Some People Really Don’t Like Annual Category Creep at Starwood

The New York Post runs a piece on the devaluation of Starwood points resulting from annual ‘category creep’.

The author of the piece (and her editors at the Post, apparently) can’t do match and or catch reverses of some of the numbers. For example:

A 66 percent hike for what Starwood calls “elite” hotels, including W New York, the Westin St. John Resort and the Meridien Beach Plaza in Monte Carlo (now 12,000 points instead of 20,000).

A 40 percent hike in points needed to stay at the Westin Embassy Row, Washington, DC, or the Westin Sydney Australia (now 16,000 points instead of 10,000).

(Emphasis mine.)

I find the tone of the piece overly alarmist, especially this year as compared to last. But then I guess that’s the New York Post.

“It’s sneaky. Did they think no one was going to notice?” Starpoints gold member Jonathan Yarmis said. “This is not an adjustment. This is a significant change.”

“Brands spend so much time cultivating a ‘we’re your friend’ persona, but things like this make you realize ‘you’re not my friend,’ ” Yarmis said.

The changes this year were minor in comparison to the 2007 bloodletting and introduction of a new category 7. (I wish I had booked the Bora Bora Nui back in the days before the introduction of category 6, but am thankful I was able to stay there prior to the introduction of category 7!)

It’s good to call attention to these changes. But the coming category creep on March 4 really seems like a non-event, except at some specific properties. And on the whole they’re driven by higher occupancy rates (and thus higher room rates) at many properties, combined with the declining value of a dollar (thus the same room rate in Euros and Baht actually costs more dollars than it did last year).

At least you can still transfer Starwood points 1:1 into tons of airline programs (with transfer bonuses when moving 20,000 Starpoints) and 1:2 into LanPass.

In the past I’ve predicted a devaluation here. My rudimentary understanding is that frequent flyer transfers are more expensive on a per-point basis than basic hotel redemptions (when the hotel is at less than 90% occupancy). I’ve suggested that higher point costs for award nights would drive folks towards airline mile redemptions. And as a result, devaluing hotel awards would wind up costing Starwood Preferred Guest more on net. So they’d be forced to get their desired cost reductions out of changes to the mileage transfer chart.

However, the changes have really been few and far between. United and Continental now transfer at 2:1 instead of 1:1, the general assumption being that the airlines (with pressure from their credit card partner Chase) have pushed this on Starwood, rather than Starwood looking to these transfers for cost savings. (This is supposition only, not actual knowledge.) Qantas used to transfer 1:2 and is now at 1:1. But on the whole these minor variations over a period of years haven’t affected the core 1:1 ratios.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. In theory, the 1:1 ratio must break at some point.

    Hotel points are based on $ spend and therefore the number earned per stay increases year-on-year with inflation, leading to inherent devaluation. However, as rooms cost more (due to inflation) you get more points per stay and therefore in general come out quits when redemption rates go up.

    However, airline miles are not $ based. They are based on distance flown. On this basis, there should never be any excuse for the devaluation of airline schemes.

    When transferring hotel points to airline miles, though, you are basically exchanging a currency that is devaluing year-on-year into another currency that is essentially pegged. At some point, as we see in the real world, this peg must break.

  2. The increase in points required for a free night redemption for Starwood compared to other hotel programs is interesting to analyze.

    Amsterdam, Netherlands
    Starwood – The Pulitzer Hotel
    2000 = 7,000 Starpoints/night
    2006 = 10,000 Starpoints/night
    2008 = 20,000 or 25,000 Starpoints/night
    about 300% increase

    Hilton Amsterdam
    2000 = 35,000 Starpoints/night
    2006 = 40,000 Starpoints/night
    2008 = 40,000 Starpoints/night
    about 15% increase

    InterContinental Amstel
    2004 = 30,000 Priority Club points/night
    2008 = 40,000 Priority Club points/night
    33% increase

    Bangkok, Thailand
    Westin Grand Sukhumvit
    2004 = 3,000 points weekend; 4,000 points weekday
    2008 = 7,000 points
    about 200% increase

    Conrad Bangkok (Hilton)
    2004 = 30,000 points/night
    2008 = 35,000 points/night
    about 16% increase

    One could argue that Starwood properties were undervalued over the past few years and they are playing catch-up. I think a city by city comparison would indicate the changes in SPG redemption categories far exceeds the major hotel loyalty competitors and represents a huge devaluation of Starpoints over the past few years.

    While the accolades for SPG tend to focus on the ease of points redemption, the common complaint has always been the lower points earning potential for members. SPG hotel stays earn 2 Starpoints/$ spending compared to 5 points/$ for Hyatt, and 10 points/ $ with Marriott, IHG, and Hilton. Hilton offers the choice of 15 points/$ in lieu of airline miles. Elite bonuses increase these amounts.

    A larger percentage of hotels shifting to the high-end redemption rates of Category 5 (12,000 to 16,000 points/night) and Category 6 (20,000 to 25,000 points/night) with SPG makes Hyatt, IHG, Hilton, and Marriott more competitive for travelers seeking points for high-end upscale and luxury hotel free stay redemption value.

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