Hilton Changes: Revenue-Based Pricing and Points & Money Awards

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On Wednesday of this week, Hilton introduced a new pricing scheme along with a few other changes to their loyalty program.

This is the old Hilton chart that will no longer, technically, apply.

Screen Shot 2015-06-24 at 7.18.37 PM

Rooms now have variable rates that will fluctuate with supply/demand and the price of the room. Hilton has promised though that the point price of a room won’t rise higher than what its category was priced on this old chart.

Seems pretty similar to what was already happening considering the variance in price of many hotel categories. The primary differences are:

A) Some rooms will be cheaper in off season.

B) Perhaps some rooms will be more expensive in that they consistently price at the top of their range instead of a previously lower price.

C) The award chart is no longer published online. I don’t particularly like the lack of transparency, but with the variance on the old chart, they weren’t glued to super specific award prices on the majority of hotels before either so there’s not much of a difference.

Hotels that were categorized as a 1, 2, or 3 before cannot get any more expensive than they already were as prices didn’t vary in those categories. A Category 1 is 5k points, category 2 is 10k points, and category 3 is 20k points. If anything, we might see those hotels get even cheaper.

The rest of the hotels are a toss up. They could end up priced on the higher end of their range or lower, depending on the cash price.

Strategies for Maximizing Hilton Program

Due to the bifurcated nature of the old Hilton chart (extreme ends with cheap low category hotels and crazy expensive top category hotels), our strategy with the Hilton program has always revolved around three key concepts:

  • Spend your points from cards like the Citi® Hilton HHonors™ Visa Signature® Card or the Hilton Surpass Card from American Express on Category 1 – 3 hotels to stretch your points
  • Spend your Free Night Certificates from the Citi® Hilton HHonors™ Reserve Card on Category 9 and 10 hotels that are extremely pricey
  • Forsake the middle of the chart
Grand Wailea on Maui, Previously a Category 10 Hilton
Grand Wailea on Maui, Previously a Category 10 Hilton

I don’t think the new pricing scheme affects that strategy much, as the hotels in Categories 1 through 3 will remain the same price, and no matter what happens to the price of the higher end hotels, your Free Night Certificate should cover it.

If you want to see the award price of a room before the changes to compare it to the price of one now, Hilton has a calculator that allows you to see the old price/price range easily.

Points & Money Awards

The biggest change to the Hilton program, in my opinion, is the ability you now have to pay for any award room partially with points and partially with cash if you so choose (except for Hampton Inns in mainland China for the time being). Before, Points & Money awards where capacity controlled and allowed you to book a room only if you had 40% of the necessary points plus a cash co-pay.

I see this as a positive change, as availability for Points & Money Awards could be quite difficult to find in the past. Now you can choose to offset the cost of any stay with your Hilton points.

Whether or not a Points & Money Award is a good deal is going to depend on each specific case, as the amount of cash owed vs. points on the sliding scale will vary depending on the cash price of the room. I think about Point & Money Awards like I am booking a free room and then simultaneously being offered the chance to buy back some of my Hilton points. If the price I’m buying the Hilton points back at is less than what I value them (.4 cents each), then it could be considered a good deal.

The minimum amount of points you can use towards a Points & Money Award is 5,000, and the sliding scale climbs in 1k increments. Points & Money stays will count toward elite status, but you only earn base points on the cash portion paid.

I can’t show you my own example as I have no Hilton points in my Honors account at the moment, so instead look at One Mile at a Time‘s screenshots using the Points & Money Award sliding scale, which I’ll reference below.

Conrad Maldives

Underwater restaurant at Conrad Maldives
Underwater restaurant at Conrad Maldives

It costs either costs either 95,000 points or $883.80 to book a standard room at the Conrad Maldives. Or, you could redeem 10,000 points and pay $720, which would be like “buying back” your Hilton points for 1.63 cents each. Since I value Hilton points at .4 cents, this would be a terrible deal.

Sliding the scale towards paying more points and less cash, you could pay 85,000 points and $90 cash. That’s like “buying back” 10,000 Hilton points (since the full award price is 95,000) for .9 cents. Still not a good deal.

DoubleTree Jakarta

It costs either 20,000 points or $136 to book a standard room at the DoubleTree Jakarta. Or, you could redeem 10,000 points and pay $62 with a Points & Money Award, which is like “buying back” your Hilton points for .62 cents each. As I value Hilton points at .4 cents each, I don’t see this a super great deal, but if I needed 10k points for another redemption soon, perhaps I might do it.

