Why is the Starwood Business Amex Better Than the Personal One?

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Reader sourabh asks,

Hi Gary, I love your blog and wonder what you feel about the new Amex fee increase for Starwood and whether that is triggered by their loss of the Costco relationship?

Also it seems now that the business Starwood card is more valuable than the personal one, why is that?

There are new benefits coming to the Starwood American Express cards August 11. And with that comes an increase in each card’s annual fee to $95 (still $0 the first year).

  • No Foreign Transaction Fees
  • Complimentary, Unlimited Boingo Wi-Fi
  • Complimentary Premium In-Room Internet Access
  • Access to Sheraton Club Lounges for Starwood Preferred Guest Business card holders

I agree that the Starwood American Express business card is better than the personal one although I have them both (since they each give me 2 stays and 5 nights to help requalify for my Starwood Platinum status).

Westin Stonebriar

There are two reasons why the business card is better than the personal one:

  1. OPEN savings (I use it for 5% rebate at domestic full service Hyatts)
  2. Sheraton club lounge access

I really don’t know why American Express and Starwood chose to make the business card better at the same price point, that’s a great question, though I imagine spend volume on the business cards tends to be higher than on personal cards.

OPEN savings (automatic rebates for using the card with particular merchants) isn’t specific to the Starwood card but is something on all Amex business cards (and Visa/MasterCard have similar programs for business cards as well).

Plus the thinking may be that club lounge access is uniquely appealing to small businesses (since there’s some savings on price sensitive travel, and lounges in the US are mostly used by business travelers during the week).

The increased fee is more likely because the American Express-Starwood co-brand deal was re-upped and presumably American Express is paying Starwood more money under the new contract, than because of some external factors. And they saw that the standard fee for premium cards — United Explorer, Citi AAdvantage, Sapphire Preferred to name a few — was $95, so they likely had room to go up to that.

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. Any sense as to whether the resto breakfast can still be substituted for club access in this scenario?

  2. Good point about the business card. In addition, I recall that my business card T&C didn’t have as good coverage benefits as the personal card. I can’t recall exactly which ones. It may have been the shopping return protection.

    The online site also has slightly better authorized cardholder management.

  3. Any thoughts on when the annual summer bump to 30K for Starwood Business AMEX will happen?

  4. My first night in a Starwood Hotel occurred after I got the personal AMEX SPG card in 2013 based on the solid value proposition of the AMEX SPG card and the Starwood loyalty program. The 30k point bonus was good for a ten night stay at a local near-the-ocean Four Points hotel, but category increases within just over a year reduced the total stays to four. Initially, several local hotel redemptions easily achieved 2.5% to 5% returns with annual spending of about $10k with the $65 annual fee. The old AMEX Blue Cash card has been our family workhorse credit card for many years due to the 5% return on gas, groceries, and drugstore with no caps. Inflation has boosted the return over the years.

    The objective of this response is to show how point earning rewards credit card returns are calculated after the annual fee to evaluate whether a cash back card may provide a higher return rate. Readers are encouraged to wrestle with the calculations to assess the appropriateness of a specific rewards card to your own spending profile.

    Start with the premise that a rewards credit card should earn its place in your wallet.

    Loyalty reward rates after the annual fee should equal (if other benefits exist) or exceed a no annual fee cash back credit card.

    Dollars returned per dollar spent or the percentage return before the annual fee for a rewards credit card is calculated as follows.

    100*[Points earned / dollar spent]*[dollar returned / points redeemed] = 100*[dollar returned / dollar spent] = % return (before annual fee)

    Points earned per (/) dollar spent is 1/1 for the AMEX Starwood Preferred Guest card.

    Dollar returned per point redeemed is the free night hotel room rate divided by the points for a free night or the flight cost divided by the points for a free flight. Taxes or other fees may alter this interpretation slightly.

    The dollar returned per dollar spent redemption rate required to earn a target return rate after the annual fee is calculated as follows.

