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Does the Accor earning and spending structure means it is annually devalued?

Does the Accor earning and spending structure means it is annually devalued?

Old Jun 3, 18, 7:01 am
  #1  
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Does the Accor earning and spending structure means it is annually devalued?

Just a (Sunday) thought really...

Most hotel (and airline) reward schemes I participate in give a points reward that can be redeemed for a , or towards, a night. Of course , the scheme can and do change the rates so maybe the below doesnít matter.

It occurred to me that the Accor scheme is somewhat of an anomaly in that it gives a fixed value return (Ä40 for 2000 points) and I canít recall when it was last restructured. Essentially the value of what you recieve is eroded, in a hidden manner, every year as hotel rates suffer inflation.

I basically use Accor for the status benefits and think of the earnings as a bonus (as opposed to IHG where I consider it the opposite).

Anyhow interested in any thoughts or discussion.
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Old Jun 3, 18, 8:40 am
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No annually. Just like cash its value slowly gets inflated away. Not always smoothly, but a continuous process.
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Old Jun 3, 18, 9:04 am
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You're right, Accor points are indexed to the euro so there's no inflation protection. As the euro loses value, so do your Accor points.

Anyways, two quick points on this:

1.) Euro-area inflation rates have been VERY low for quite some time. Currently, the inflation rate is at 1.9 percent on an annualized basis, and that's the highest rate we've seen in years. (It's most likely also a temporary high that's mostly due to the current spike in oil prices.)

Roughly speaking, you can assume that inflation deteriorates your points value by around 1.5 percent p.a. That's not much. Again, my understanding is the points value is tied to the euro. Therefore, if you're mostly redeeming for hotels that use other currencies, you're bearing some exchange-rate risk as well.

2.) Other programs most certainly change the terms of redemptions to adjust for inflation. But they do it at discrete intervals which are extremely hard to anticipate. In fact, as a customer, Accor's structure might be preferable. It's easier to predict. With other programs, you might be hit by, say, a 10 or 15 percent devaluation every few years which might come as a total surprise to you.
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Old Jun 3, 18, 9:17 am
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Don't forget your earned points increase just the same way hotel prices do - yoy.

So you will also get to your eur40 quicker than before.
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Old Jun 3, 18, 9:24 am
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Originally Posted by 1flyer View Post
You're right, Accor points are indexed to the euro so there's no inflation protection. As the euro loses value, so do your Accor points.

Anyways, two quick points on this:

1.) Euro-area inflation rates have been VERY low for quite some time. Currently, the inflation rate is at 1.9 percent on an annualized basis, and that's the highest rate we've seen in years. (It's most likely also a temporary high that's mostly due to the current spike in oil prices.)

Roughly speaking, you can assume that inflation deteriorates your points value by around 1.5 percent p.a. That's not much. Again, my understanding is the points value is tied to the euro. Therefore, if you're mostly redeeming for hotels that use other currencies, you're bearing some exchange-rate risk as well.

2.) Other programs most certainly change the terms of redemptions to adjust for inflation. But they do it at discrete intervals which are extremely hard to anticipate. In fact, as a customer, Accor's structure might be preferable. It's easier to predict. With other programs, you might be hit by, say, a 10 or 15 percent devaluation every few years which might come as a total surprise to you.
Thank you. Helpful. Iíd just been pondering on it a little to see if anyone else realised!

Of course the fact there is inflation erosion doesnít protect you against Accor changing the rates , but weíll assume they are happy with redemption rates and donít feel the need for now at least given the gentle ongoing process.

I was actually more thinking / hoping (!) the other way. As I mentioned I canít recall when the earnings rate was set (Iíve been a member around five years and I think itís always been the same), but thereís no doubt Ä40 doesnít buy you as much hotel room as it used to. And I suppose if you donít like it there are other options with conversion to airline schemes etc that are not cash equivalent redemptions.

Itís also got me thinking that having a big pile of Accor points, if you plan on redeeming in properties outside the eurozone, also exposes you to FX.

Last edited by Woodbinerich; Jun 3, 18 at 9:27 am Reason: Typo
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Old Jun 3, 18, 9:26 am
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Originally Posted by gilbertaue View Post
Don't forget your earned points increase just the same way hotel prices do - yoy.

So you will also get to your eur40 quicker than before.
Iím not smart enough to do the exact maths to see if you lose a bit or not , but certainly thatís true. Good point .
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Old Jun 3, 18, 9:32 am
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Originally Posted by gilbertaue View Post
Don't forget your earned points increase just the same way hotel prices do - yoy.

So you will also get to your eur40 quicker than before.
I thought he was talking about existing points.

The fact that you earn more points when there's inflation is kind of trivial. It happens in all programs in which earnings are revenue-based. Hence there's a need to devalue points in all of those, whether it's IHG, Delta, or Starriott. (Otherwise, over time, people would earn more points even if they don't increase spending in real terms.)

What makes Accor unique (to the best of my knowledge) is that the spending structure is also revenue-based. Hence, there's no need to devalue points at discrete points in time. It happens automagically.
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Old Jun 4, 18, 12:01 am
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Originally Posted by Woodbinerich View Post


Itís also got me thinking that having a big pile of Accor points, if you plan on redeeming in properties outside the eurozone, also exposes you to FX.
This is, IMO, the biggest issue. In the past you had at least the option to chose USD OR EUR. Now its just EUR. I typically only redeem my points when I travel to the EU to avoid the Forex losses.
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Old Jun 4, 18, 3:08 am
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Originally Posted by gilbertaue View Post
This is, IMO, the biggest issue. In the past you had at least the option to chose USD OR EUR. Now its just EUR. I typically only redeem my points when I travel to the EU to avoid the Forex losses.
I second that ^
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Old Jun 4, 18, 3:36 am
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Originally Posted by 1flyer View Post
I thought he was talking about existing points.

The fact that you earn more points when there's inflation is kind of trivial. It happens in all programs in which earnings are revenue-based. Hence there's a need to devalue points in all of those, whether it's IHG, Delta, or Starriott. (Otherwise, over time, people would earn more points even if they don't increase spending in real terms.)

What makes Accor unique (to the best of my knowledge) is that the spending structure is also revenue-based. Hence, there's no need to devalue points at discrete points in time. It happens automagically.
I see it differently. Considering points expire after 1 year with no activity, the real lifespan of the points is 365 days. I don't see much of a devaluation to consider of when you redeem your points within 365 days of obtaining them. Of course some people have certain goals they want to achieve which may take some time and in that case may need to consider some form of devaluation. But if you earn and redeem in the same 12 month cycle, it's negligible.
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Old Jun 6, 18, 2:30 pm
  #11  
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Because both the earning and redemption side are revenue based, you have a fixed reward rate on your spend that depends on your elite level. The earn rates changes last in 2016/17.
Because it is revenue based, you should use the points as soon as you have 2,000 points - unless you are gunning for a promotion where nights partially paid with points don't count.
If you do earn & burn quickly, your FX or inflation risk is much lower than the devaluation you get in the other hotel programs...
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