Choosing Your Reward

Last spring, I blogged about the $5/day for in-house food purchases that many Sheraton hotels give guests who waive house-cleaning.  In some hotels, they offer a choice between the $5 and 500 frequent-guest points.  Which is better?  For infrequent guests like me, the $5 is better.  But in some of the best Sheraton hotels, it only takes 10,000 points to obtain a free night—i.e., 20 days of no house-cleaning.  If you are a frequent guest, that seems like a much better deal—the opportunity cost of one free night is $100, typically far below the price of a night.  The Sheraton’s offer creates a separation between infrequent and frequent guests, benefiting the latter (and giving people an incentive to become frequent guests). (HT: DJH)