    [$ returned / $ spent redemption rate] = target return + [annual fee] / [annual spend]

    For a $95 annual fee, a target return after the annual fee of 0.015 (1.5% equal to a Capital One Quicksilver credit card), and $19,000 annual spend, the $ returned per $ spent redemption rate is 0.020. For a $95 annual fee, a target return after the annual fee of 0.020 (~2.0% equal to a Citibank Double Cash credit card), and $19,000 annual spend, the $ returned per $ spent redemption rate is 0.025. For a $65 annual fee, the same returns are achieved with $13,000 annual spend. Thus, annual spend of about $20k or greater is required to justify paying the $95 annual fee to attempt to beat the after fee returns of a cash back credit card. AMEX fundamentally altered the SPG card value proposition be increasing the annual fee to require higher annual spend for similar returns. Return rate depends on annual spend for all rewards cards with annual fees.

    Surveys of the room rate divided by the points for a free night for a variety of Starwood hotels in California indicate that beating a 1.0% cash back card or getting close to the 1.5% return on the Quicksilver card is possible with many free night redemptions (but there are still many that don’t) but beating the nominal 2.0% return of the Double Cash card is much tougher with fewer redemptions exceeding that rate. Many redemptions do not beat the cash back cards.

    Thus, since my annual spending is balanced between cash back and points cards to avoid excessive point buildup subject to devaluation, it is unlikely that I will keep the AMEX SPG card with the annual fee increase. Since the card benefits result from spending, it is also likely that my hotel business will move elsewhere since I am no longer earning free nights with Starwood from credit card spend.

    The AMEX SPG value proposition was unique due to the lower annual fee, the point value, and the flexibility of the Starwood point program. The “benefits” do no offset the altered value for my situation.

    Hopefully, there will be legions of small business owners signing up for the card due to the free lounge access to replace the personal card users that leave the program.

  5. Does anyone know if the SPG Business AmEx only includes Sheraton Club Lounges, or will it include all SPG Club Lounges?

  6. Charging a foreign transaction fee made no sense for the SPG cards. It was somewhat insulting to get hit with that fee even when using the card at a foreign SPG hotel. These changes now make this card a strong option for use in connection with foreign travel.

  7. Hi Gary,
    My Amex Starwood personal has come due to renew. Any reason to keep it besides the two nights credit (I won’t need the nights as I can’t achieve Platnuim Status)? Also whatever the offer is for small business Saturday????

    I have the Starwood Business Card.
    Thanks in advance.

  8. I am seriously reconsidering SPG for me, since Citi Prestige/Premier have such a compelling product. One FF advantage was the 25% bonus on transfers but if they take too long to get and you miss getting a flight, it’s not much of an advantage The earn rate cannot compare to Citi .Citi transferred points in a few days, Chase in less than 24 hours, it’s been 8 days for SPG, but really I have no idea when I’ll get these points. This is for Krisflyer, I wonder if times are different for other airlines transfers.

    I’m not a sophisticated FF, but I’ve already moved the SPG card to the back of my wallet.

  9. @Gary continues to claim “[SPG AMEX cards] earn the most valuable hotel points currency. I use them for unbonused spend, because each Starpoint is worth 2.2 cents to me”, undeterred by a virtual Himalaya of evidence that shows the claim to be the biggest con the travel blogosphere.

    A starpoint may be worth 2.2cents to you but it a meaningless number. The reason the “value” of the starpoint is higher than those of most other loyalty currencies is simply arbitrary and not because the starpoint is worth more! By choice and arbitrarily, SPG decided to set their award scale to be just 1/6th that of HHonors and 1/2 that of Hyatt GP. Thus, if one defines the “value” of a loyalty point as the total cost of a stay in ca$h over the cost of the same stay in points, then based on exactly the same spend, starpoints would almost always give you a higher “value” than HHonors or Hyatt GP points because the denominator — the award costs in points — is always a much smaller number for SPG (smaller by factors 6 and 2, respectively). That is why it is much more meaningful to evaluate/compare hotel loyalty programs in terms of how much spend one needs to do afford a free night [but, of course, if one does that, it would show top-tier SPG awards to be the highest-priced in the business…by far, which would undercut the claim of how “valuable” a starpoint because even if a starpoint is ‘valued’ higher NUMERICALLY, it buys you much less when you go to redeem since the awards cost a LOT more!]

