardholder, it’s usually best to get the main cardholder to make any big purchases, rather than using the extra card yourself.

      This doesn’t mean that purchases made by a secondary card holder will never be covered, but it’s best for the primary card holder to make larger purchases if you want to be sure of protection under Section 75.

      If, however, the purchase is made with the primary card holder’s authority and if they expressly request the purchase and will benefit from it – a family holiday, for instance – they will still be covered under Section 75.
      [Which?]

  3. I don’t understand how
    “The maximum points price for a room will be no higher than it is today. However, off peak points prices will fall sharply.”

    aligns with:-
    “Whilst Gran Hotel Montesol will have a maximum price of 95,000 points this year, there is no reason why it cannot quietly drift out to 120,000 or 150,000 points next year.”

    Are you saying the cat caps are only being lifted next year (2018) ?

    No maximum points cost for a room is a killer for high-end aspirational properties. For example I can see redemptions costs at Conrad Maldives increasing dramatically. At busy times they are often sold out. I can evisage 150K becoming a usual night redemption there. You’ll still be able to get it for 95K a night but only by adding £££.

    Places you actually want to stay will end up on average more expensive, either on pure points or points + cash. Less attractive properties might end up cheaper, but there is a reason why they are less attractive. The article doesn’t mention Hilton corporate having any control over the hotels actions, so you can bet where analysis shows they can squeeze more money, they’ll squeeze more money.

    Is this the first hotel loyalty programme to have uncapped, uncategorised redemptions ?

    • Yes, that is what I meant. As of March, the maximum points per night will be no higher than it is today and off-peak it will be lower. Long term, however, Hilton now has huge amounts of flexibility to sneak up maximum pricing especially as there will be no published list of the price per hotel.

      However …..

      I spend a fair bit of time with the Avios people. Whenever we discuss revenue based redemptions, we always come back to Nectar vs Clubcard. The single biggest reason that Nectar is a disaster (relatively speaking) is because of revenue based redemption. You can’t ‘game’ the rewards as you can with Clubcard.

      If Hilton points become worth exactly 0.3p in any circumstance, people will quickly start to write them off. You need to sell the vision that you can actually get outsized value if you redeem well (which is what I have just done in Tokyo – 95,000 points for a £500+ room). You mess with this formula at your peril.

      • is it hilton that will increase rates, or is it up to each hotel ?

        • I imagine it is Hilton. Remember that Hilton Honors has no capacity controls – reward nights must be offered if standard rooms are offered – so Hilton has to ensure such a model is financially viable.

      • Nectar would be more exciting if there were more earning promotions and they were easier to access. I hate that horrible website you have to use to save offers so much that most of the time I pass on them. I usually fail to use till-spit coupons too.

      • Plus you now have a peak cap on off-peak dates so the potential for outsized value redemptions on those dates has significantly reduced.

  4. Cash and points was excellent – I stayed in Hilton Taba (until it left Hilton recently) for 2k points and 30$ per night. Cash rate was 63$ so got very good value for points. Stayed also in Narita airtport Hilton, also cash and points, cash rate was 90 GBP, i used 8000 points and around 30 quid. Also very good value. Hope this doesnt change…

  5. It is what was in the survey some time ago,
    The travelution.
    I didn’t like the sound of no fixed points caps.
    Which busy hotel won’t ramp up points to extortionate levels.
    Nor that points have a fixed value, I like to find good rpoints and money edemptions, slightly off peak at good value.
    All busy hotels will ramp up points per night and so I’d need bucket load of points or loads of cash.
    Programme changes have never benefited us before.

    • The difference here, I think, is that the changes are being done as part of a drive to stop people booking via third party channels. It is not, in itself, a way of making more money from the program.

      • Mr(s) Entitled says:

        It would be odd for a Private Equity firm not to be thinking of ways to make more money, and thus earn a higher valuation, when they sell/list.

