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In my post on Friday valuing hotel points, reader Alan asked:
Hi Lucky, would it still be reasonable to put $40,000 spending on the Citi HH Reserve card to have the diamond status? Or to just put the spending on AMEX SPG/Chase Sapphire Preferred to earns the regular points? (I have top tier with Hyatt and SPG already.)
I know, I’ve stupidly spent much of the past year trying to rack up Hilton points realizing what a great value AXON awards can be, only to be slapped with an unprecedented devaluation just around the time I wanted to start redeeming my points. While we still have till March 28 to make bookings at the old levels, I’m sure I’m not the only one in a position where I can’t lock in enough travel right now to burn all the points I’ve earned.
Part of my credit card spend strategy for this year was to put $40,000 of spend on the Citi® Hilton HHonors™ Reserve Card to achieve Hilton HHonors Diamond status. This card was introduced last year, and has quite a few unique benefits that make it one of the most rewarding hotel cards out there:
- Hilton HHonors Gold status for as long as you have the card, which is one of the most valuable mid-tier hotel status levels out there given that it offers free internet and free breakfast/lounge access
- A free weekend night certificate for any year in which you spend $10,000 on the card, which can be redeemed at virtually any Hilton property
- Hilton HHonors Diamond status for any year in which you spend $40,000 on the card
So I figured I’d tackle under what circumstances this card still makes sense, given the devaluation. Please note that as we start talking about putting $10,000-40,000 of spend on the card per year, obviously this only applies to people that put a lot of spend on their cards, be it legitimate personal/business spend or manufactured spend.
Does it make sense to just keep the card for HHonors Gold status?
This is an absolute no brainer — YES. While the Hilton devaluation is causing me to focus less on earning HHonors points, I’ll continue to stay at Hilton properties. That’s because I’m primarily loyal to Hyatt and Starwood, and they just don’t have hotels everywhere. This year alone I’ve made about a handful of Hilton stays, and that’s even with doing my best to avoid them.
Hilton Gold status is the best “real” mid-tier hotel status (I exclude Marriott Gold from this group, given that it requires as many nights as top tier status with most other hotel chains), as it offers free internet and free breakfast/lounge access. The annual fee on the card is only $95, so after one or two stays per year the annual fee pays for itself.
Does it make sense to put $10,000 of spend on the card for the annual free weekend night certificate?
If you spend $10,000 on the card per year you get a free weekend night certificate, which I’d argue is becoming more valuable after the devaluation. It’s valid at even category 10 hotels, which cost up to 95,000 points per night. After the devaluation I value HHonors points at 0.4 cents each, and the card ordinarily earns three points per dollar on spend in non-bonus categories. That’s a measly return of 1.2% on credit card spend, which isn’t very good. But let’s conservatively value that free night certificate at 50,000 points, and you’re looking at an additional five points per dollar back on the first $10,000 you spend, for a total of eight points per dollar, or a return of 3.2%. Again, I’d say that’s definitely worth it.
Does it make sense to put $40,000 of spend on the card for HHonors Diamond status?
If you’ve put $10,000 of spend on the card you need to put another $30,000 of spend on the card to earn Diamond status. So assume my valuation 0f 0.4 cents per HHonors point and three points per dollar, for a 1.2% return on spend. Assume the alternative is the Starwood Preferred Guest® Credit Card from American Express, as I value Starpoints at 2.2 cents each. So we’re basically looking at a difference in “return” of 1% for $30,000 of spend, so you’re giving up $300 of “value” for putting that spend on the Hilton card vs. Starwood card. So you’d basically be spending $300 for top tier hotel status, which seems like an amazing deal… on the surface.
Is HHonors Diamond status worth $300?
Top tier hotel status for $300 sounds like a no brainer, right? In reality it’s a difference of $300 for Diamond status over Gold status, so is that worthwhile?
I dunno. I’ve been a Hilton HHonors Gold member for a long time, and without exception have received access to the club lounge, though have never received a “real” room upgrade.
The major distinctions between Gold and Diamond status are as follows:
- Gold members only get access to the club lounge if they get upgraded to a club room, while Diamond members are guaranteed lounge access (though it’s worth noting that if you don’t get upgraded to the club level as a Gold member you get restaurant breakfast, which many would consider superior).
- The terms & conditions of the program give Diamond members suite upgrades at the hotel’s discretion. This is different than Starwood where Platinum members get guaranteed suite upgrades based on availability at arrival, but instead with Hilton it’s entirely at the hotel’s discretion. I don’t think there are many Hilton Diamond members getting suite upgrades anywhere close to a majority of the time, though.
- As a Diamond member you earn an additional 25% points bonus on all Hilton spend.
So are those benefits worth $300? I’d say probably, if you make more than a handful of stays a year at Hilton properties. Getting Gold status for $95 a year is a no brainer, though I do think it’s worth “gambling” $300 for guaranteed lounge access and the occasional suite upgrade if you have at least few Hilton stays per year. So to answer Alan’s question, yes I think it’s reasonable, and yes, I’m still planning on going for Diamond through spend on the Citi Hilton Reserve Card.