What’s The “Business Model” For The Citi Prestige Fourth Night Free Benefit?

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Reader Alex727 asked the following question in the Ask Lucky forum:

What’s Citi’s business model for Citi Prestige’s 4th night free benefit?

Why I love the Citi Prestige fourth night free benefit

My single favorite benefit offered by any credit card is the fourth night free on the Citi Prestige Card. This benefit has literally saved me thousands of dollars. In my first year of card membership alone, the benefit saved me over $2,000.

What’s great is that when you use the fourth night free benefit you still earn points with your hotel loyalty program like you usually would. While some credit card free night benefits are highly restrictive, this one can be used on any publicly available paid rate. That means you can use it on a pre-paid rate, AAA rate, etc. Furthermore, the cost of the fourth night is reimbursed on the back end, meaning that you earn hotel points for the cost of the entire stay, rather than just the cost of the first three nights.

In the past you had to call to use this benefit, though nowadays you can actually request to make a fourth night free reservation by email.

The Citi Prestige Card has a $450 annual fee, though offers a $250 annual airline credit (which can be used towards any purchase directly with an airline), so the way I view it, the real out of pocket on the card is ~$200 per year. I think a lot of people would get outsized value from that from the fourth night free benefit alone.


How can Citi afford to offer a fourth night free?

When you use the Citi Prestige Card fourth night free benefit, is Citi simply covering the cost of the fourth night? Yes and no. That’s to say that the hotel has no part in reimbursing you for this benefit, and that they don’t even know that you’re getting the fourth night free.

However, your fourth night free isn’t actually costing Citi the face value. On the most basic level, Aspire Lifestyles (the concierge service that facilities this feature) is getting at least a 10% commission on each of these bookings. If they have access to one of the larger travel platforms, there’s a chance they’re getting an even bigger commission than that, especially at independent hotels. In practice I’d say they’re getting an average commission of 10-20% on these bookings.

So the cost to Citi is 25% of the cost of a four night stay, and then they’re getting somewhere between 10% and 20% back.

But also keep in mind that this benefit only applies to the fourth night of a stay, while in practice many people are probably using this benefit for longer stays. In other words, I imagine people are in many cases making week-long bookings through the concierge, in order to get the fourth night free.

That increases the commission they’re earning on these bookings, since they’re also earning that commission on the additional nights beyond the first four.

However, I suspect there’s still a net loss on this, and that’s fine. This is a perk of the card that I suspect is a cost center. Any benefit offered on the Citi Prestige Card is costing Citi money — the $250 airline credit, a Priority Pass membership, a Global Entry fee credit, etc. — that’s part of the value proposition of the card, and how they can justify charging a $450 annual fee. But the cost to Citi isn’t anywhere close to being the full cost of the fourth night stay.


Bottom line

The fourth night free benefit on the Citi Prestige Card remains my single favorite perk offered by any credit card, given how much value I get out of it. It has really changed how I book hotels, since I’ll now typically add a fourth night to any three night hotel stay I’d otherwise make. While I do think this benefit is costing Citi some money, it’s nowhere near the cost of the free night — they’re probably making money on some peoples’ bookings, while they’re losing money on others.

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  1. @Lucky,
    Any guess on if Citi will introduce additional benefits to supplement Citi Prestige comes July when some of the existing benefits are discontinued? Thanks.

  2. Dont forget the amount of people that got this card thinking they will use this benefit more often *cough* me *cough*

  3. I purposefully book 4 night stays when possible. I’ve yet to use this on a +4 night stay. For example, we planned our Southern Italy trip as 4 nights in Rome, then 2 nights on the Amalfi Coast.

    We are going to Jamaica for the first time this summer to just chill on a beach with adult beverages. We received suggestions to two different All-inclusive brands. We are going to spend 4 nights at one brand/resort and 4 nights at another brand/resort. The first would be $2000 for 4 nights (so $500 back) and the second is $1700 for 4 nights (so $425 back). We used Citi points buying AA to get us there. The $3700 of hotel rooms for 8 nights are only going to cost me $2775. That’s epic.. And of course only points/miles junkies like us would switch hotels on a “relaxing” vacation!

