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Hotel chains devalue loyalty rewards points

March 13, 2013 at 7:54 AM ET

Video: Some of the biggest hotel chains are making major changes in how you book rooms with reward points. NBC’s Jeff Rossen reports on the changes and how you can still get a deal if you act now.

It's that time of the year again. Four big hotel chains, Starwood, Marriott, Hilton, and Intercontinental Hotels Group, are changing how their loyalty rewards programs are structured. Overall, while the chains made it easier to redeem points for lower-category hotels, they boosted the number of points needed to stay at their most luxurious properties.

Starwood
Like most chains, Starwood divides its hotels into ascending tiers, in their case seven, with the more budget-friendly, full-service hotels in Categories 1 and 2 and the top-shelf luxury hotels in Category 7. Their popular Cash & Points redemption options can now be used for upgraded rooms and suites, as well as free nights at all Category 1 and 2 hotels worldwide, while before it was limited to just those in the U.S., Canada and Asia. But it will take 300-2000 points more and an additional $5-$30 to get a free room in all but Category 7 hotels.

Starwood's Senior Vice President of its Starwood Preferred Guest program, Chris Holdren, said that the overwhelming feedback from their guests was to increase the number of free rooms available for booking, but, "the only way for us to make it more available was that costs needed to increase." However, he said, unlike their competitors, Starwood "didn't change our actual base reward chart."

Hilton
On March 28, Hilton adds two new hotel reward categories, both requiring more points. It will take nearly twice as many points to get a free night at some top-tier Hilton hotels.

Right now, it takes 50,000 to 80,000 HHonors points to book at these luxury properties, which include the Waldorf Astoria Hotels & Resort. Under the new rules, it will take between 70,000 and 95,000 points.

There will also be seasonal pricing that requires more points for reward stays at most Hilton hotels and resorts.

"Like all loyalty programs, we periodically make changes to the HHonors program," said Hilton spokesperson Scott Carman. The new changes, he said, "help us to stay competitive and continue to provide exceptional value to our members"

Hilton did sweeten things a bit by reducing the points needed to qualify for a free night at a Category 1 hotel from 7,500 to 5,000. Also, elite members will get a free night when they book a standard room for five or more consecutive nights, in line with offerings by Starwood and Marriott.

Brian Kelly, who runs thepointsguy.com, wants to cash in his HHonors points for a stay at the Conrad Hilton in the Maldives, where rooms start at $1,300 per night. Currently with his elite status with Hilton it's only 37,500 points per night when he books five nights. But under the new rules, Hilton is ditching its elite status program. It will now cost Kelly 95,000 points a night for the same Category 7 room.

Marriott
When the Marriott Rewards program changes on May 16, the program gets a new top-tier category 9 that requires an additional 5,000 points per night. Only 1 percent of hotels will go down a category level, and 36 percent of the hotels will go up a category level. It's essentially rewards inflation, making the same number of Rewards points less valuable.

"Every year, Marriott Rewards reviews its hotels and what category they are in. Then we decide whether to move them up or down," said Marriott spokesperson Laurie Goldstein. "The decision to move a hotel up or down is based on a variety of factors including what is happening in the hotel market of that hotel and how many redemptions a particular hotel receives in a year."

“They’re counting on consumer inertia,” said Professor George Belch, Chair of the Marketing Department at San Diego State University of how each of the chains changes its rewards programs.

Kelly said, "If a hotel chain waters down its program, stay at a place that gives you better value or use a site like Priceline to book a room."

Hoarding points for years for a fantasy trip poses the risk of inflation.

“Hotel points and frequent flier miles do not improve with age,” said travel expert Ed Perkins.

Two other chains also announced changes:

Intercontinental Hotels Group (IHG)
Effective after January 18, almost 30 percent of Intercontintental worldwide hotels and resorts increased in reward points needed for a free night, more than 30 percent decreased, and 40 percent stayed the same, according to a company spokesperson. IHG created a new points system more in line with what other hotel chains are using. Members can book using the old point price up until March 17.

Wyndham
Wyndham hotels says most of their changes involve needing fewer points at their hotels. The chain says that effective after March 14, 40 percent of worldwide hotels and resorts decreased in number of points needed, and 22 percent increased. 37 percent remain unchanged. The average decrease is 4,385 points, the average increase is 4,367, according to a Wyndham spokesman. A new point system was created, eliminating the highest two categories and reducing the lowest point category.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.

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