Preview 2016 hotel category changes

 
Old Feb 18, 16, 11:55 am
  #31  
 
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Originally Posted by joshua362 View Post
A monetary system (such as the US) doesn't cause the pile of cash under your mattress to devalue by 20% over night (the critical move from Cat 5 to Cat 6)...

I agree there is nothing to do but smile, smile, smile

And burn before you can be burned but some of us just can't get up and go that often due to life's circumstances.
Well - Argentina recently devalued 30% overnight (I know I know, it was already trading there on the black market - but they did once upon a time redenominate foreign deposits into pesos overnight which ended up being the same thing!)

Anyway, to the posters talking about the rationale behind category pricing - in fact, everyone is partly right: it is a combination of factors that include redemption demand, ADR and the USD exchange rate (in the case of non-US properties).

The first thing to do is not forget that MR needs to operate profitably - it acts as a secondary commission on properties by forcing all properties to purchase points based on spend from Marriott at a pre-determined rate. When people make redemptions, a fixed number of points are debited from an account, but Marriott make a cash reimbursement to the property. So obviously to make the thing profitable, the revenue gained from selling points to hotels to put in customer accounts needs to outweigh the actual cash cost incurred in paying hotels when customers use those points. Simple enough except:

The redemption price to customers is fixed every year at a certain amount of points, but the reimbursement to hotels is recalculated monthly based on a formula that depends on the trailing 12-month ADR: that way a new hotel can have a category based on their forecast ADR which then gets adjusted very quickly next customer reprice; also a well performing hotel is not forced to be stuck with a poor performing segments (Rewards). The rewards system is sold to franchisees and owners as a way to monetise spare inventory - that means for them to be happy, the rewards revenue stream has to be quite neutral to performance, i.e. the rate has to be in line with the overall rate performance of the hotel.

Additionally, USD is the Marriott operating currency - hotels get billed by Marriott in USD (i.e. the points are sold in USD), but the reimbursement is based on local currency ADR. Thus you can get a situation where local ADR has stayed the same, but USD has weakened with respect to that currency, and so costs to Marriott have increased in USD which are passed on in the form of higher redemption prices.

As a hotel's overall demand increases, its ADR should also increase - thus precipitating a change in the required redemption price before Marriott starts to lose money - the hotels themselves don't care, because Rewards reimbursement rates are so low that even associate rates are more expensive and it's sold as selling spare inventory: pricing changes are always made with the aim of making sure Marriott doesn't lose money on the points sale business.

If a hotel is getting a lot of redemptions - this can easily be picked up by Marriott and thus a tweak on their end (jacking up the points price) means they can either reduce the amount of redemption stays (so more room for revenue guests - although that can always be done anyway), or more usually, Marriott makes more cash. Simple supply and demand: except their costs don't change (unless in the reimbursement formula there are additional payments if a hotel is accepting Rewards bookings when running at a specified capacity, or a lot of rewards bookings), so it's just pure profit.

The sweet spot then is to find a hotel whose rates are creeping up consistently (and remember the rates the calculation is based on is a sum of the average hotel ADR across all segments, not just ones visible on the website which is a small, expensive subset of guests) before it comes to annual repricing, because Marriott doesn't yet operate a fluid point for cash redemption system.

There is no way that it will move to a 3-5 year evaluation system - Marriott operates in too many countries with too many properties to be that inflexible. If anything, it would move to a more dynamic pricing system (even though I think that's unlikely as well). Franchisees and Owners don't care, because they get no say in the matter anyway: commission point costs and reimbursement formulae are baked into the management contract.

Last edited by eternaltransit; Feb 18, 16 at 12:01 pm
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Old Feb 18, 16, 12:39 pm
  #32  
 
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Originally Posted by joshua362 View Post
A monetary system (such as the US) doesn't cause the pile of cash under your mattress to devalue by 20% over night (the critical move from Cat 5 to Cat 6)...
OK, so unlike MileageGoblin it appears you would prefer smaller changes more often, more in line with monetary inflation. For example 5 -> 5.1, then 5.1 -> 5.2, etc. over 5 or 10 years in half or 1 year increments where it goes from cat 5 to cat 6 with approximately 1.8-3.7% increases each year, more gradual in line with monetary inflation.

