Are Hotel Loyalty Points Becoming Worthless?

The big hotel companies are wisely leaning on the goodwill built up among their loyalty programs to prop up sluggish business these days, as I wrote about in the January issue of HOTELS. And the staggering flood of bonus points offers and similar promotions has been hard to miss.

But what happens when too many guests start collecting 30,000 IHG Priority Club Rewards points for three stays or 20,000 Hyatt Gold Passport points for eight nights? Will the points lose some of their value by way of inflation and resulting devaluation, as hotel companies try to get the insane amount of freebie points off the books?

That question is posed by blogger Mark Ashley at Upgrade: Travel Better: "I love bonuses — don’t get me wrong — but this spate of extra point opportunities reminds me of the big awards that the airlines were offering in 2004 and 2005. (Take, for example, the ~50,000 bonus miles I earned in 2005 for taking four flights to Washington, DC.) The flood of points was followed a few years later with award devaluation. An oversupply of points contributed to the rising ‘prices’ for awards."

I asked Adam Burke, senior vice president and managing director of Hilton HHonors, to allay the worries of travelers like Ashley.

"I certainly understand why some people are concerned, but I don’t personally see it the same way – at least not as it relates to the HHonors program," Burke says. "We’re offering double points right now, for example, because at the beginning of the year, a lot of travelers are making choices about where to stay for the coming year. Given that, and knowing how much our members value the ability to get a free night faster, we’re looking to give our customers even more reasons to consolidate their stays with the Hilton Family of hotels."

Likewise, Marriott Rewards Vice President Bob Behrens insists that hotel loyalty point devaluations are not in the offing: "It is unusual to see most of the major hotel programs with promotions in-market at the same time, but this is not new for Rewards… we have run similar promotions every year."

Behrens goes on to note that while Marriott’s current MegaBonus promotion offers up to 25,000 bonus points, "our most frequent members have the ability to earn up to 50,000 bonus points." Which is really generous, but I’m not sure that will really damp down any devaluation paranoia.

Anyway, what’s the sense within the industry? Is a loyalty points devaluation inevitable, or can hotels stave off what the airlines couldn’t?