    To compare and make claim about how “valuable” a loyalty point is relative to others, one simply needs to take into account the relative ability to earn those points.

    So, because I earn 6x more HHonors points a pop with AMEX Surpass than I do starpoints with my SPG AMEX, the value of a starpoint in TERMS OF HHonors is 2.2 cents/6 = 0.36 cent/point, which is less than you estimate of 0.5 cent for HH point. Alternatively, in TERMS OF starpoint each HHonors point would be worth 0.5 cent * 6 = 3.0 cents (vs. 2.2 cents).

    See how the claim can be easily shown to be bogus, but you just wait: @Gary will ignore this evidence make the claim again the first chance he gets; it’ll be just a cut and paste, like he’s done thousands of times before…mindlessly 😉

  10. @DCS you continue not to read. Amex Surpass earns 3x on unbonused spend. At $0.004 per point that’s 1.2 cents in value per dollar spent on unbonused categories. I do not ever say you should use SPG Amex for all spend, where you can earn bonuses. But putting a dollar of unbonused spend on the SPG Amex is nearly twice as valuable as putting a dollar of unbonused spend on the Amex Surpass card.

    And much of the value of Starpoints comes from its transfers to airline partners.

  11. @Gary — More gobbledygook. Terms like “unbonused” are as meaningless as your claim about how the starpoint is the “most valuable point currency”.

    HH AMEX Surpass awards
    12 points/$ for on-property spend
    6 points/$ for gas, department store, gas spend
    3 points/$ for all else.

    SPG AMEX awards
    2 points/$ for on-property spend
    1 point/$ for all else

    For on property spend, the HH:SPG earn ratio is clearly 6:1.

    Because SPG awards 1 point/$ for every category but on-property spend, while the HH AMEX Surpass has a couple of categories beside the on-property spend, the mean of these categories, which is 5.5points/$, is what one compares vs. SPG’s “all else category”. Moreover, even if one considers only points earned through revenue stays, including elite bonuses, the ratio of HH:SPG point earning remains close of 6:1 — “unbonused” or otherwise. This difference in relative point earning simply must be taken into account in comparing or making claims about the “value” of loyalty points or relative merits of various programs.

  12. BTW, Hilton has as many as if not more transfer partners than SPG:


    I’d provided the link before but, predictably, you keep making it sound as if only SPG has transfer partners. Considering how easy one can HHonors points, transferring them to other programs when one needs to is a lot less “painful” than transferring those hard-to-earn starpoints…

    My UA Chase Explorer card offers me “more valuable currency” than constantly touted the SPG AMEX starpoint currency: I do not have to transfer the UA miles I earn with the Explorer to anyone. I just use them as they are on all 26 of UA’s *A “transfer” partners…

  13. Hilton has transfer partners but a very poor transfer ratio compared t Starwood. But you keep talking yourself into suboptimal choices 😉

  14. I was looking for your response concerning COSTCO dropping Amex. I am feeling that I will not be using COSTCO as frequently if that in fact occurs

  15. I currently have the personal SPG AmEx. If I get the business version is it possible to transfer my points to it and close the personal account without a loss?

  16. @Gary

    I have 3 Personal Amex cards and 1 business. I had heard the limit of cards you can have with Amex is 4, is this true?

  17. Clearly, DCS doesn’t get how this works. And, as far as I’m concerned, the primary value for my SPG points are airfare. I have 20 active cards, and use the SPG for almost all unbonused spend. I didn’t need a blogger to show me how or why, but they all confirm my personal experience.

  18. @DCS

    The particular comparison you make between using United miles to book alliance wide available awards and transferring Starwood points to their airline partners to book awards as means of determining value is a highly contrived presentation without grounding in reality.

