Why is MR -> SPG points so bad?
Oct 26, 2007, 4:14 pm
#1
Original Poster
Join Date: Apr 2000
Location: Fort Myers, FL
Programs: Hilton Gold, SPG & IHG Plat, & every airline program that I can join
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Why is MR -> SPG points so bad?
I am wondering why 1000 MR = 333 Starwood Points, when the SPG Amex is 1 or 1.15 SPG points per $? Since there are few double MR promos on the Amex Plat card it seems that they would come up with a higher ratio on the transfers. I would move them all at 1-1....
Just my ranting......
JudyJFLA
Just my ranting......
JudyJFLA
Oct 26, 2007, 4:44 pm
#2
Join Date: Dec 2005
Location: SLC
Posts: 229
This is just speculation, but it wouldn't surprise me if SPG has been pressured by their airline partners to "limit" their participation in MR in this fashion.
Having a 1:1 transfer ratio from MR to SPG would mean that a number of airlines (such as AA) would effectively become MR partners. While no one outside of the airlines and the banks can know for sure, I assume that many of the contracts which govern frequent flyer credit card arrangements prohibit the airline from participating in another credit card points-earning scheme such as MR.
Having a 1:1 transfer ratio from MR to SPG would mean that a number of airlines (such as AA) would effectively become MR partners. While no one outside of the airlines and the banks can know for sure, I assume that many of the contracts which govern frequent flyer credit card arrangements prohibit the airline from participating in another credit card points-earning scheme such as MR.
Oct 27, 2007, 6:59 am
#3
Join Date: Dec 2006
Location: Jacksonville, Florida
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Nice thought, but if the airlines were pressuring anyone behind the scenes, they'd probably want to increase and not decrease the value of the MR to *wood points conversion.
You are forgetting that the airlines actually sell their miles to credit card companies, starwood, etc. at a very significant profit. From the airlines' perspective, the more the merrier.
The only reason some carriers don't accept MR transfers is because they are barred by contract from doing so. They signed agreements with banks other than Amex to provide their branded credit card products, and sometimes, like in AAs contract with Citibank, the contract is exclusive and the carrier cannot directly participate in any competing credit card rewards redemption program.
Other times, like with Continental and Chase, the airline can still sell points to other programs even though chase is the "official" CAL card. It all depends on the strength of the bargaining positions when the contract was formed. In AA's situation, their contract with citibank was one of the earliest such arrangements, being signed in 1982/1983 IIRC. Though very lucrative for the time, AA didn't grasp the full value there and signed a 10-year exclusive contract renewable several times at citi's option. The other carriers learned from AA's situation, and reserved the right to sell points to anyone, but giving a points discount to their partner-bank.
In fairness to citibank, nobody really knew the value of frequent flyer programs at that time, but looking at it today it is safe to say that AA really gave away the farm. This is also one area were bankruptcy would have REALLY helped AA...look at USAir, for example: They had an exclusive arrangement with Bank of America left over from the 1980s when NCNB first signed them. They were able to reject the contract in BK court, forcing BOA to renegotiate it with them and USAir came out waaaay ahead. They now have two competing credit card programs, through both BOA and Barclay's Bank, throwing money their way at the same time.
As to starwood, the reason starwood devalues regular MR points is simple: They have their own branded Amex product, on which they make residuals for every card issued under the program. If the redemption ratio with the regular Amex MR program was anywhere close to the value of the Starwood-branded Amex, then nobody would have an incentive to get the Starwood card.
You have to look at the whole picture in the industry. I know everyone holds out hope for AA becoming a MR redemption partner, and I bet AA would love to do it, since they'd make a fortune. But they can't, at least not until their contract with Citibank expires. The starwood thing is similar, but more self-protective.....as long as they have their own branded credit card, they aren't going to start reducing the incentive to sign up for that product by giving comparable redemption rates to other products.
You are forgetting that the airlines actually sell their miles to credit card companies, starwood, etc. at a very significant profit. From the airlines' perspective, the more the merrier.
The only reason some carriers don't accept MR transfers is because they are barred by contract from doing so. They signed agreements with banks other than Amex to provide their branded credit card products, and sometimes, like in AAs contract with Citibank, the contract is exclusive and the carrier cannot directly participate in any competing credit card rewards redemption program.
Other times, like with Continental and Chase, the airline can still sell points to other programs even though chase is the "official" CAL card. It all depends on the strength of the bargaining positions when the contract was formed. In AA's situation, their contract with citibank was one of the earliest such arrangements, being signed in 1982/1983 IIRC. Though very lucrative for the time, AA didn't grasp the full value there and signed a 10-year exclusive contract renewable several times at citi's option. The other carriers learned from AA's situation, and reserved the right to sell points to anyone, but giving a points discount to their partner-bank.
In fairness to citibank, nobody really knew the value of frequent flyer programs at that time, but looking at it today it is safe to say that AA really gave away the farm. This is also one area were bankruptcy would have REALLY helped AA...look at USAir, for example: They had an exclusive arrangement with Bank of America left over from the 1980s when NCNB first signed them. They were able to reject the contract in BK court, forcing BOA to renegotiate it with them and USAir came out waaaay ahead. They now have two competing credit card programs, through both BOA and Barclay's Bank, throwing money their way at the same time.
As to starwood, the reason starwood devalues regular MR points is simple: They have their own branded Amex product, on which they make residuals for every card issued under the program. If the redemption ratio with the regular Amex MR program was anywhere close to the value of the Starwood-branded Amex, then nobody would have an incentive to get the Starwood card.
You have to look at the whole picture in the industry. I know everyone holds out hope for AA becoming a MR redemption partner, and I bet AA would love to do it, since they'd make a fortune. But they can't, at least not until their contract with Citibank expires. The starwood thing is similar, but more self-protective.....as long as they have their own branded credit card, they aren't going to start reducing the incentive to sign up for that product by giving comparable redemption rates to other products.
Oct 27, 2007, 1:01 pm
#4
Join Date: Nov 2001
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Oct 28, 2007, 8:34 am
#6
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Nov 5, 2007, 11:02 pm
#8
Join Date: Aug 2007
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Could anyone confirm how to get this promotion with 2 to 1 ration for SPG points? It said it is targeted and only apply to addressee. Can I just registered and get it? How to verify that I get it?