There have been several new hotel booking agents that have launched websites that allow you to earn points and miles from your hotel bookings. Traditionally you had two options: 1) book from an OTA and get no points but potentially a lower price, or 2) book with the hotel (ex. SPG.com) and get the points and loyalty credits. With the advent of companies like Pointshound.com or Rocketmiles.com you can now earn airline points through hotel bookings. Here is a Rocketmiles Earnings Comparison I’ve done.
Rocketmiles Earnings Comparison with Starwood Direct
For my experiment I’m attempting to book at the Westin St. Francis in San Francisco for one night (May 2nd). When I input my search into Rocketmiles I receive an offer for $259 and will receive 2,000 United MileagePlus miles.
At that same price of $259/night for the Westin St. Francis I’ll only receive 1 SPG point per dollar spent. So by directly booking through Starwood I’ll only get 259 points. With this the clear choice is to book through Rocketmiles and get the 2,000 points.
Generally I also tend to value airline points higher than hotel points and status. If you’re looking to book award travel there are usually tight restrictions on flights and airports so it’s better to have the higher flexibility there. If you’re flying from Boston to Singapore there are limited flight options but hundreds of potential hotels and places to stay.
What are Rocketmiles Economics?
Traditionally an OTA gets a share (10-20%) of a hotel booking for acting as the booking agent. For example a $1,000 a night hotel would give Expedia or Priceline $100-200 for selling the reservation and the remaining amount the hotel would keep for themselves.
Companies like Rocketmiles are purchasing miles in bulk from United, Amerian, US Airways, and Delta for likely $0.01-0.03 per mile. Looking at Rocketmiles I can book a night at the Affinia Manhattan for $360 per night and receive 5,000 United MileagePlus miles per night for doing so. Assuming a 15% gross bookings share with the hotel, Rocketmiles will get $54 when I book the hotel for 1 night. Out of that $54 they’re giving me 5,000 miles which are valued at $50 ($0.01 X 5,000). So in this example Rocketmiles only profits $4 in net revenue before paying for other business operational costs.
Now that $4 profit on 1 transaction is likely very pessimistic but it shows the margin pressure and steps OTAs are willing to take to get market share. In my opinion Rocketmiles will likely have to reduce the amount of miles they give in exchange for booking through them in the near future. Likely the first 6 months after launch they’ll try to gain traction at big reward levels then slowly ratchet down the rewards until they can make a reasonable profit. Expect nights that previously earned you 5,000 United miles to only net you 2,500 or 1,000 and give a smaller benefit over booking through a hotel directly.