Hilton Eliminating Hotel Categories Can’t Possibly Be Good

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Yesterday afternoon Hilton announced some coming updates to their program ranging from dropping the extra “H” in HHonors to allowing free pooling of points between up to ten people. I wasn’t one of those folks who talked to Hilton directly about the coming changes, but it seemed to me that intentionally or otherwise the true lede of the story was buried a bit here between things like using points for Amazon purchases and the streamlined new Hilton Honors name.

Hilton Honors

The real story to me in all of this is that Hilton Honors is eliminating hotel categories as we know them. I mentioned that in my quick post yesterday, but now that I have had time to sleep on it, I feel even more strongly that this is indeed the biggest news of this update and worthy of a closer look.

 

It seems every site that has talked directly to Hilton truly believes that this is not a bad thing, largely because Hilton is not increasing the maximum number of points that standard award nights will cost, just decreasing the floor. In other words, a Category 5 property like the Hampton Inn Oneonta that my parents recently stayed at near Cooperstown currently costs either 30,000 or 40,000 Hilton points per night for a standard award. However, under the new more variable program Hilton expects the points price range for this property to be between 18,000 – 40,000 points per night. The maximum is not increasing, but the minimum amount may go lower on nights where there is low demand/low rates.

Hilton Hampton Inn.jpg

That sounds great, right? Color me a skeptic, but I am not as enthused. I 100% believe that for the immediate future and for at least 2017 or so this change won’t hurt Hilton points users as they will do what they said and keep the current maximum award rate as the maximum. However, I think that the situation is summed up best in their own FAQs…bolding mine.

“The pricing of award redemptions is now more flexible. That means when our hotel rates are lower – during off-peak periods, for instance – our Point redemption price can go lower than before. Additionally, we are currently using the hotel’s peak redemption price from the old model as the continued maximum threshold for redemptions using Points & Money Rewards™. For example, a Category 10 previously topped out at 95,000 Points, and in late February 2017, those hotels will still not require any more Points than that.”

Key in on the words “currently” and “old model”. Now, raise your hand if you think in a few years that “currently” and “old model” will still be in play when it comes to capping the award price of a standard room. If they wanted to just drop the floor on pricing, they could have simply done that without eliminating categories.

Hopefully I am being too much of a skeptic on this one, but my money is on the eventual elimination of a maximum threshold from the “old model” via a totally revenue based redemption model that allows you to book “any room at any time (for a potentially insane number of points) in order to meet the current needs and desires of the Hilton customer”…or something like that. In my mind, there is no way that long term we get the perks of both low demand/low rates and a lid is kept on the upper award rates during high demand.

However, in the short to mid-term, this change shouldn’t hurt anyone, and has the potential to help those who want to use Hilton Honors points but are traveling during a slow season. Here are a few examples of how the new more flexible award rates will work via their calculator you can play with here.

Grand Wailea

Currently: Category 10

Currently: 70,000 – 95,000 points per night

Via new model: 48,000 – 95,000 points per night

I seriously want to visit the Grand Wailea

I seriously want to visit the Grand Wailea

Embassy Suites by Hilton Hughes Landingthis is the hotel I was pleasantly surprised by here

Currently: Category 7

Currently: 60,000 points per night

Via new model: 30,000 – 60,000 points per night

img_0269.jpg

Hilton Times Square

Currently: Category 8

Currently: 70,000 – 80,000 points per night

Via new model: 36,000 – 80,000 points per night

It is also possible that at some properties that the floor won’t decrease as shown below.

HIlton Honors Variable Points.jpg

Now perhaps this will only be a good thing and will indeed mainly serve to help Hilton get some points off their books while giving customers more options at a lower points rate than they could find today. Words like “currently” and “old model” just don’t instill in me longer term confidence that upper limits will stay in place as we know them today. I usually like to use my points when rates are high during peak travel periods, and don’t care as much about using them in low demand periods because either rates are low to start with, or that isn’t when my school scheduled family is traveling anyway.

We already know that points are never a long term investment, but I’m even a bit more cautious now about what it will look like if I want to use my Hilton Honors points at a pricier property on a peak date a few years down the road than I was 24 hours ago.

