Does the Accor earning and spending structure means it is annually devalued?
Jun 3, 2018, 6:01 am
#1
Original Poster
Join Date: Jan 2011
Location: London, UK
Programs: BAGGL, A3G, Accor Gold, Hilton Diamond, IHG Diamond, LHW Sterling
Posts: 1,308
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 doesn’t matter.
It occurred to me that the Accor scheme is somewhat of an anomaly in that it gives a fixed value return (€40 for 2000 points) and I can’t 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.
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 doesn’t matter.
It occurred to me that the Accor scheme is somewhat of an anomaly in that it gives a fixed value return (€40 for 2000 points) and I can’t 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.
Jun 3, 2018, 8:04 am
#3
Suspended
Join Date: Sep 2017
Programs: M&S, Radisson
Posts: 758
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.
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.
Jun 3, 2018, 8:24 am
#5
Original Poster
Join Date: Jan 2011
Location: London, UK
Programs: BAGGL, A3G, Accor Gold, Hilton Diamond, IHG Diamond, LHW Sterling
Posts: 1,308
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.
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.
Of course the fact there is inflation erosion doesn’t protect you against Accor changing the rates , but we’ll assume they are happy with redemption rates and don’t 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 can’t recall when the earnings rate was set (I’ve been a member around five years and I think it’s always been the same), but there’s no doubt €40 doesn’t buy you as much hotel room as it used to. And I suppose if you don’t like it there are other options with conversion to airline schemes etc that are not cash equivalent redemptions.
It’s 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, 2018 at 8:27 am Reason: Typo
Jun 3, 2018, 8:26 am
#6
Original Poster
Join Date: Jan 2011
Location: London, UK
Programs: BAGGL, A3G, Accor Gold, Hilton Diamond, IHG Diamond, LHW Sterling
Posts: 1,308
Jun 3, 2018, 8:32 am
#7
Suspended
Join Date: Sep 2017
Programs: M&S, Radisson
Posts: 758
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.
Jun 3, 2018, 11:01 pm
#8
Join Date: Jun 2007
Location: ASIA
Programs: TK Elite, ALL Plus Diamond, Marriott Platinum, Hertz PC
Posts: 3,530
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.
Jun 4, 2018, 2:08 am
#9
Join Date: Aug 2015
Location: Wellington/Jakarta
Programs: Accor+ Platinum, Honors Diamond, SPG/MR Gold, IHG, KrisFlyer, Airpoints, Qantas FF, Enrich, SkyMiles
Posts: 480
Jun 4, 2018, 2:36 am
#10
Join Date: Jun 2007
Location: ASIA
Programs: TK Elite, ALL Plus Diamond, Marriott Platinum, Hertz PC
Posts: 3,530
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.
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.
Jun 6, 2018, 1:30 pm
#11
Join Date: Feb 2013
Location: SFO, MNL, SIN, HAM
Programs: UA GS, SQ PPS, IHG Plat Amb, Marriot Gold, Hilton Gold, Club Carlson Gold, Accor Plat
Posts: 488
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...
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...