  4. Lucky — is there any downfall to paying incidental hotel charges with another card? I.e I’ve got a 4 night stay coming up utilizing the 4th night free. However, I want to take advantage of an Amex offer of 3500 MR points after $250 spend at Hilton. Any reason I couldn’t rack up dinners/drinks and then pay down with my Amex.

  5. @ Scott P — No problem paying incidental charges with another card. Just make sure the actual cost of the stay/an amount equal to it is charged to the Citi Prestige.

  6. The business case must be poor – they aren’t allowing you to use it on all rates anymore (e.g. a breakfast included rate wasn’t allowed for me recently) and are even getting more restrictive (I just booked a stay where they booked me a non-refundable pay-in-advance rate).

  7. I think it’s worth noting that come July, the refund will be the average of the 4 night stay, excluding taxes and fees.

  8. @ Lucky

    I recently tried to make a booking via e-mail as suggested in the post you link to above. I have made many bookings with them before (so all of my information is in their system), and I included all of the necessary information in my e-mail.

    It took them about two days to get back to me, and the e-mail said something to the effect of “we are pleased to offer you the 4th-night free benefit [insert details about the visit, though with now-higher room rate]. Please call us to confirm the booking.” By the time I received their e-mail, the rate had changed, and I was no longer interested in making the booking. So I wrote back and told them as much, and also asked why they weren’t able to process my booking via e-mail, and why it took them so long to get back to me. (I was nice about all this–just cutting to the chase here.)

    A few days later, I received a call from a supervisor, who was very nice and apologetic but explained that their e-mail booking requests had gone up over 100x as a result of recent blog postings, and that their system simply isn’t set up to handle such bookings. She also explained that they prefer to speak to customers so they can handle other arrangements and offer suggestions (which I get; they’re a travel agency and get money on commissions). Long story short, she said they used to do occasional bookings via e-mail as exceptions (like when someone was traveling abroad without phone access and needed to make a booking immediately), but that they aren’t currently able to handle bookings via e-mail.

    I wonder if others have had the same response? Has anyone else been told to call in to make their booking? Or maybe I just got unlucky because my rate changed?

  9. I love this benefit, I typically find stay 3 and pay for 2 day offers at numerous hotels and I simple book the 4th day and essentially pay 50% of the total rack rate, which is always awesome

  10. On the fence about keeping the Prestige. My annual fee is due this month and I didn’t use the 4th night free at all last year. Usually on the go when I travel (3 days in Cape Town and Queenstown is the longest stay I had in one city in my 40+ cities I visited last year) — there’s only so much of the same thing to do / see in a particular city as a solo traveler so there’s hardly ever a reason to stick around 4 nights.

  11. I don’t think the business case is as bad as you describe:
    A lot of travel agency and corporate travel contracts are based on volume – the higher the volume, the lower the rates or higher the commission.
    The travel agency is likely getting much more volume because of this deal than without this credit card perk – improving their rate/commission structure with the big hotel groups. And they get to sell other stuff around it (hence the preference for phone calls…

  12. @Kor — why wouldn’t you book 4 nights even if you only plan to stay 3? Might as well earn elite benefits & hotel points on the 4th night even if you don’t plan to stay.

    Also, sometimes the rate is cheaper when you book more nights. I needed a 2-night weekend stay once in the past year. Two nights — Saturday and Sunday — was more expensive than Saturday->Tuesday with the 4th night free. So I booked the 4 nights and got elite credit for four nights instead of 2. The cost of 4 nights was more expensive than 2, so I earned more points than I would have — but after the 4th night free rebate, I paid less out of pocket than I would have for two.

    My convoluted point here is that it’s a benefit that you might be able to take advantage of even if you only spend a couple of nights in a place. On the flip side, I’ve also chosen to actually stay four nights rather than the three I initially intended because….why not? 🙂

  13. The last four bookings I have made have all been at properties that don’t pay commission. I asked the owners.

  14. I’ve booked many smaller hotels with this benefit (as well as big ones) and they don’t use a commission based travel portal. The agents book these right through the websites. I have even walked them through how to use some of the less intuitive boutique sites and 100% sure we were looking at the same thing.

