By Nicholas Kralev
The Washington Times
January 25, 2010
Are airlines and hotel companies trying to benefit from charity donations to Haiti? When you donate miles or points, how do they decide into how many dollars your contribution converts? Should they be more generous than they are?
Every major U.S. carrier and hotel chain is offering the members of its loyalty program to redeem points in support of earthquake relief operations in Haiti, which was almost totally devastated earlier this month. For many Americans who may be short on cash but have thousands of points in various accounts, that is a rather attractive option.
Most airlines transfer the miles you redeem directly to the Red Cross or other organizations, which use them to book “award” tickets for their employees or disaster victims. Of course, those charities need either dedicated personnel or a travel agent to spend significant time working with the airlines to find the ever-so-elusive “award” availability.
Thanks to global alliances with up to two dozen members, one can fly almost anywhere with miles from a single carrier. United Airlines has no flights to Indonesia, but your United miles can get you there on Star Alliance partners Singapore Airlines or Thai Airways. Although American Airlines doesn’t go to Bulgaria, fellow Oneworld members British Airways and Hungarian carrier Malev do.
Simply passing your miles on to a charity is not exactly generous of an airline, so some of them are doing more than that. United has offered to match member donations up to $50,000, and Alaska Airlines up to 5 million miles.
The story is somewhat different with hotel chains. Their points would be of little use to a charity if they didn’t have properties in certain cities or countries, so instead of transferring your points, they convert them into dollars. Most chains are currently doing that, though the InterContinental Hotels Group has decided in favor of a direct points transfer.
Hilton, Marriott, Best Western and Starwood, which includes the Sheraton, Westin and St. Regis brands, all offer cash conversions.
Gary Leff, who writes a travel blog called “View from the Wing,” expressed some cynicism last week about the conversion rate of Hilton’s HHonors program of $25 for 10,000 points — or a quarter of a cent per point.
“It costs Hilton less on a per-point basis to redeem your points for disaster relief than for HHonors to pay a hotel for an award night. They get liability off their books at a lower cost than actually giving you an ‘award’ night. Is it too much to expect Hilton not to actually come ahead through donating to Haitian disaster relief?” he wrote.
Jeff Diskin, senior vice president of global customer marketing at Hilton Worldwide, said it actually costs the company “more to redeem points for donations than hotel rooms,” and there is “no advantage in terms of getting liability off the books.”
In fact, if you wanted to redeem points for merchandise or other non-hotel options, the value of those points would be less than if used for donations, Mr. Diskin said. For example, you need 50,000 points for a $100 gift card, he said.
Still, Mr. Leff, whom I met by accident on a flight over the weekend, said it’s “a far better deal for an HHonors member to redeem points for hotel nights and donate money to charity” — unless he or she has 1 million points and will never need them for hotel stays again. “There is no Hilton generosity in this,” he said.
However, Mr. Diskin said the company will match customer donations up to $250,000.
Marriott converts 10,000 points into $25 donations, too, but Mr. Leff said a Marriott point is generally considered more valuable than a Hilton point by frequent travelers. Starwood, he added, “is giving more than a penny a point to charities” — no less value than you would get if you redeem for hotel nights.”
American Airlines is actually offering to give you 500 miles if you donate $100 to the Red Cross. Initially, Mr. Leff took aim at American, too, speculating that it sells those miles to the Red Cross — a practice among some charities as “part of their cost to acquire a new donor.”
“The contribution itself doesn’t really provide net dollars for disaster relief, [but] it puts the donor on a mailing list, and the Red Cross makes money because people who self-identify as likely to give to the Red Cross are highly likely to give again in the future,” he wrote.
American spokesman Tim Smith said the Red Cross “pays nothing for the miles.” The carrier is “giving the miles to our members who prove to us with a receipt that they donated to the Red Cross. It is just one part of our overall relief effort,” he said, adding that American has also flown several flights to Haiti, as have other airlines.
I made sure to inform Mr. Leff, who said he stands corrected.
This column was first published by The Washington Times