Originally Posted by ILUVCITIBANK

Well, I held my nose and voted starwood top program *** for 2006 ***. 2007 will likely be another story.

I had to remind myself not to look at 2007's changes and vote "true" 2006. So be it.

Now, for 2007...let me review already, in 30 days, starwood has so severely damaged their affinity program I am awestruck at the math. Please, math "majors" out there sharpen your pencil and tell me I have mis-calcuated:

a) effective loss of Continental as an airline partner. After all, who in their right mind would convert starpoints 2:1 to Onepass ? (ie 2 starpts = 1 onespass mile) ? Just as conversions to United, I suspect, went to nil in 2006 when that ratio went 2:1 (from 1:1), now we've lost a second major US carrier from viable conversions. The math here is a sickening 100% increase in starpoint to airline mile change. Ominous trend. Is starwood going to toss all airline conversion out like HHONORS did in 2006 ? If they allow EVEN ONE MORE major domestic US airline to go to 2:1, effectively they might as well. moving on...

b) creation of a new CAT 7 is a de facto devaluation of the starpoint, not to mention this (one day to be) infamous addition of a new CAT gives starwood more overhead now to bump up hotels for future years...I expect 2008 to be a true bloodbath, as if this year's new re-catagorization wasn't. In a surreal reflection, adding this CAT 7 may someday prove to actually release some of the pressure of upward migration, as one can guess CAT 7s won't get many award stayers this year...so if they desire award stayers to fill in the weaknesses (if any) of seasonal demand or perhaps slack paid travel, et al, guess they can slide back down the scale also for 2008 ? IOW - the award conversion rates for CAT 7 are so onerous that I can't believe many will do them ("many" is a relative term I realize). So CAT 7 properties had better hope for continued strong global economies. I assume the fat cat CEOs making the bizzillions in stock option profits are the people who pay $4-$6K a night for an overwater bungalow in Bora Bora, no ? So much for award stayers at CAT 7s.

AND MOST OBVIOUSLY:
c) massive devaluation of the underlying value of the 2006 starpoint we all worked so diligently to accumlate, via last night's re-catagorization (ie most properties went up one CAT level or more) that far, far exceeds rates of inflation, and, I suspect, because of the inherent flaw of having only six categories (ok, now seven), also far far exceeds THE PERCENTAGE of INCREASE of the avg room rate (which we're told is the benchmark that starwood uses to determine CAT changes and positioning).


STARWOOD FLUNKED THE SMELL TEST
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*** Starwood, its the PERCENTAGE INCREASE issue that we're all having problems with, not your right to enjoy the fruits of an improving economy and resultant higher ROI on your affinity (ok, starpoint profit center) program.


DO THE MATH
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Let's agree anecdotally that AVG room rates/nt might have risen 15-20% in 2006 due to a strengthening travel and business climate (good for starwood I say, FWIW)...BUT a corresponding bump from a CAT 4 to a CAT 5 means as much as an incredible 60% increase in required starpoints to secure the now CAT 5 property for a FREE NIGHT - WEEKDAY (16K/nt versus 10K/nt, as determined by this math: ((16K-10K)/10K)).

To make one even sicker, let's analyze the CAT 5 to CAT 6 property: 12K (CAT 5) now requires 20K (CAT 6). I compute this as a stupifying 66% increase, based on 8(K)/12(K).


FLAWED PROGRAM ITSELF ?
Fundamentally, I conclude starwood has a flawed program in the sense that they only had six categories to work with and a formula that allowed for mandatory migration upward to a NEW CAT based on AVG room rates which did not mathematically correspond equally to award level requirements. Whew - that was a mouthfull Put another way - starwood's formula for setting CAT levels, as I understand it, is based on room rate increases that contractually required starwood to raise the CAT level for a property, but that doesn't take into account real-world inflation, which we consumers rely on as a "smell test" for value, or consider these onerous increases of 60% and up are simply not justifiable from a consumer's perspective.

HOW TO MITIGATE THE DAMAGE ? Dunno - I'm lost this time for recommendations.

So, starwood had their "perfect storm" and I don't think they came through very well. One would have expected some "positive news" to be released simultaneously w/ the bad, but it is eeriely quiet on the spg.com web page

For the record: William, I feel for you having to be the "public frontrunner" for starwood on this major fiasco, not unlike Tony Snow at a bad press conference. Stay tough, but perhaps ask yourself, from our perspective, how you would feel if your "bank" of starpoints just underwent a 60-66% devaluation (for mid-CAT level properties (resorts) which I prefer and target). Unless I blew the math, this is what just happened.