    United Mileage Plus miles allow for the booking of award tickets on United as well as the award tickets released by their alliance partners for consumption alliance wide. Using Mileage Plus miles one can book from the total available catalog of United award tickets, plus they can book from all of the award tickets United’s partner airlines make available alliance wide. However United’s partners do no release their entire catalog of award tickets to the alliance – each airline holds back inventory for their own frequent flyer program.

    Starwood points are transferable to multiple airline frequent flyer programs. Each of those airlines then has their own set of alliance and non-alliance partners just like United. This allows a Starwood points user access to the private award catalogs of many different airlines in addition to their shared alliance wide award availability. In the end a Starwood points user has access to a larger overall inventory of award tickets than someone who only a single frequent flyer program – United or otherwise.

    The relative value of the points is an irrelevant discussion as the main issue is access.

    When I want to fly to a particular destination using miles the primary barrier to travel is award availability. In the perspective of a single airline strategy (like earning United miles) if there are no award tickets from A to B during the dates I want to go then I have no other options – that trip is not possible with points. However in the perspective of a transferable point strategy (like Starwood) if airline X isn’t showing any awards, maybe airline Y in the same alliance has some private awards I can access, or even airline Q in a different alliance all together may show awards. Airlines Y and Q may not have as good an award chart value as airline X but I then have the ability to decide if that particular award is a value I’m willing to pay rather having no choice at all.

  19. @Gary. — I will not keep demonstrating with simple math things that I’d already demonstrated. I did show that with just spending $25k on the Explorer and collecting the associated 10k bonus miles I achieve better value than someone earning 20k starpoints on the SPG AMEX and transferring them to an airline for a 5K bonus. The UA Explorer miles, moreover, are good on 26 *A carriers + UA without the need to transfer anything. You just use the miles. Period.


  20. @DCS spending a dollar less than $25k exactly on that card would be a waste and every dollar over 25k is a waste. A stronger case could be made for the value of the United Club card. But even that is worth less than the Amex Everyday Preferred.

    Still I think you overvalued United miles.

    You have access to Star Alliance only and only United’s chart for those awards vs all 3 alliances and some non-aligned carriers via Starwood (and other transferrable points currencies).

  21. I have a similar question to someone who posted earlier — any idea if Amex is going to up the Bonus points to 30K, as they’ve done in previous years during the summer months? I’ve been wanting to get the SPG Business, but have been holding off for a higher bonus. Do you know, Gary?

  22. @Laura

    My guess is that the changes to their cards were released now instead of a summer bonus.

  23. @Vinhsynd — The smart thing to do when playing the mile/point game is to pick a hotel loyalty program and a FF program and then to focus on accumulating as many points/miles as possible within those programs, consistent with achieving top elite status in both since benefits are greatest at the top. That starpoints can be transferred to airlines of different alliances sounds good on paper, but not very valuable for one who is smart about how they play the mile/point game.

    @Gary sez: “[S]pending a dollar less than $25k exactly on that card would be a waste and every dollar over 25k is a waste. A stronger case could be made for the value of the United Club card. But even that is worth less than the Amex Everyday Preferred.”

    Likewise, transferring less than 20K starpoints earned painstakingly as a dollar a point with the SPG AMEX does not earn one 20% bonus, thus limiting its “value.” However, I easily put $25K on the UA Explorer every year so it is a moot a point. In addition, UA Explorer earns more than the United Club card if one collects the 10K bonus @$25K spend. I have both UA cards so that as soon as I hit the $25K spend on the Explorer, I switch my spend to the Club card. I win and win…

    I have not modeled the Amex Everyday Preferred but if it is worth more than the Chase UA cards, then it is definitely also worth more than the SPG AMEX…

    The bottom line is that your claim about how the starpoint is the “single most valuable point currency”, like the one about “Hyatt offers the best suite upgrade benefit of any chain”, is antiquated and needs to be updated. You have been making these claims for year and keep making them despite the fact that a drastic change in travel/loyalty landscape has made such claims completely bogus! Time to catch up and update your tunes!

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