jpdx

We've played this game in the past, and I enjoy it. So: What are your 2016 category change predictions?

I spent a couple of hours today looking at my favorite hotels and making some speculative points/C&P bookings. Here are my guesses for the hotels I'm interested in staying at in 2016:

7->6: SR Mallorca, SR Istanbul, SR Deer Valley

6->7: Vedema, Park Tower, W Verbier, SLS, Canyon Suites, W Amsterdam, W Leicester, Vana Belle, Pine Cliffs, Liberty, Suiran, SR Langkawi

6->5: Arion, SR Bangkok, SR Sanya, Goldener Hirsch

5->6: W Scottsdale, Augustine, Sheraton & Westin Maui, SR Osaka, Park Lane, Westin Singapore, US Grant, Westin Tokyo

5->4: Sheraton & LM Dubai, Sheraton Hiroshima, National & Palace Moscow, Brazil Sheratons, Sheraton Singapore

4->5: Westin Kyoto and Osaka, Lake Como, plus lots of domestic properties I don’t stay at, but that seem to be in the $300 range pretty consistently, like Sheraton Austin, Westin San Diego

4->3: various Brazil, Canada and Europe properties, Sheraton Macau, Westin KUL, LM Saigon, Sheraton Jakarta

3->4: Westin Tashee, Grand Bratislava

I’m not very familiar with Cat 1/2, and the rate ranges harder to figure out here, but I’d expect various Canada, LM KUL and KK to drop, and Sheraton Kyoto to increase.

remymartin

Could you add city names for "Park Tower", "Park Lane" and SLS, as there are >1 of each?

thomasito

W Verbier is already Cat 7, since its opening.

3rdworldresident

W Verbier is already a Cat 7 hotel and for sure it will remain the same this year. (just my speculation)

spgplat21

I doubt you'll see SR Deer Valley ever go back to a 6, the rates are usually $1200+ in the winter now. Back when it was a 6, you could get it for under $600 if you were flexible with the dates.

Also, is the Liberty hotel you mentioned the one in Boston? If so, I don't see any way that hotel or the SLS Beverly Hills move up to a Cat. 7. Those hotels can often be had for $200-300/night. I know they can get expensive some times, but the Cat. 7 properties are almost always super expensive and are usually in a league of their own. The current Cat. 7 hotels I can think of off the top of my head (e.g., SR New York, Chatwal, or SR San Francisco) are almost always $400-500+ and sometimes much higher. I think there is a better chance of the Chatwal or SR San Francisco moving down to a Cat. 6 than the others moving up, but I've been wrong before.

I think the list is pretty good though. The Sheraton Austin is terrible but it's rates seem to be closer to Category 5 lately. I also think the US Grant could be moving up after the renovation as the rates seem to have gone up quite a bit there.

And who knows what the effect of the strengthened $$ will have on international properties. I would think you'd see a lot of downward movement in Europe, Canada and Mexico.

el_tigre

Keep in mind the projected ADR to determine category levels is calculated in US dollars. The important question is what kind of currency conversion formula Starwood uses. Whatever it is, I am guessing it is determined no later than January 1 on any given year. Given that, it is going to be very tough for a huge chunk of international properties to move up given how much stronger the dollar has become over the last year and a half.

Take countries that use the Euro for example. The Euro hovered above 1.30 per dollar for most of 2014, when it then collapsed the last third of the year, but still not falling below 1.20. That was enough for widespread category drops in the Eurozone and, I believe, not one property went up. Since then, the Euro has slid even more, averaging around 1.09 per dollar in 2015. So that would make any increase in the Eurozone unlikely for this year. For any particular property, rates would have to overcome that additional ten percent in loss of currency value in addition to the amount their ADR would have to increase to reach the next category.

So I just don't see the Vedema, Pine Cliffs, etc. moving up. I can maybe see the W Amsterdam move since it is not uncommon for new properties to figure out their own demand. I think the OP hit a lot of the European hotels that will move down, but it should be much more than that. I have a feeling the Danieli is very likely to drop to a cat. 6 too.

As for the London properties, that is a bit trickier. The pound has lost about 6% of its value over the last several weeks, but that may be too recent for it to be a factor for this year. I wouldn't be surprised either way.

I don't see the amount of movement the OP sees in the Japanese properties. There might be 1 or 2 that could move up, but it won't be 4+.

