Why you earn so few points for paid stays in Europe
When traveling outside of the United States, you may notice how “few” hotel points you seem to earn from your hotel stays.
Here is an example from a recent stay. I paid almost $230 for my room, but Hyatt only counted $195 as an “eligible expense”.
Why does it work like this?
Value Added Tax (VAT)
In the United States, you’re probably used to your hotel room rates being listed before tax. A room rate of $199 per night will likely end up somewhere between $215 and $220 once local or state taxes are added to your bill. But when you check the number of points earned for your hotel stay, they will be based on the $199 room rate you consciously booked.
In Europe, things work differently. Most, if not all, countries have a national sales tax, commonly referred to as value added tax. By law, prices must be indicated including VAT. So when you book a hotel rate of €220 or £190, you know that’s exactly what you’ll pay. (with one minor exception, mentioned in the next section)
However, major hotel chains calculate “eligible expenses” using the room rate before taxes. You probably don’t care about the VAT rates in each European country – after all, you only pay the listed price – but the hotel chains certainly do. So… if it looks like you’ve earned a particularly low number of hotel points, it could just mean that the country you visited has a very high VAT rate. (in the UK for example, it’s 20%!)
Local tourist taxes
Many cities in Europe add a small nightly “tourist tax” which rarely amounts to more than 2-3 euros per night. You always pay the tourist tax directly to the hotel, even when prepaying (direct or via an online travel agency) or using points.
Pro tip – If a hotel receptionist asks if you’re here for business or tourism, always answer with “business”. This could exempt you from a local “tourist tax”.
In any event, local resort taxes are also not considered “eligible expenses” for the calculation of the number of points you earn on your hotel stay.
Once you’ve removed VAT and all local taxes from your room rate, you may still not be able to determine the basic “eligible expense”. The difference is due to the exchange rate used.
Although exchange rates fluctuate constantly, major hotel chains update their exchange rates much less frequently. To ensure they are not disadvantaged, the exchange rate chosen tends to be significantly “worse” than the actual rate at the time of your hotel stay.
If you’ve ever felt like you earned far too few hotel points for a hotel stay in Europe, take a look at the VAT rate of the country you visited. That should explain most of the difference…