This has been one of my observations every year as to why people get so bent out of shape; they don't get bent out of shape over grocery prices going up, or hotel prices increasing exponentially as they have been the past 5-7 years (doubling), but then again they are gradual increases. And for those of you whose employers pay your for your hotel, you probably haven't noticed, yet you have benefited by earning a lot more points. I'm strictly a leisure traveler and am painfully aware of hotel price increases.

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Originally Posted by MileageGoblin View Post
Here's an idea. How about getting your incompetent MR team find a way to tweak the system with the franchisees and owners to do this every 3-5 years instead of this ridiculous annual charade?
OK, so unlike Joshua you would like less frequent changes, like every 3-5 years, but more hotels changing, and with the unintended but not unanticipated consequences of much larger category changes like from Cat 4 to Cat 7 or 8. For example in 2014 there were about 1000 hotels that changed their categories, in 2015 about 1500 and this year about 800. So if done every 3-5 years, then let's say anywhere from 3000-5000 hotels would need to change their category; with some increasing, or decreasing (don't hold your breath), multiple categories.

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Hmm, I kind of like the system just the way it is.

More frequent with smaller incremental change means we would have to put up with 10 times as many redemption levels and would make the program much more complicated than it already is.

Less frequent would mean folks going ballistic over 30%, 40% or even 50% inflation in number of points required for a stay when the changes do occur.

Be careful what you ask for. Obviously neither of you would be happy with the other's vision of the program.

The current program, on average, it appears a hotel increases 1 category every 5 years. That's on average. Popular leisure destinations would increase more due to more redemption, business hotels less. Assuming cat changes every 5 years:

Cat 5 going to cat 6 is a 20% increase, over 5 years that comes to an annual inflation rate of about 3.7% a year.
Cat 6 going to cat 7 is a 16.7% increase, over 5 years that comes to an annual inflation rate of about 3.1% a year.
Cat 7 going to cat 8 is a 14.3% increase, over 5 years that comes to an annual inflation rate of about 2.75% a year.
A cat 8 going to cat 9 is a 12.5% increase, over 5 years that comes to an annual inflation rate of about 2.4% a year.

FWIW, these threads are very entertaining every year. This year's changes are quite minimal IMO.

There is only one hotel change that really affects me, and that is a positive as now I may well use my Visa Cat 5 cert at the Denver Gateway Marriott instead of the Denver Marriott West.
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Old Feb 18, 16, 1:35 pm
  #33  
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Originally Posted by CPRich View Post
What is your basis for "seems"? Hilton has been decimated far worse than MR. I've performed an analysis of the moves each year, and they are usually in line with expectations/average of other programs.
And IHG has really done a number on their redemption values over the last 4 or 5 years. Hotels I used to get for 15K points are now moving to 45K points. At least Marriott point earning opportunities are about the same or better. With IHG, they have not only greatly increase the point costs for a large number of their hotels, but reduced the bonus point opportunities as well. So they've hit us in both directions.

So I agree, Marriott's devalution is not nearly as bad as some of the other programs have been.
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Old Feb 18, 16, 2:11 pm
  #34  
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Originally Posted by CPRich View Post
What is your basis for "seems"? Hilton has been decimated far worse than MR. I've performed an analysis of the moves each year, and they are usually in line with expectations/average of other programs.

Winning awards tends to support the argument that they don't "seem" to be the worst to the vast majority of the (voting) public.
Of course you're right about your last sentence, which is why I asked my question. Here's a good summary of what has happened for the last six years: http://viewfromthewing.boardingarea....6/02/18/45398/

My quick estimate says that on average, Marriott has increased the category of 18 to 20% of its hotels every year, which is worse than any other hotel program I can think of year after year (though IHG's 2015 was really bad). Hilton's 2013 devaluation was of course devastating, but at least they've held relatively still since.

