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As you may know from some of my earlier posts, I’m a big fan of fancy hotels with double-story windows and white-glove butler service. I love using reward points to spend a night for free in a room that would cost the average paying customer $700 or more.
I’m also well aware that this isn’t everyone’s travel style.
Most travelers who don’t write about hotels for a living aren’t looking for high-end luxury every time they take a holiday. Most travelers simply look for a quality place to stay for multiple days in a location that’s convenient for the sites they want to see and things they want to do on vacation.
Whether you prefer pampering or simply a place to lay your head, your credit card rewards points can be your ticket to a great stay – especially if you understand how to use hotel categories to get the experience that you want.
One key to becoming a hotel points master at rewards is to be sure that you understand the basics (this may be a review for you – but stay with me).
How hotel groups work
The majority of hotels offering points-earning loyalty programs are part of larger conglomerates.
If you’ve ever stayed at a hotel (or shopped around for hotel credit cards), you’re probably aware of the most popular U.S.-based hotel groups such as Marriott, Starwood, Hilton, Hyatt and IHG.
Each of these groups serves as the umbrella for a number of other hotel brands.
For example, you can earn points on your Starwood Preferred Guest Card from American Express and use them to book free stays at a variety of hotel chains such as the Sheraton, W, Westin, Le Meridien, Four Points, Luxury Collection, Element, St. Regis or Aloft.
Some hotel brands are nicer than others, and some hotel properties from the same brand are better than others.
If you want white-glove butler service from SPG, for example, you’re likely to stay at a St. Regis property. If you need practical accommodation for a week-long family road trip, you’ll probably opt for a Sheraton Four Points.
Hotel groups know this, too. That’s why their portfolios of properties cater to different styles and budgets.
Every hotel property group has a system that sorts their hotels into categories based on a variety of factors, including level of service, style of accommodation and the demand for that particular location.
While each hotel group’s system is different, the scale generally ranges from 1-7 (or more) with 1 being budget hotels and the highest number being luxury properties.
Why do hotel categories matter?
Hotel categorization is important to rewards travelers because this category label is what regularly determines how much a “free” reward night is going to cost you. You can see this “price tag” in the category redemption chart that each hotel group has published on its website.
Hyatt, for example, has a seven-category system, with the lowest redemptions starting at 5,000 points per night for a Category 1 hotel and the highest redemptions for 30,000 points per night for a Category 7 hotel.
The math is simple. The number of nights you can afford to stay for free is determined by your rewards balance divided by the number of points it costs to stay at any category of hotel.
If you have 40,000 points in the Hyatt bank from a sign-up bonus you received for opening The Hyatt Credit Card, for example, you can opt for an eight-night stay at a Category 1 hotel, or one night at a Category 7 hotel.
Let’s explore some practical examples, keeping these two hotel award principles in mind:
- Booking a low category hotel with award points will get you lots of nights from one bonus.
- Booking a high category hotel will get you fewer nights, but a more luxurious experience and often a bigger cash savings.
Low category booking = many nights
Consider this story from my friend and fellow credit card rewards collector Robin Mays.
“For my boyfriend’s birthday one year, I scored us tickets to Lollapalooza, a massive annual Chicago music festival right in the heart of downtown’s Grant Park,” Mays says.
“There are multiple Marriott Cat 7 and 8 properties within walking distance of the park, including the posh JW Marriott, their highest-end brand,” she says. “However, only three blocks from that property is a Marriott Residence Inn, which caters to longer stays.”
Mays booked the Marriott Residence Inn.
“Stumbling distance from Radiohead and Jane’s Addiction, we booked four nights and got a kitchen to boot!” Mays says.
“By choosing the alternative brand, we were able to stretch our points to cover the duration of the festival, and even cook our own meals, which also helped us save on cost.”
In Mays’ case, the lower category hotel provided the best value.
High category booking = fancy experience + big savings
For those of us who value a luxurious experience, we may choose to forgo many nights at a lower category hotel to take advantage of the opportunity to stay at a hotel where we might not otherwise be sleeping if we had to pay the going room rate.
One of the reasons I like using my points for fancy hotels is that rewards currencies give me access to an experience beyond my financial means.
While I wouldn’t hesitate to pay $150 to stay at that Residence Inn in Chicago if I needed to, I would never consider paying outright for a property way out of my budget like the Category 7 Park Hyatt Maldives that runs an average of $1,200 per night.
I choose to use my points in higher category hotels because I would never have the opportunity to experience them otherwise.
Sure, I could use the same 30,000 points to book six nights at a Category 1 Hyatt property, but even if that hotel costs $150 a night, I’d still be mathematically coming out ahead.
Location, location, location
Lest I mislead you to believe that a hotel category is solely determined by how fancy the property is, I’ll point out that there is one other critical factor that plays a big role in determining hotel category. That is location and popularity of the destination.
Last year I was traveling around Asia and wanted to spend a handful of days basking in the sun and do some diving on an Indonesian island. I first considered Bali as it is Indonesia’s most popular island and vacation destination.
Planning to use the 35,000 SPG points I’d earned on my Starwood American Express card, I searched the SPG website to check my options.
Looking for a midpriced hotel so I could afford to relax for a few days, I came across the Sheraton Bali Kuta Resort smack in the middle of Bali’s most popular beach.
As a category 5 hotel, the cost would be 12,000 points per night – meaning I could stay three nights if I could somehow swing earning an extra 1,000 points before booking.
As I kept looking, I happened across the Sheraton Senggigi Resort in Lombok – a smaller and much quieter Indonesian island just a ferry ride or quick flight from Bali. This hotel was a Category 3, pricing out at only 7,000 points per night.
This lower price meant I could afford to stay five nights at this hotel for the same cost as three nights in Bali. And, because Starwood offers a fifth night free on award stays, I actually had enough points to get six free nights in Lombok.
While the two hotels had different styles, the Bali hotel was more modern and the Lombok hotel was more open-air and tropical, both would have been good options. Since being in Bali wasn’t a key piece to my plan, I opted for Lombok and had an amazingly relaxing week on the beach.
I should also point out that because this hotel location was less popular than Bali, there was more upgrade availability and I wound up with a pretty amazing suite for my stay.
(Sidenote: The Sheraton Senggigi Resort is the only hotel I’ve ever been in that has an ice cream maker, chocolate fountain and a cotton candy machine on the breakfast buffet.)
The lesson I learned in Lombok: Not all great hotels will be in the highest category.
As you can see in my Lombok example, location is a big factor, and this principle holds true for most popular destinations. Hotels will always be in higher categories in busy cities with lots of visitors such as New York and London than they will be in Boise, Idaho, and Hattiesburg, Mississippi.
The lesson for you: A low category ranking isn’t a sign of a “bad” hotel. Search for properties in less popular destinations if you want to pay fewer points, max out your nights and enjoy a top-end experience.
No matter what type of hotel you need to suit your accommodation travel-style, it can be yours.
You’ll quickly learn that not only do your credit cards rewards points earned in hotel programs have a lot of value, knowing how to use them better will help you stretch your nights and/or your experience!
See related: Hotel credit card reviews, Our 3 best hotel credit cards, Use your credit card to score a hotel upgrade, 5 ways hotel cards add up to big savings