Originally Posted by
Colin
My educated guess is that SPG does not provide any compensation to hotels for cash & points redemption. The cash portion is all the hotel gets. Hotels still participate because the cash portion is incremental revenue for rooms that would otherwise go unsold, plus the hotel is hoping for revenue from incidentals. The local hotel managers probably think of offering cash & points in the same way they consider making inventory available to Priceline. Otherwise unsold. Get some revenue -- better than nothing. The advantage of Cash * points over Priceline is that cash & points less cannibalizes regular reservations.
To the best of my knowledge, the major difference for SPG hotels is that with a regular points reservation, the property can charge Starwood corporate the full rack rate if the hotel actually sells out that particular night - since they are obligated to make the award available as long as a traditional/standard room is remaining.
With C&P, the hotel can determine availability of this rate plan, which means they have to live with the standard redemption values even if they happen to sell out that night.