Hotels.com has recently launched a credit card in the United States. I should say upfront that I don’t have any news about a similar card being launched in the UK in the short term.
However, I thought it was worth covering because it uses an interesting rewards model.
Hotels.com Rewards is a very good loyalty which, for many people, works better than traditional hotel loyalty schemes.
Put simply, for every 10 nights you stay, you receive a free night worth the average ex-VAT price of those 10 nights.
This idea has a lot going for it. Hotels.com features 50x more hotels than even the largest global chain. You can earn rewards without ever having to compromise on location, price or hotel quality to stay at a particular brand.
Redeeming is also easier. Your free night credit can be topped up to pay for a more expensive room, allowing you to book suites or executive rooms if you with.
The only downside is that Hotels.com bookings do not earn points or elite night credit with the chain where you stay. Your elite benefits are also blocked, so a Marriott Platinum Elite won’t get free breakfast or upgrades on Hotels.com bookings at Marriott properties.
It’s a trade off, but one that many are happy to make. You can learn more about Hotels.com Rewards here.
How does the Hotels.com Rewards credit card reward you?
Since Hotels.com Rewards is not points based, the credit card cannot give you points for every $1 you spend.
Instead, it has gone down a different route.
You receive 1 ‘stamp’ in Hotels.com Rewards for every $500 you spend on their credit card.
Each ‘stamp’ is the equivalent of a $110 hotel room.
Since you each ‘stamp’ is worth 10% of the value of the room, you are effectively earning $11 in Hotels.com Rewards credit for every $500 you spend on their credit card. This is a return of 2.2%.
What other card benefits do you get?
The card comes with other goodies on top:
a free night voucher worth $125 when you spend $1,000 within three months
Hotels.com Rewards Silver membership for your first 12 months of card membership (provides extra benefits at some hotels)
Would a similar card work in the UK?
There is, of course, no way that you would ever see a credit card which was so generous in the UK.
Interchange fees are capped at 0.3% here. In the US, retailers can expect to pay around 2% for accepting a Visa or Mastercard, with more for American Express, and that is before terminal fees etc.
That said ….. a card which offered you a free night ‘stamp’ worth £50 for every £1,000 you spent would work.
Hotels.com could probably break even on this basis, assuming they fully shared in the P&L of the card with the issuer. This is the model that Virgin Atlantic is using with Virgin Money.
Hotels.com would get extra upside from upselling redemption rooms (I doubt many people would be redeeming their 10 x £50 stamps for a £50 room) and driving additional cash bookings as cardholders tried to push up the average value of their free night.
Let’s see if anything emerges in 2021.
Want to earn more points from credit cards? – September 2021 update
If you are looking to apply for a new credit or charge card, here are our September 2021 recommendations based on the current sign-up bonus.
The following offers will end soon:
- 2,000 Virgin Points on Virgin Atlantic Reward Mastercard (ends 15th October)
- 30,000 Virgin Points on Virgin Atlantic Reward+ Mastercard (ends 15th October)
- 10,000 Avios on British Airways American Express (ends 2nd November)
- 40,000 Avios on British Airways American Express Premium Plus (ends 2nd November)
- 60,000 points on The Platinum Card from American Express (ends 2nd November)
- 30,000 points on American Express Preferred Rewards Gold (ends 9th November)
Here are the top current deals:
British Airways American Express
10,000 Avios for signing up, no annual fee and an Economy 241 voucher for spending ….. Read our full review
British Airways American Express Premium Plus
40,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 30,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward Mastercard
The UK’s most generous free Visa or Mastercard at 0.75 points / £1 Read our full review
Virgin Atlantic Reward+ Mastercard
30,000 points bonus and the most generous non-Amex for day to day spending Read our full review
Earning miles and points from small business cards
If you are a sole trader or run a small company, you may also want to check out these offers.
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
British Airways Accelerating Business American Express
60,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
Capital On Tap Business Rewards Visa
The most generous Avios Visa or Mastercard for a limited company Read our full review
For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending: