Anniversary credit card benefits: why are hotels so much better than airlines?

[Anonymous]

Have you guys ever noticed that many hotel credit cards seem to have a de facto negative annual fee through a recurring benefit? 

The Hyatt card, IHG and the carlson premiere card are examples of this. 

However, there seems to be no such case with airline cards. The chase southwest cards have annual benefits, but not nearly enough to compensate the AF. The US Airways card used to come with a 10k miles/year annual fee, but that is long gone. 

Why is that?

[Anonymous]

Group package hotel room are heavily discounted. I would not be surprise if Hyatt cost only $40 per night.

[Anonymous]

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@Anonymous wrote:

Have you guys ever noticed that many hotel credit cards seem to have a de facto negative annual fee through a recurring benefit? 

The Hyatt card, IHG and the carlson premiere card are examples of this. 

However, there seems to be no such case with airline cards. The chase southwest cards have annual benefits, but not nearly enough to compensate the AF. The US Airways card used to come with a 10k miles/year annual fee, but that is long gone. 

Why is that?

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Yes. I love it, So much.

And I disagree about the SW. 6,000 Anniv pts is pretty close to equal the $99 AF.

[NRB525]

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@Anonymous wrote:

Have you guys ever noticed that many hotel credit cards seem to have a de facto negative annual fee through a recurring benefit? 

The Hyatt card, IHG and the carlson premiere card are examples of this. 

However, there seems to be no such case with airline cards. The chase southwest cards have annual benefits, but not nearly enough to compensate the AF. The US Airways card used to come with a 10k miles/year annual fee, but that is long gone. 

Why is that?

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My opinion is that a hotel is a fixed location asset with a daily expiring room count. Most hotels are not 100% full, even a few days a year. There are some restrictions on the use of the annual room benefit, but the "opportunity cost" to the hotel of putting someone up for a night is virtually zero. Plus, if you put someone up for the night, they have to eat, they may stay for another night, etc. so they feel they can get something out of the cardholder, particularly since these cards give the cardholder extra points for paying for hotel services. "Lets eat here at the hotel, honey, we'll get 5 (or 12) points per dollar! Order the lobster, the room was free!"

Airlines, on the other hand, have a mobile, schedulable, seat that they can adjust pricing quickly to fill to make sure that plane leaves with 110% booking. That's why you always see flights asking for volunteers to bump to a later flight; they over book every flight they possibly can, so only in rare situations do they leave with less than 100% butts in the seats. Even first class; that one is a way to get the frequent fliers to salivate and line up to see if they can get first in line for the free upgrade.

[Anonymous]

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@NRB525 wrote:

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@Anonymous wrote:

Have you guys ever noticed that many hotel credit cards seem to have a de facto negative annual fee through a recurring benefit? 

The Hyatt card, IHG and the carlson premiere card are examples of this. 

However, there seems to be no such case with airline cards. The chase southwest cards have annual benefits, but not nearly enough to compensate the AF. The US Airways card used to come with a 10k miles/year annual fee, but that is long gone. 

Why is that?

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My opinion is that a hotel is a fixed location asset with a daily expiring room count. Most hotels are not 100% full, even a few days a year. There are some restrictions on the use of the annual room benefit, but the "opportunity cost" to the hotel of putting someone up for a night is virtually zero. Plus, if you put someone up for the night, they have to eat, they may stay for another night, etc. so they feel they can get something out of the cardholder, particularly since these cards give the cardholder extra points for paying for hotel services. "Lets eat here at the hotel, honey, we'll get 5 (or 12) points per dollar! Order the lobster, the room was free!"

Airlines, on the other hand, have a mobile, schedulable, seat that they can adjust pricing quickly to fill to make sure that plane leaves with 110% booking. That's why you always see flights asking for volunteers to bump to a later flight; they over book every flight they possibly can, so only in rare situations do they leave with less than 100% butts in the seats. Even first class; that one is a way to get the frequent fliers to salivate and line up to see if they can get first in line for the free upgrade.

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This is a great explanation.