Side Perks of Points & Money Awards

Commenter Luis on One Mile at a Time‘s post covering the Hilton changes pointed out the following perks of Points & Money Awards that, while I assume not intentional on Hilton’s part, could result in significant of savings for the customer:

  • Points & Money Awards might also lower the tax on a booking, which could be very advantageous in areas with high hotel taxes like Bali (as in a savings of around 25%).
  • Points & Money Awards appear to eliminate the resort charges, even if you only redeem 5k the minimum amount required.

As I already mentioned, I can’t personally play around with the Points & Money Awards slider to check it out for myself, but if anyone else has and can comment on Luis’ input, that would be appreciated.

Other Changes to the Hilton Honors Program

  • It is now called Hilton Honors, not Hilton HHonors
  • You can pool your points with up to 10 other Hilton Honors members for no extra cost (awesome!)
  • You can extend Diamond status once for free as long as have you have at least 250 lifetime elite qualifying nights or 500k base points AND you’ve earned Diamond status for at least three years already (great, but probably won’t apply to many people)
  • You can redeem points for purchases on Amazon (meh, it’s bound to be a bad value)

How to Get a Ton of Hilton Points Quickly

The Citi® Hilton HHonors™ Visa Signature® Card is offering 75,000 bonus HHonors points after spending $2,000 on the card in the first three months. The card has no annual fee ever.

After meeting the minimum spending requirement, you’ll have at least 79,000 Hilton points (more if you use the card’s category bonuses discussed below.) For reference, eighty thousand points were enough for 20 free nights in a Hilton Category 1 hotel10 free nights in Category 2 Hiltons, or 5 free nights in Category 3 Hiltons on the old award chart.

Or if you’d rather earn the Free Weekend Night Certificates to spend at top tier Hiltons, go for the Citi® Hilton HHonors™ Reserve Card. You’ll get two certificates valid for two Free Weekend Nights after spending $2,500 on the card in four months.

Credit card links have been removed from posts and added to the menu bar at the top of every page of MileValue under the heading Top Travel Credit Cards.

Bottom Line

Hilton’s loyalty program, newly renamed Hilton Honors, introduced some changes on Wednesday. In my opinion the biggest change is the ability to apply points to offset the cash price of pretty much any award booking. Hilton is also taking away its published award chart and introducing a new revenue-based pricing scheme, but if you already follow our strategies for maximizing the Hilton program, you shouldn’t be affected much. The program was already on its way to becoming revenue-based with the variance in price ranges for categories on its old award chart. Now they’re just saying publicly that Hilton Honors pricing is, in fact, revenue-based.

Other changes include the abillity to pool points for free, redeem points on Amazon, and extend the life of your Diamond elite status for a fourth year if you meet certain requirements.

Reservations made before the launch of these changes Wednesday will maintain the same price as when you booked. If you try to change the reservation, however, it will be subject to the new pricing scheme.


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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11 COMMENTS

  1. Sarah,
    Your methodology for determining the value of the HH points for Cash + Points redemptions strikes me as odd. You state, “I think about Point & Money Awards like I am booking a free room and then simultaneously being offered the chance to buy back some of my Hilton points.” From my interpretation your methodology must assume that the individual has the requisite amount of points for a full redemption and then equate the points portion as “buy(ing) back” for the amount of the associated cash reduction. I would think that if an individual is contemplating a Cash + Points award they either a) don’t have enough points for a full redemption or b) the full redemption value of the HH points is less than ~.4c/pt and a Cash + Points award presents a better valued alternative. Would it not be more logical to view the points portion as saving you the associated cash reduction that you may have otherwise forfeited if you paid the full cash rate? Considering cash is fungible and HH points are near the bottom of the totem pole, I would think that determining the value per HH point (using one of your examples sans typos/errors) would be better expressed as the following:

    It costs either 95,000 points or $883.80 to book a standard room at the Conrad Maldives. Or, you could redeem 10,000 points and pay $720, thereby reducing your cash outlay by $163.80 for the redemption of 10,000 your Hilton points. In effect, your redemption of 10,000 HH points saved you $163.80, thus each HH point was effectively worth 1.63 cents each…..which would be a phenomenal redemption of HH points! I guess this view would really only pertain to individuals that had a fraction of the HH points required. Otherwise an informed consumer, with a finite amount of cash, would accept an HH point redemption rate of .93c/pt for a full redemption and save the cash.

    Your blog’s rule of thumb:
    Point value = (Cash cost – cash paid)/(Points redeemed + Points otherwise lost from award)

  2. […] There are two Hilton credit cards with limited time increased sign up bonuses, both issued by American Express, that should catch your attention. Sign up for both now and you’ll earn at least 195,000 Hilton points after spending $5,000 total in the next three months, enough for at least 48 free nights at what used to be called Category 1 Hilton hotels, but are now just the lowest tier since Hilton changed their pricing scheme. […]

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