Although I think the OP is unfortunately going to be right given they are among the most popular redemptions, I feel there's no way the Sheraton and Westin Maui should be moving up. Both of them have rates that hover around the mid $300's for most of 2016. If they move to cat. 6s, that means it will be near impossible to get anywhere close to two cents per point value out of either property, which is sadly a growing trend in Hawaii overall.

3Cforme

That's a logical guess given the weakening of the loonie to $US but I somehow suspect that the conversion of historical & projected average daily room rate to award bracket will use a rate less favorable for starpoint redemptions than the bank rate available today. Prices are pretty sticky coming down.

WheelsFirst

SR Deer Valley won't be moving down, way too much high-end demand in that area and it's the only lux hotel in DV even available on any type of points system.

jpdx

There are several Cat 7s that have ridiculous low season rates, and lengthy low seasons at that ... for instance the Caresse is $140 for March and April, Cervo is $160 from October through April, W Verbier used to be $250 for several months during the shoulder seasons. Deer Valley has $250 rates in April, May, September, and $350 rates in summer. Other Cat 7s (Venice, Geneva, Istanbul) have lows in the $250 range, but on limited dates. Cat 6 can drop to the $100 range, e.g., Arion at EUR91 in Jan/Feb 2017. I'd estimate that half the Cat 6 hotels have at least some dates with lows in the sub-$200 range.

Of course we don't know how all this factors into SPG's average rate calculations, so it's entirely possible that the high season rates at Caresse or Cervo warrant these hotels being Cat 7, even though the low season rates are ridiculous. And maybe there is some sort of fudge factor that keeps hotels in their respective category to limit high season redemptions.

True, and it's worth keeping in mind that the Euro's drop from the $1.30s to the current level was not included in last year's category adjustments. From that perspective alone, we should see a big downward shift in European properties. (Keep in mind that my list includes hotels I like and consider staying at; the vast majority of hotels that I have no interest in isn't included).

Westin Tokyo is an example of a hotel that could either be a great value Cat 5 or a poor value Cat 6. Their rates have been inching up significantly, so I'd say it'll go back up to cat 6. SR Osaka came in overpriced at Cat 6, rightfully dropped to Cat 5, and now rates seem through the roof for much of the year, so I'd be very surprised to see it remain at Cat 5. The Westin in Kyoto also has much higher rates, so I'm fairly certain about increases there, as well. Westin Osaka is a strong maybe, as is Sheraton Osaka (back to cat 3).

I'd be surprised if the Maui properties remained at Cat 5, given that the Oahu ones moved to Cat 6, with very similar rates. I'd think the Maui rates (~$300-ish and up) warrant a move to Cat 6, and SPG may also want to limit Maui redemptions (I'm sure a lot has shifted away from Waikiki).

MSPeconomist

However, Westin Tokyo is dated and not in a particularly good location. Surely they're losing to the Andaz, for example.

I could envision Starwood not of making a lot of category changes in anticipation of the Marriott merger.

Hotel des Indes could drop by one; they were deeply discounting rooms toward the end of the year.

Otherwise I don't see a lot of foreign properties moving up (since the dollar has been strong and this is generally expected too continue), although depending on predictions for the Chinese (and other Asian) economy, some of those hotels could drop down one or two categories.

jpdx

Age, location, and competitive situation do not matter (allegedly) for SPG category assignments. They are based on revenue rates only, which for Westin Tokyo rarely drop below $250 for entry-level rooms, and are often $300 and higher.

There are tons of old, run-down hotels that elicit a "there's no way this should be a Cat XYZ" response, but that doesn't change how they're categorized. Of course there are some hotels like SPK Honolulu, which should be Cat 2 based on the property condition and no more than Cat 4 based on rates, yet miraculously are categorized as 5. So potentially the "proprietary formula" allows for a certain fudge factor, which might in this particular case shield the property from excessive redemptions from unwitting guests who wish to avoid the neighboring Cat 6 hotels.

spgplat21

Totally agree, my point was mainly focused on the fact that the peak season winter rates at the SR Deer Valley are almost twice now what they were a few years ago, and they seem to be a little higher each year. So unless the underlying calculation changed, I don't think the hotel moves down because all the inputs seem to have only increased in the past year.

My second comment was in regards to the liberty hotel and focused on cat 7 properties in large us cities, all of which that I've been to seem to have much higher rates than the liberty.

howtofreetravel

What if a hotel has high rates but low occupancy ? does that factor into the rating?

clublounger

The result of that is usually the GM losing his or her job.

craigthemif

(Sheraton) Park Lane in London is definitely going to go up in Category now that many of the rooms have had their renovations completed.