New Hilton Honors Program: Winners and Losers

I’m sure by now you’ve heard about upcoming changes to Hilton HHonors program, set to take place at the end of February (read official announcement here). The biggest one, of course, is the fact that the name will lose one H. Kidding! Many bloggers have already covered the details and presented their own analysis. I hope I can add value with mine.

To summarize:

1. Award categories will be gone completely, but “5th night free” benefit  is staying.

2. There will be an option to use combination of points and money that starts at 5,000 points.

3. You will be able to pool points with family and friends for free (currently costs $5 per 1,000 points).

4. You will be able to use points on Amazon purchases (the rate is not yet specified, but will almost certainly be poor).

5. Some bonus points on rate earnings, Diamond status extension, blah blah blah. Basically, stuff that don’t affect my readership.

Yay or nay?

I’m going to go with Yay/Nay, but mostly Yay. Aside from obvious issue of doing away with award chart, I actually think it’s a positive change. Yes, it will have implications on the way other hotel programs are run, I can almost guarantee it. And not everyone will like the changes.

What’s happening here is that Hilton is mimicking Delta. As most of you know, Delta has a hybrid award system. There is a ceiling, but some of the seat redemptions are tied to $ rates, which helps with lower priced routes. That’s why we are seeing award tickets that cost only 5,000 miles one-way. On the other hand, if you want to fly in business class, you will usually pay a fortune in miles.

Hilton will be somewhat similar. Sure, right now, they are saying that the most expensive property will still cost 95,000 points. But I suspect that it will change eventually and be directly tied to revenue rate. So, if you are looking to fly to Maldives in a few years, I wouldn’t collect Hilton points speculatively.

Here is the example presented on Hilton’s own website to demonstrate how the changes will be applied in real life:

Look at the two examples I’ve highlighted. You’ll notice that the lowest price will be considerably less that it is now. Hilton assured in its statement that the award rate will be directly tied to revenue rate. Of course, there is  a catch. You will only be able to get this rate in the off-season when prices are at their lowest. If you are looking to visit during Christmas break or peak tourist time, you will have to pay the highest point price.

There is a lot of outrage in the community over the fact that the award chart will be gone. I can certainly understand the sentiment. Any time the program becomes less transparent and more opaque, it’s not a good thing. However, what people forget is that the current system is confusing as heck. Just look at the chart:

Aside from the lowest three categories, the rates are all over the place. In reality, Hilton program has been using dynamic pricing for some time. Obviously, it’s no surprise that Hilton’s fanciest properties run at 70,000 to 95,000 points per night. We are talking upscale villas with plunge pools, that rarely go for less than $500.

There is, however, real disparity in award rates on some basic Hilton properties. I would sometimes look up a  Hampton Inn in a medium-size, non-tourist US city, and it would run 50,000 points per night. Yet, the revenue rate would be $85. That made no sense whatsoever, and the new pricing system will hopefully fix it.

Of course, the real value lies in Category 1 and 2 hotels. Those cost 5,000 and 10,000 points, respectively. Well, according to Hilton, nothing will change…for now. I checked Hampton Inn in Minsk where my parents usually spend the night before their flight to US, and it looks like under the new system it will still cost the maximum of 5,000 points.

It may even cost less than 5,000 points per night during certain times, though I’m not holding my breath.

Winners and losers

Those who will benefit under the new system:

1) Regular families who have some flexibility in their plans and often travel off the beaten path. Many Hilton hotels will hopefully become slightly cheaper on points. Category 1 and 2 properties will supposedly cost the same amount, and those are a great deal during any season.

2) Spouses who can now combine their Hilton points’ balances for free.

3) People with a small stash in Hilton program, who  will now be able to utilize it via Cash+Points redemption option in order to get a discount (starts at only 5,000 points for ALL properties).

4) Those who have a ton of Hilton points and have absolutely no way to burn them. For those folks, Amazon option will be welcome news.

Those who will lose under the new system:

1) People who have been saving up Hilton points in order to stay at a fancy property while using off-peak redemption rates. Unless they plan to go when cash prices are super low, they will now likely have to factor in the higher end of the spectrum.

2) Those who speculatively accumulate Hilton points via everyday spending. No matter how much Hilton tries to sugarcoat it, not knowing the price of your redemption ahead of time is not a good thing. Personally, I don’t believe in collecting ANY hotel points via everyday spending. But some feel that buying Visa gift cards at grocery stores with Amex Surpass is worth it. I’m sure they will have to rethink this strategy due to upcoming changes.

3) Those who used “sweet spots” in Cash+Points rates via current system. It’s not unusual to get 1 cent or more per point on certain properties right now. Sometimes there is no rhyme or reason as to why some hotels offer highly discounted rates in exchange for few Hilton points. This option will now be gone, and the discount will correlate to revenue rate.

4) Those who have a lot of points in other hotel programs and usually travel during peak times and holidays. 

Will other programs copy Hilton?

I’m almost certain that they will eventually. My money is on IHG because it doesn’t publish award charts, so it will be easy for them to scheme a new program similar to Hilton. If it happens, you can almost count on them raising the rates on most popular properties during peak season. As I’ve said, once programs go revenue-based, the price will determine the rate. It’s a good thing for those who travel during slow times, not so much for those who have to stay in a hotel during holidays.

I suspect that Hilton will eventually do away with maximum cap on rates. Right now, they needed to ease their customers into the new system and didn’t want to rock the boat. Make no mistake about it, like most businesses,  Hilton is in it only for the profit. They want you to pay a lot of money to stay in their hotels and in exchange for your loyalty, they want to charge as many points as possible for your “free” nights. Hilton cares about its elites, you say? Think again.

Check out this screenshot one of my readers sent me few days ago:

Notice how top-tier elite members get the least amount of cash back on hotel bookings? Hilton is the one reimbursing Topcashback shopping portal, and this is quite telling as to how they view their most prized customers. This is why I’m not loyal to any chain, airline or company. I look for the best deal, period. Oh, and I don’t hoard my hotel points and neither should you.

Click here to view various credit cards and available sign-up bonuses