The party line for travel bloggers and point enthusiasts is that any potential devaluation is a bad thing, but I am not so sure that in Hyatt’s case it’s true. I have some reasons to embrace Hyatt’s coming Category 8 award redemptions.
World of Hyatt offers seven categories for outright award redemption. There has been a recent change to allow for premium suite nights for additional points but the base rates haven’t changed and that’s where we will focus. Soon the brand will add an eighth category for 40,000 points per night or 20,000 points plus half of the cash nightly rate.
To be clear, 40,000 is an awful lot of points and seems like a fortune for those are new to Hyatt loyalty. Those without status would have to spend at least $8,000 (5 points per dollar spent) to get a free night in a category 8 hotel compared with the previous top category 7 properties, of which Hyatt had just seven out of more than 700 properties.
Different Than Airline Devaluations
Any travel space increases in the cost of redemption feel like a devaluation, but I’d argue that it’s not really what is happening in this case. When American Airlines increased the price of flights from the continental US to Southeast Asia from 110,000 to 140,000 in business class per person, loyalists weren’t getting anything more for their points. The same trip was increased by 27% but nothing else was given to the traveler, like the ability to transit another region (Europe or North Asia would have been convenient and added value).
Hyatt isn’t introducing a new category just to move all of their properties up one level, but rather to accommodate new properties that don’t fit into their current chart well. These are new properties in new markets and that’s something for something, not something for nothing like it is with airline devaluations.
Hyatt’s recent acquisition of Two Roads Hospitality adds some really nice, high-end properties. The brand’s footprint in key premium markets like Hawaii and New York City grow dramatically – I am looking forward to adding the Beekman to our next NYC trip. Hyatt also signed a loyalty deal with Small Luxury Hotels which allow for earning and redeeming points when executed through a Hyatt channel.
Top hotels have higher marginal costs for guests that stay. Filling up empty rooms with award customers costs money with higher levels of amenities and services offered than other hotels. When most customers think of redeeming Hyatt points, their minds draw to aspirational properties but probably forget that the most prevalent brand in the chain is Hyatt Place. Many Hyatts were branded from their inception inside the company, whereas the new SLH and Two Roads are coming from outside the company and may need more revenue to understand the value of the relationship with Hyatt, but keeping them within the brand adds value to the program.
More Hotels Likely To Free Up Space
Some hotels play games with availability, the Hyatt Regency Aruba is guilty of this all the time. The reason hotels play games with availability is that the value they get for those reward nights is so low that the hotel would rather take their chances of not being able to fill the room than give it to a member for very little money.
Those properties at the higher end of the chain will be able to receive more revenue for award redemption nights and will be more apt to release space. That’s good news for Hyatt loyalists who would rather be able to use their points than not.
Easier to Earn
Hyatt points have become easier to earn with the new credit card. We don’t sell credit cards at Live and Let’s Fly, but we use them. Consider a Globalist that now earns 4x points per dollar spent on Hyatt hotels then 5x per dollar on the stay and a 30% bonus on those points. That comes to 10.5 points per dollar.
Gary Leff coined the phrase “SkyPesos” to describe the Delta SkyMiles program due to their self-inflicted inflation of both earn and burn rates. I believe that this additional category will add ways to earn points at an accelerated rate. Globalists will also likely earn a new Category 1-8 (that’s a total guess but I don’t think they will hand out 1-7 certificates when an eighth category arrives). That adds value to my Globalist membership and doesn’t cost me anything.
Avoiding the Trend of Dynamic Pricing
I am not a fan of dynamic pricing. Hilton can be egregious with their dynamic (variable) pricing based on availability, but Hyatt has mostly avoided this trend. Proponents of variable pricing like that they have access to an award though the hotel is really full, even if it costs more than it normally should; it’s better to have a room even if the price is higher than nothing at all.
On one occasion I experienced semi-dynamic pricing from Hyatt as the Regency Denver was available for club rooms but not for standard awards increasing the cost but at least the room was available.
Hyatt acquired some wellness properties, Miraval resorts, which routinely price their award nights at 45,000 points or more. That’s insanely high considering the cash price for those nights which run between $350 (add another $120 with taxes and resort fees) when properties like the Park Hyatt New York can run more than $1000/night for just 30,000 points.
Miraval award pricing is bad behavior from Hyatt in my opinion, but perhaps the brand understands that high-end hotels need more revenue per award booking, and also that having a series of outlier properties is bad for program loyalty.
What do you think? Do you welcome an eighth award level if it means newer, nicer properties with better availability? Or is this just a new way to charge more and inflate the system?