Hotels.com has announced that they’ll be introducing a $5 fee when redeeming free nights earned through their Welcome Rewards program. While it’s good that they’re not dressing it up as an enhancement or as something that customers have been clamoring for, it’s still a lame move considering their “free” nights already aren’t free.
In case you’re not familiar with how Hotels.com’s Welcome Rewards program works, for every night you book you get a credit worth 10% of the room rate before taxes and fees. Once you’ve collected 10 of those credits, you can redeem them for a free night up to that total value.
For example, let’s say you booked five nights at $70 before tax and five nights at $100 before tax. You’d earn $35 of credit for those first five nights, then $50 of credit for the second set of five nights, giving you a Welcome Rewards free night worth up to $85.
The $5 redemption fee will be charged from November 27, 2019, although as the email above shows, it’ll be possible to avoid the fee by redeeming your free nights in the app. While that’s not a particularly onerous requirement, it does make redeeming the free night more inconvenient.
Hotels.com is stating that the change is being introduced to help offset the cost of the program. While there are no doubt costs involved, they also get to take advantage of breakage in a couple of ways.
First, any credits you earn expire when you’ve had no activity for 12 months. I imagine that a not-insignificant number of Hotels.com users lose their credits in this way; I know that I’ve lost credits before due to this.
Second, each set of credits can only be applied towards one night. If that night is less expensive than the value of the credits, you lose the additional amount. For example, I’d earned a free night worth up to $58.65 and redeemed it last year for a free night that cost $50.99 before taxes and fees. That meant I lost the additional $7.66 of credits that I’d earned rather than them rolling over towards a future free night.
In addition to that, Welcome Rewards free nights already aren’t free. As you can see from the screenshot above, the credits you earn don’t cover taxes and fees, so you have to pay for those out of your own pocket, unlike reward programs for actual hotel chains where award stays don’t require payment of taxes (although resort fees usually still have to be paid where applicable).
Adding a $5 fee therefore feels mean-spirited, especially considering a free night booking through the website presumably doesn’t incur higher expenses than booking it through the app. If you’ll be using the credit towards a stay longer than one night, booking through the app also means you’d be forgoing the opportunity to earn portal cashback on the other nights of your stay. That means paying the $5 fee might still leave you better off depending on the cost of the rest of your stay and the cashback rate you’d be earning through the shopping portal.