  15. Don’t forget swipe fees. I would bet the average premium card consumer carries just one premium card (AF >$450) and feels compelled to use it more often to psychologically justify the higher AF.

  16. Hi Lucky, you have missed out on the fact that CIti negotiates with hotels to average out the rate for the 4th night. this is a win win for Citi as well as the Hotel, as the Length of Stay gets increased, increasing average occupancies for the Hotel, while the payment if i remember correctly, has to be settled by the Citi card used to guarantee the reservation, driving the payments through the Citi processing system, increasing their billing numbers.

  17. @ 747always — But they’re also awarding triple points on those purchases, so they’re not exactly coming out ahead in terms of processing fees due to the rewards they’re issuing. Also, not sure what you mean by them negotiating with the hotel to average out the fourth night?

  18. You aren’t counting the cost of Aspire’s operations and their profit margin. They are a separate company and expect to make money. They aren’t going to eat that.

  19. @ dmodemd — Agreed, but that’s part of a much bigger agreement. This is one of only many services that Aspire provides for Citi. They also provide a lot of other concierge and travel planning services, and I suspect they make money on a large portion of that.

  20. Aspire has messed up two of my 3 most recent bookings. We were able to reach amicable settlements but a huge waste of time on my part. Also, they take days to do a simple hotel booking. The Citi Prestige case keeps getting thinner…..

  21. I have used this a lot and on all types of rates with no issues. Recently used it at a 5* hotel in Paris, Munich and London (both cities give you plenty of things to do for more than 4 nights) on a premium room with the breakfast included rate, also on a suite in the Bahamas. I always do it by phone call. I pick the hotel I want (not one that is on the City list or that they have a negotiated rate with). As long as the rate is available on the hotel web site I have been able to book it without issue. I just call and tell then exactly what package/rate I want. They then look it up on while I am on the phone with them, call the hotel and confirm it right away. Has saved me many times over the annual fee

  22. @Michael S
    The terms clearly state that a rate that includes breakfast is not allowed, unless it is the lowest rate. I just booked a 4 night stay in Kyoto where the promotional rate including breakfast is lower than any other rate without breakfast. So Aspire booked the rate that included breakfast. Also, you can choose whether you want to book a non-refundable rate or a refundable rate. Aspire will not book the non-refundable rate if you ask for the lowest refundable rate.

  23. If I stay in a place for 30 nights consecutive for work, do I get every 4th night free? How would I handle the booking on that length of a stay?

  24. @ R Johnson — Nope, you only get one free night per stay. If you leave a night gap between stays, or switch hotels every four nights, you could, but not if you just stay at the same hotel 30 days in a row.

  25. Can I get this benefit with hotels like Aman, Eden Rock, Cheval Blanc, Frigate Island, etc? Thanks.

  26. @Michael C
    I just booked 4 nights at the Hyatt in Maui. They had a senior rate including breakfast and it was $20 per night more than the lowest rate. Of course, breakfast for 2 people would be much more than that. Citi concierge had no problem booking it for me.

  27. @Eric, I think you dodged a bullet and are lucky. Last year, while I was on the phone with the Aspire agent booking a hotel, the rate changed. Both the agent and I had screen shots of the price at the start of the booking and I made it clear I had no interest in the room at that price. NONE of these facts are in dispute, but I gave just began my 2nd year of contesting these charges. The biggest problem is that, as far as I can tell, all communication with Citi is either entirely done by computers, or people who speak no English and just reflexively click on a form letter (with no understanding of the letter to which they are responding).

    By my estimate, I’ve spent over 15 hours dealing with this nightmare (which still isn’t resolved) and has had a definite negative impact on my credit. I will report back when this is all done, but right now, I have nothing good to say about “4th night free” and would warn anyone to be very, very careful when using thus “benefit.” (And, I wouldn’t risk doing it by email at all.)

  28. shame they don’t offer through a TA, and instead use hotels.com down under.

    not that it matters given the interchange regulation, and the subsequent points devaluation Citi have implemented (not that the other banks will be better, but Citi probably haven’t helped themselves being the first to jump)

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