Of course I'm doing what I can to try to book at the old rates, but it's hard to deal with this every year. The increases always hit properties I care about, and the decreases almost never do, and I imagine many other people are having this problem too. I can't feel at all happy about the Marriott program like this. But we are apparently collectively voting for Marriott for the Freddie award anyway, so Marriott will gladly keep sticking it to us.
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Old Feb 18, 16, 2:54 pm
  #35  
 
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Originally Posted by aaupgrade View Post
....OK, so unlike Joshua you would like less frequent changes, like every 3-5 years, but more hotels changing, and with the unintended but not unanticipated consequences of much larger category changes like from Cat 4 to Cat 7 or 8. For example in 2014 there were about 1000 hotels that changed their categories, in 2015 about 1500 and this year about 800. So if done every 3-5 years, then let's say anywhere from 3000-5000 hotels would need to change their category; with some increasing, or decreasing (don't hold your breath), multiple categories....
I get what you are saying, but those are some faulty assumptions:

1) If there is a property that has gone from Cat 4 to Cat 8 in the past three years a) there is only a handful, if any b) it was completely miscategorized to begin with.

2) You can't add the changes each year and then say changes in Years A + B + C = equals the number of changes that would occur in Year D if they made changes every 3 years. Some may net to zero, some that change each year would only have one big jump.

I really don't mind the annual changes as I only redeem for Cat 9s, but it shows how brainless the MR leadership team is (they are just continuing what Ed French did who is now at RC). It wastes company resources each year when it could be done bi or tri-annually which 1) gives MR team time to do other things in between revaluations 2) isn't a constant PR game every year, 3) doesn't irk customers that really do care and 4) doesn't appear the MR program devalues every year.
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Old Feb 18, 16, 4:34 pm
  #36  
 
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Hey, the Atlanta Marriott Marquis is going from a 6 to a 5 - we can use a free night certificate there now. That's a good deal.
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Old Feb 18, 16, 6:44 pm
  #37  
 
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Originally Posted by dwcatty View Post
Hey, the Atlanta Marriott Marquis is going from a 6 to a 5 - we can use a free night certificate there now. That's a good deal.
The Marquis used to be one of my favorite hotels, it has lost a lot. The demotion is well deserved.
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Old Feb 18, 16, 7:47 pm
  #38  
 
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Wow...lots of Florida hotels going up, particularly many Courtyards.
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Old Feb 18, 16, 7:57 pm
  #39  
 
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I actually found use for some of these Category 1's that are getting bumped up. I thought most of my hotels would be "safe" based on the 2015 devaluations too

I'll need some time to digest this but this may be bad enough for me to close my Chase card and transfer my points at as bad as a 4:1 ratio...
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Old Feb 18, 16, 8:30 pm
  #40  
 
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Seems like mostly low end hotels that are increasing - don't see many hotels in the list where I stay. The move from Cat 5 to 6 affects the CC certificate.

Only one that impacts me is: Courtyard Los Angeles LAX/El Segundo
This was the last Cat 5 hotel at LAX - now it is going to 6.

Just not sure where to use the Cat 5 now. I usually redeem for Cat 9 hotels, and good than 9 remains the top.
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Old Feb 19, 16, 1:50 am
  #41  
 
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>tfw you realize Hawaii Marriotts won't be changing cats because they've gone up so much over the past years as it is and there's no room left to go up
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Old Feb 19, 16, 5:05 am
  #42  
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they could always give Vicki her nightmare come true and start a Cat 10!

Originally Posted by msp3 View Post
>tfw you realize Hawaii Marriotts won't be changing cats because they've gone up so much over the past years as it is and there's no room left to go up
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Old Feb 19, 16, 6:35 am
  #43  
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Fair to assume no changes to Ritz tiers coming this year then?
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Old Feb 19, 16, 6:52 am
  #44  
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RC props are among those on yesterdays list; ie

The Ritz-Carlton, Montreal
Tier 3 to 4

The Ritz-Carlton, Kyoto
Tier 4 to 5



Originally Posted by Microwave View Post
Fair to assume no changes to Ritz tiers coming this year then?
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Old Feb 19, 16, 6:58 am
  #45  
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There are a few Ritz properties listed in the changes.
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