Originally Posted by
r415
Both your examples assume that the redemption rate for SPG properties is going to be converted at the same rate as the SPG points. This is very unlikely. Whether right away or the following year, Marriott will almost certainly assign higher values to the converted properties of any real worth (perhaps sparing some crappy Cat 2 properties that nobody really would use points at).
I think it's very likely they will convert at the same ratio. If they convert legacy SPG accounts at a lower ratio than they convert SPG property points costs they'd outrage the SPG customer base. If they convert accounts at a higher ratio they'd be needlessly adding liability to their books. I don't see any rationale for either increasing or decreasing the spending power of legacy SPG accounts at legacy SPG properties. Of course they could devalue points at some time in the future, but hotel loyalty programs have been doing this since they began.
Originally Posted by
r415
Financially, if you did assume they converted at the same rate, it probably makes a lot of sense for Marriott to pick a ratio above 3:1, as it would allow them to lower their total balance sheet liability, since there are a lot more outstanding legacy MR points. But I don't think redemptions will convert at the same rate as legacy SPG points, so this point is kind of moot.
Actually, using a higher conversion ratio
increases their liability. Converting legacy SPG points to MR points at a high ratio creates a high amount of MR points and thus a high liability.
Originally Posted by
r415
Given that you earn five times as many legacy MR points per dollar spent (ignoring credit card and elite bonuses), any conversion ratio below 5:1 is basically a slap in the face, with Marriott telling SPG customers that their dollars spend is not valued as much as a Marriott customers' dollars spend. IMHO, this is not a great way to retain your premium high-spending SPG customers.
You're assuming that the rate at which you earn points has something to do with the value of those points when it comes to redeeming them. It doesn't. The real value of a dollar spent at MR versus SPG is based on what you can do with the points earned. Legacy MR properties generally cost roughly 2 to 3 times as many MR points as comparable legacy SPG properties cost in SPG points. So while you earn 5 times as many points per $ at MR properties (ignoring bonuses, promos, welcome gift, etc.), the value of those points is not 5 times higher than what you earn per $ spent at legacy SPG properties.