jpdx

Many of us were pleasantly surprised when the1:3 conversion rate was announced. The feared devaluation of our Starpoints had been averted, and in fact, there were lots of arbitrage opportunities, allowing stays at high category Marriott hotels for much less than comparable Starwoods. But I'm beginning to think that the 1:3 conversion was too generous, and we're seeing the effects:

- The upcoming promo of 250 points/nt (after 3rd night, participating properties) is widely seen as pathetic. For Marriott folks, it's 750 points, not amazing, but doesn't look quite as terrible.
- During the recent annual category adjustment, SPG had a normal some-properties-going-up-some-down year, while Marriott had a bloodbath with about 4 properties going up for every property going down. There's still an imbalance between SPG and Marriott hotels, and I can't imagine Starriott will close the arbitrage opportunities by lowering the categories of SPG properties. So we'll probably continue to see brutal increases on Marriott redemption categories.
- We're used to Plat amenities of 500/250 Starpoints, MAGC of 500/250, and BRG reward of 2000. Marriott sorta matched the latter (5000 Marriott points) but in all other areas, we're in for a world of hurt, with potential earnings reductions of 66%.

So while the 1:3 conversion ratio was a pleasant surprise when it was announced, I wonder if Marriott ended up shooting itself in the foot. They created a redemption category differential (with arbitrage opportunity) that they now have to close -- this will hurt their own loyal members. And SPG loyalists are bound to be upset by the reduction in points earning. Marriott may well have felt compelled to go with the 1:3 ratio in order to overcome fears of Starwood loyalists, but it seems like going forward, the 1:3 ratio will create much greater problems for them than 1:2 or 1:2.5 would have done.