I’ve written in the past about the fascinating but complex world of hotel award reimbursement rates. For the most part hotels are owned by investment companies, and have management contracts with the major hotel chains. Basically the global hotel chains get a cut of revenue in exchange for running the hotel and slapping their name on it.
That being said, it gets a bit tricky with award nights. The major hotel chains don’t have blackout dates on award nights, so as long as a standard room is available you can redeem points for it. But how do you balance the interests of the individual hotels with the interests of the overall hotel chain and loyalty program? Here’s how I explained it in the past:
During the recession most hotel loyalty programs introduced “no blackout dates” as a selling point of their programs, and that worked great at the time since hotel occupancy was extremely low, and the marginal cost of filling an extra room was very low.
But keep in mind that hotel chains run the hotel loyalty programs, while the individual hotels are typically franchises, and both have their own best interests in mind. Hotel loyalty programs want to make their loyalty programs as profitable as possible, while the hotels themselves want to make their individual properties as profitable as possible.
As a result, the arrangement that most hotels have with their loyalty programs is that if hotel occupancy is above a certain number (usually 90-95%) then the loyalty program has to reimburse the hotel at the average daily rate for an award reservation, while if it’s below that “magic number” they reimburse the hotel just slightly above the marginal cost.
As such, during the recession the hotel loyalty programs were typically only paying slightly above the marginal cost for award redemptions, while post-recession they’re often reimbursing the hotel at the exponentially more expensive average daily rate.
But it looks like we may have even more concrete numbers than that. Reader Robert pointed out that Hyatt’s app seems to be displaying reimbursement rates for award nights. If you have an award reservation booked and pull up the details through the Hyatt app, you should see rate information listed.
For example, an award reservation at the Category 1 Hyatt Regency Kathmandu lists a rate of $40 per night:
The Category 3 Grand Hyatt Tampa lists a rate of $67.20 per night:
During the Gold Passport award chart devaluation earlier this year I was surprised that the Park Hyatt Beaver Creek became a Category 7 property, given that it’s not nearly as expensive as some of the Hyatt properties in Europe. Seasonally it’s really expensive, and other times of the year it isn’t.
The listed rate for the dates I searched in July are $324.99:
That’s actually higher than the paid rate for that night:
I was a bit surprised that the Park Hyatt Maldives didn’t become a Category 7 property with the devaluation earlier this year, given that rates are consistently ~$1,000 per night. The rate for this Category 6 property is listed as $373.33:
And hopefully you’re sitting down for this one. The Park Hyatt Sydney, which I’m staying at right now, is showing a rate of 1,680AUD(!!!!) per night:
I feel like I should be sending the folks at Gold Passport a gift for that this holiday season. 😉
Anyway, I can’t really draw conclusions from this, though I do find it interesting. I’m not sure whether there’s seasonal pricing or if the above rates factor in the hotels being sold out or not. But it’s interesting nonetheless to get a general sense of how much award nights are costing the major hotel chains.
If you’re also seeing rates listed through the Hyatt app for upcoming award stays, please share your data points below.
It would be interesting to see how they vary.