        Watch this space…

      • RussellH says:

        If the chains want to stop people booking via Expedia etc then there are other tools at their disposal as well. IHG pushes Roomkey.co.uk (or .com) a little, and IHG also puts up annoying little flags showing how much more expensive their hotels are compared with their own website, but I have not noticed that on the hilton site, nor Carlson or Wyndham.

      • Really tough for me to feel for them on this one.

        The number of times I’ve found a cheaper hilton rate that isnt on the hilton website is unreal. The weird/unique terms attached to these rates (72/48 hour cancellation before stay rather than 2359 the day before on hilton.com) makes me feel that hilton are still planting rates out there that are designed to be cheaper and designed to circumvent their BRG.

      • Good point, that at least gives a bit of hope!

  6. I might be being spectacularly naive here regarding the changes but as I like to use points towards “aspirational” redemptions be it flights or hotels I see this tentatively as a good thing. I do earn Hilton points through a few business and leisure stays a year – but not masses, even with Diamond status it seems hard to build up a pot. I guess using points make me feel less guilty about spending a lot of cash on travel etc. consequently I think it would be more useful for me to use points to reduce the actual cost of the hotel especially if it helps with availability. I’m a bit worried about there being no category grading and cap (Doubletree in KUL first to fall?).

  7. This sounds good. Will the “fewer points at off-peak times” be dynamic (i.e. hotels can cut their points for the following month if they see they’re quiet) or will peak/off-peak be set as per BA?

    (I have a points booking set up for New York in August. I suspect that this is unlikely to be designated off-peak, and to come down in price…)

  8. A quick scan of the comments and I’m surprised nobody has mentioned this… (Sorry if it has been)…

    Under this new model I highly suspect that “5 nights for the points of 4” will be going. I can’t see how it would work and if so it counts as a 20% devaluation in my view. I have been saving up my points for such a deal.

  9. Anyone know if I convert tesco vouchers to BA – will they take the oldest vouchers first?

    Have some £96 expiring end of February.

    Thanks

    • Genghis says:

      You select the vouchers as payment for your conversion – so just choose the oldest ones.

    • If you have large vouchers expirying you can choose to convert the minimum of £2.50 and the ‘change’ will be added as a new voucher to your account on the next statement.

      Their have been reports on FT of people be caught for ‘abusing’ the system though. Not sure how many conversions would constitute abuse. I’ve done it 3 times where i had £50 vouchers expiring

  10. surely you select which vouchers to spend?

    • I would have thought that – but it goes to a page with a red checkout button.

      i am not sure if that simply processes the transaction or allows me to select the vouchers.

      On the list of vouchers the only option is to print them

      A bit confused!

      • FrequentDriver says:

        I have literally just done this – as long as you are logged in, checkout page shows a list of your vouchers and you tick the ones you want to use – easy peasy 🙂

        • Thanks!

          Wasn’t sure if the checkout button just processed it and I had missed a page to select.

          • PayPal can be sneaky with this. I hit “checkout”, expecting to choose my most lucrative credit card, only to be met with “success we’ve taken the money out of your bank account”. I was fuming! I tried to submit a complaint but got nowhere.

          • Yes, you’ve got to watch like a hawk – they always default to linked bank a/c rather than credit card. Also you need to empty out PayPal balance first if you have any and want to just put it all on a card.

  11. Pangolin says:

    I for one am far less optimistic than the bloggers are about this.

    It’s a switch to dynamic pricing and a revenue based model. Sooner or later the redemption caps will be removed and then the sky’s the limit. For off peak redemptions the cap is already removed so expect these to be more expensive for points rather than cheaper, as the commentaries suggest.

    The chance to find great value in C+P is also gone – now you have an Accor type system where points simply exchange into cash at a set rate.

    The main value for a lot of people in Hilton was the ability to combine valuable points promotions with good value redemptions at lower category hotels, especially if C+P was available. Now that’s gone.

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