What do you think, am I being overly paranoid about the potential negative implications of this otherwise positive change?

Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.

Comments

  1. That pic of the Grand Wailea is a total lie. if you hold you child like that on the water slide there is a person with a whistle near the bottom that blows it and tells you loudly that you have to go one at a time

    • Well that was rude, just telling you that you were being paranoid! Not sure where the rest of my comment went.
      Here goes again:
      I think they have dropped categories because they would have had to be too broad to be useful. Conrad Maldives and Doubletree Suites Times Square are both category 10, but after the change one will always be 95,000 points and the other will go as low as 38,000 points. If they continued to advertise category 10 as ranging from 38,000 to 95,000 points, then people are going to get ticked off when they can’t find a 38,000 point night at the Conrad.

      • Ha ha. I was fine with the paranoid comment…I’ve gotten much worse. 😉
        Seriously though, I hope you are right. I think there is certainly a chance that is indeed the case, but as always I wouldn’t hoard points and bank on it. #earnandburn

        • Maybe wishfull thinking on my part as between my wife and I, we have nearly a million points and get 4 free nights per year fron reserve cards.

          • Well I totally hope I’m wrong, and at the very least I trust there won’t be near-term changes. My concern comes more a couple years down the line.

  2. I don’t think MP is paranoid. Hilton does for Hilton what is in their own best interest. They know the end game, we do not.

  3. Think you are right to be paranoid. In addition to potentially raising the max point requirement for each “category” without notice, this allows Hilton to avoid the minimal disclosure they used to give on a web page when hotels changed categories. They can now move large numbers of hotels to higher categories without the internet screaming “DEVALUATION!!!”.

    The only way to track it will be checking each individual hotel on their comparison site, and that site has previously come and gone depending on how much they wanted to hide.

  4. Sadly, I think that you’re completely correct. It’s pretty obvious that Hilton will use this to Enhance customers over in the future, and doing this makes it even more likely that it’ll be really bad when it does happen, like when the huge AA devaluation hit last year. Everyone knew it might be bad, but no one believed just how awful it would turn out after all. I sincerely hope that we’re both wrong though.

  5. MP, I think you are correct about this. This situation is exactly the same as Delta eliminating their award chart which caused most bloggers to nuts. Now, just like at Delta, there is no way to know in advance exactly how many points a room will cost (or even an upper limit). I think that within a year or two the points will be worth $0.0036 each (or maybe even less) for any redemption.

    I personally will be burning all my points in 2017 as that seems to be about as long as the current pricing is committed to last.

  6. nothing good has ever come from a program doing away with an award chart!!!…they know they cant compete with Marriott/spg so they are going the way of skypesos and will become the least valuable hotel points…if you doubt they will use this to jack up award prices to insane levels, just look at what a non-standard room can cost without a chart to set a price…hundreds of thousands of points for a room that looks at the ocean or when a standard room is unavailable and your not diamond…its stupidly inflated…this will just allow them to keep prices at the upper limits for all future dates and the only low level (off demand) awards will become available with such limited notice as to make planning an award ticket impossible. The new shop with amazon will likely be a stupid conversion rate, rendering it a useless feature….I plan on booking now and seeing what happens later this month…the undisclosed change date (later this month) and vague details encourage booking while you can…if the changes are bad, I am booked, if my particular hotels are not affected than I can allways cancel and get my points back.

  7. You are definitely being overly paranoid. Yesterday, I opened a box from Starwood and discovered a shiny metal card inside stating I was now a Starwood Lifetime Platinum Member. The so-called travel experts said that wouldn’t happen after the merger. Wrong!

  8. Well, do you feel vindicated today? Today is the day that the new points redemptions went live, and there is already a pile of reports on flyertalk of greatly increased point levels for redemptions.

    In my own area, there are a bunch of hotels that are technically 20,000 to 30,000 but in fact are 20,000 every night for huge parts of the year. No more. No 20,000 nights in sight in spite of what it says on the points tool you linked to.

    The only thing you were wrong about was the timetable., It didn’t take Hilton years to implement the huge devaluation. Don’t worry, I’m sure you’ll be right on the timetable too, because I’m sure it will get worse.

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