You can only get this F1 race experience with 2.7 million hotel points

By K. Oanh Ha

(Bloomberg) – Jonathan Masehi-Lano and his mother will be travelling from their Southern California homes to Singapore’s Grand Prix this week where they’ll take part in a McLaren F1 racing team pit stop practice session, escort the team’s drivers to appearances and watch the race from the best seats on the track.

The three-day race adventure didn’t cost him a cent – in fact, he couldn’t have bought it. He bid for it, beating out 29 rivals for the money-can’t-buy experience that Hilton Worldwide offered to its loyalty programme members. His winning offer: 2,675,000 points. He and his parents purposefully charged everything they could on their credit cards in the past year to load up on Hilton points.

“Watching a live race is exciting, and we’ve been wanting to go back to Singapore, so this is pretty special for us,” said the 33-year-old Masehi-Lano, whose family stays at Hilton properties three to four weeks a year. “I keep harping on to my parents about earning points. We barely carry any cash these days and just pay for everything with credit cards now for the points.”

Loyal hotel members like Masehi-Lano are bringing in dividends for the world’s biggest hospitality chains as consumers travel again in greater numbers. Post-pandemic, Hilton, Marriott International and other brands are competing to outdo themselves to offer one-of-a-kind experiences from VIP seats at sold out Taylor Swift concerts to a private masterclass with tennis player Daniil Medvedev as a way to attract and retain members to their lucrative loyalty programmes.

“There’s a bit of an arms race among hotel loyalty programmes,” said Rob Burgess, editor of the Head for Points website, who has advised on loyalty programmes. “There’s an understanding that someone who spends 100-plus nights per year in hotels doesn’t want more free nights as a reward. Experiences let members redeem for something different.”

Loyalty programs are an important revenue generator for hotel chains, with Hilton reporting 29% member growth since 2022. Post-pandemic, the occupancy contribution from loyalty program members continues to rise, and at 51%, is the highest since at least 2017, according to a CBRE Group report that analysed the five biggest hotel programs. Hilton topped that, with 66% of room nights booked by members globally. For Marriott, that figure stood at 65% – a record high, it said in an earnings call July 31.

Valuable Guests

And hotel members typically book rooms directly through the chains’ website or apps, enabling the hoteliers to bypass commission fees of 15% to 30% to online travel agencies like Expedia Group or Trip.com when guests make reservations through those platforms. Members generate on average 2.5 times revenue than a non-member, said Ramzy Fenianos, Radisson’s chief Asia Pacific development officer.

“Loyalty members are valuable guests – they spend more money on the property and they stay longer,” said Fenianos. “That’s why we want to enrol more of them.”

Asia is a pitched battleground, with China a key focus. The programmes are seen as particularly important by Chinese travelers, who ranked loyalty programmes highest among respondents as a factor in choosing hotels, according to a McKinsey & Co. survey.

For Marriott, three out of 10 loyalty members in its Bonvoy programmes now come from greater China – making it the fastest-growing market. Marriott currently has 210 million members worldwide. Hilton is close behind with 195 million members, with a quarter of them in China. Radisson, leveraging on its acquisition by China’s top travel and hospitality conglomerate, Jin Jiang International Holdings, boasts 150 million loyalty programme members on the mainland alone.

“The competition is fierce,” said Alison Yang, vice president overseeing revenue strategy, loyalty and partnerships for Marriott’s greater China business. “China is climbing back to be the major source market for global travel. That’s why increasing members in this market is getting more and more critical.”

Emotional Bond

That’s driving international chains to offer more memorable experiences that can only be traded in or auctioned with points. Hilton has offered four race paddock packages for members to get up close to the action at this weekend’s Singapore Grand Prix. A record 209 bids were made, and more than 7.4 million points redeemed, also the highest for the event. Almost 4,000 Hilton Honors members are staying with the brand in Singapore over the five-day race event, with travelers from the US, China and Japan heading the list, it said.

“It’s really down to us to get creative to bring these money-can’t-buy-experiences, which then just gives customers a reason to join Hilton, stay and build points,” said Ben George, Hilton’s senior vice president and commercial director for Asia Pacific. “We want that emotional bond to our brand.”

In February, Hilton signed a multi-year deal to be the official hotel partner of the Singapore Sports Hub, a complex that includes the city’s national stadium that hosts music and entertainment events. The deal includes a dedicated suite at the stadium. Although Taylor Swift’s Eras Tour concert in Singapore was sold out, Hilton could offer a select number of VIP passes in its new box suite to loyalty members.

Marriott’s tennis master classes with Russian tennis star Medvedev and Chinese pro Zhang Zhizhen follow a three-year partnership with the Rolex Shanghai Masters tennis tournament signed in August. It’s auctioning premium seats in its sky box for the event in October. The programme’s also rolled out auction packages in other Asian countries, including a private lesson with Korean pro golfer Koh Deok Ho on Jeju island and a podcast session with a local celebrity host in Vietnam.

The companies have also over the past few years launched hotel-branded credit cards, partnering with banks in the region. Those who have racked up millions of points are likely doing so on business. And that risks alienating many members who can’t compete, says Head for Points’ Burgess.

A top tier Hilton member, for example, earns 20 points per $1 spent, so guests would have to spend $50,000 before taxes at its hotels to amass 1 million points, estimates Burgess. That means the top points earners are likely small businesses that put company expenses on Hilton-branded credit cards or American Express cards that offer Hilton points, rather than hotel guest members, he says.

“This leaves the programmes in an odd position, because the very top tier of events like the F1 auctions tend to be bought up by people with high credit card spend and not people who stay a lot with Hilton,” Burgess said. “Ordinary members start to tune out – why should they waste their time looking at the experiences on offer when they know they can never afford them?”

As for Masehi-Lano and his mother, redeeming points for experiences is a perk they’ve recently discovered. They had typically traded in their points for hotel stays until last year, when they bid on a package available only to members. They won tickets to see the F1 in November, after unused weeks at a Hilton timeshare they own were also converted to points.

“We’ll have to plan and rack up the points again before we can go all-in on another race event,” he said. “We’re sticking with Hilton for the foreseeable future.”

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