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Wyndham Rewards offers best payback among leading hotel loyalty programs

IdeaWorksCompany releases results from the second annual Switchfly Hotel Reward Payback Survey, which now includes 6 global programs.

SHOREWOOD, WISCONSIN – Wyndham Rewards returns an average of 13.6% from room night spending as reward stay value in the second annual Switchfly Hotel Reward Payback Survey. That’s a 143% higher return than the reward value provided by Starwood SPG, which was ranked last among the six hotel loyalty programs at 5.6% for reward payback.

During August 2016, IdeaWorksCompany conducted 1,305 reward queries for key hotel brands in six global frequent guest programs: Choice Privileges, Hilton HHonors, IHG Rewards, Marriott Rewards, Starwood SPG, and Wyndham Rewards. For each query, the lowest reward price in points was recorded along with the corresponding room price in US dollars. The value provided by points was adjusted to consider the different rates of point accrual for the programs. The result provides an average “reward payback” for each program as shown in the graph below. For example, the 9% rate for Marriott Rewards
represents average reward value payback of $9.00 for every $100 spent on hotel room rates. By comparison, IdeaWorksCompany calculated that reward payback for major US airlines ranges from 3.1% to 7.9%."Travel companies must remember that even if their rewards members are not doing the complicated math necessary to know the exact value of a rewards program, they do know when a rewards program is providing value – and when it isn't," said Daniel Farrar, CEO of Switchfly. "Across programs, elite members are reaping the greatest benefits, but those customers who aren't elite members can still maximize their loyalty game by stacking rewards. For example, they can use a rewards credit card to book a flight through a thirdparty website that offers rewards on an airline where they earn frequent-flier miles. That's an easy way for everyone to maximize the value of their rewards payback every time they book travel."

All points are not created equal
Dividing the room price (including local taxes) by the number of points per query provides a simple valuation of the point currency used by individual programs (see below table). Think of it as the room value that can be purchased with a reward point. However, points are naturally unequal in value because of differing rates of accrual. For example, the Hilton HHonors usual accrual rate is 15 HHonors Points per dollar spent at a hotel, while Sheraton SPG provides 2 Starpoints per dollar spent at a hotel. Knowing the value of reward points is helpful for members who wish to assess the value of their account balances.However, raw point values don’t allow consumers to compare hotel reward benefits across different loyalty programs – points are only as good as the room rewards they bring. So IdeaWorksCompany uses “reward payback” as a simple benchmark to measure how these programs deliver their primary benefit to everyday travelers. Think of this as the reward value returned for hotel expenditures.

The survey used 225 queries per hotel loyalty program distributed among a chain’s three leading brands. For Wyndham Rewards, this comprised Days Inn, Ramada, and Wyndham Hotels & Resorts (including Wyndham Grand). Queries for each program were performed for the same 15 dates (ranging from August 2016 through February 2017) and a list of US and global destinations. This included New York City, San Francisco, London, and Beijing. Queries outside the US relied on a chain’s signature brand, such as Sheraton Hotels for SPG or Ramada for Wyndham Rewards. Fewer queries were performed for Choice
Privileges (a total of 180) because the program limits reward availability to a 100-day window, which means February 2017 was not displayed at its booking website when the queries were performed in August 2016.

As with airline frequent flyer programs, the majority of hotel loyalty members do not hold the program’s co-branded credit card and don’t have elite status. For these members, the reward payback method provides a good measure of reward value. Members that have elite status and use a program’s co-branded credit card to pay room charges benefit from a large matrix of bonus point possibilities. These members might consider doing their own calculations based upon the simple value of reward points presented in the table above. The value provided by reward nights is traditionally the most important attribute for many members; the results presented here don’t attempt to assess all the benefits provided by hotel loyalty programs.

Reward payback extremes were found to range from 2.0% to 39.1%
The best reward payback occurs when room rates are high and reward point levels are low. Of course, the opposite condition yields low reward payback. The 1,305 queries were ranked from low to high to determine extreme values among the cities, dates, and hotel properties queried. The reward payback statistics listed in the table below assume members limit their paid stays and reward redemptions to the same hotel.

Imagine a hotel that provides a 39.1% reward payback on paid stays. That’s the reward payback associated with a December 2016 stay at the Wyndham New Yorker. Booking a room for 10 December 2016 cost $587 or an incredibly modest reward night price of 15,000 points. That combination, and the Wyndham Rewards base accrual rate of 10 points per dollar spent, delivers a very generous reward payback. The following are some examples from the highest and lowest reward payback rates found in the survey:

Low reward payback can be associated with hotel properties which are typically high-priced in terms of reward point prices and room rates. When these locations deeply discount their cash room rate ? and don’t reduce the reward point level – the result is an unusually low reward payback. That’s what happened when the Holiday Inn New York Midtown 57th dropped its weekday room price to $117 while maintaining its 40,000 reward night point price.

Two very distinct reward programs were added this year
Choice Privileges and Wyndham Rewards are global programs with a significant presence in the economy end of the market with brands such as Days Inn (Wyndham), Econo Lodge (Choice), Rodeway Inn (Choice), and Super 8 (Wyndham). Hilton HHonors, IHG Rewards, Marriott Rewards, and Starwood SPG offer a significant network of upscale and luxury locations. But clearly Choice Privileges and Wyndham Rewards offer world class value with their placement at the top end of the reward payback ranking.

Consumers should be careful when choosing a program. Choice has a very unusual and highly restrictive approach for availability and booking. General members can only book rewards 30 days in advance, or 60 days for hotels outside the US and Canada. Elite status provides a larger booking window up to 100 days in advance. And while Wyndham Grand was found to offer exceptional reward payback, the brand’s global footprint is limited to 30+ hotels in eight countries.

Reward payback represents just one method of comparing hotel loyalty programs. But for those consumers intent on maximizing the return on a dollar, euro, or peso spent on overnight accommodations, the results can be very dramatic. Very few everyday choices in life yield paybacks that can range from 2 to 39 percent.

News Editor - TravelDailyNews Media Network | + Posts

Angelos is the news editor for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). His role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy.

He currently studies Communication, Media & Culture in Panteion University of Political & Social Studies of Athens.

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