Starwood Points Redemption Increase - 2007
Dec 19, 2006, 2:10 pm
#361
Company Representative - Starwood
Original Poster
Join Date: Nov 2000
Location: Austin, Texas
Programs: Marriott Employee Level
Posts: 31,593
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Dec 19, 2006, 2:38 pm
#362
Suspended
Join Date: Sep 2000
Location: USA
Programs: HH Diamond, SPG Gold, PC Platinum Ambassador, Marriott Silver
Posts: 15,249
Not at all. Nice try, though.^
I'll see if I can't get them added or the offending phrase eliminated altogether.
Would that make you happy? Probably not, I'm guessing.
Dec 19, 2006, 2:41 pm
#363
Company Representative - Starwood
Original Poster
Join Date: Nov 2000
Location: Austin, Texas
Programs: Marriott Employee Level
Posts: 31,593
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Dec 19, 2006, 3:14 pm
#364
Company Representative - Starwood
Original Poster
Join Date: Nov 2000
Location: Austin, Texas
Programs: Marriott Employee Level
Posts: 31,593
this just in...
Okay. Then you can take this to the bank: Hotels that aren't Category 7 are going to be adjusted long before February 1st. Probably closer to January 1st. Category 7 will go into effect as of February 1st.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Glad to be wrong sometimes.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Dec 19, 2006, 3:32 pm
#365
Join Date: Oct 2003
Location: YYZ
Programs: UA1K2MM ACMME50 SQPPS HHDiamond Marriott Lifetime Titanium
Posts: 4,391
Looks like I was wrong...no one is going up in category until February 1, 2007, so the message on the web site is correct. There will be no category changes affected to any other category until that date.
Glad to be wrong sometimes.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Glad to be wrong sometimes.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
BTW when can we expect the usual end of the year category changes?
Dec 19, 2006, 7:11 pm
#366
FlyerTalk Evangelist
Join Date: May 2002
Location: Pittsburgh
Programs: MR/SPG LT Titanium, AA LT PLT, UA SLV, Avis PreferredPlus
Posts: 31,017
Dec 19, 2006, 7:42 pm
#367
Join Date: Jun 2004
Programs: united airlines
Posts: 4,967
Looks like I was wrong...no one is going up in category until February 1, 2007, so the message on the web site is correct. There will be no category changes affected to any other category until that date.
Glad to be wrong sometimes.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
Glad to be wrong sometimes.
Sincerely,
William R. Sanders
Customer Service Coordinator
Starwood Preferred Services
[email protected]
[This "big grin" icon looks derisive IMHO, but that is not my intention with the icon or my gentle gibe.]
Dec 19, 2006, 8:57 pm
#372
FlyerTalk Evangelist
Join Date: Apr 2001
Location: NYC
Posts: 27,258
In return, SPG would only have to pay the hotel the lower SPG rate. It would be nice for those travelers with flexibility to be able to redeem reasonably priced awards at ultra-lux properties on the nights when the property owner thinks the rooms will be vacant. The economics of point schemes only work when the business is giving away excess inventory.
But in any event, in those period of "excess inventory", you're more likely to find an attractive paid rate, given the recent proliferation of revenue management techniques in the hotel business. Anyone can do the math to figure out the relative value of using points or paying cash. I think most people would consider $0.03 of value per point (e.g., $300 for a Cat 4; $210 for Cat 3) good, and frequently achievable. At the end of the day, I would MUCH rather have the ability to use the same number of points when rates soar, then the ability to use a reduced number of points when rates are weak.
Say, $600 for a Cat 4 would be $0.06/point, and that's not unrealistic (I'm getting $0.09/point in Mexico over New Years!). If they cut the point requirement to 5,000 when rates fell to the $150 range, you'd only be getting $0.03 per point, which is good, but hardly "great". The no-capacity-control system is much better for finding those "great" opportunities, which are usually the periods I want to travel anyway. Not the Carribean during hurricane season or Minneapolis in February, which is when you might find those $150 Cat 4 rates.
Dec 19, 2006, 10:24 pm
#373
Join Date: Feb 2000
Posts: 6,551
Well first, the hotels do NOT lose money on award bookings. If the hotel is nearly full (over 90% occupancy IIRC), then the SPG program (i.e., corporate Starwood) reimburses the property the average daily paid rate for the date of that stay. The hotel is indifferent. If the hotel is NOT full, then the SPG program pays the hotel its marginal cost of "operating" that room, which is prenegotiated. Again, the hotel is indifferent at that point whether the room goes empty or they make zero profit. (I don't know whether potential ancillary guest revenues are factored into the negotiated reimbursement).
The "economics" of SPG is basically that it is a marketing expense for the corporate entity, to generate loyalty. It is NOT a profit center, like I think the AC frequent flier program is given the spin-off. When Starwood designed the program, they chose to have zero capacity controls, and obviously there's a cost to that -- having to reimburse properties at significantly higher rates when occupancy is high. The good news is that occupancy has basically plateaued in recent months, and probably won't go any higher in the next few years. On the other hand, the SPG program collects 5% of total (room?) revenues at all participating *W hotels. (I don't know how this compares to Hilton or Marriott -- would be interesting to find out). So, as room rates continue to rise, so does the program's revenue stream (and so do our point balances!). With flat occupancy rates, the program's expense stream shouldn't increase any further, except to the extent that rising operating costs (e.g., labor) adversely impact the hotels marginal costs and thus the reimbursement from SPG. If you had to ask me, I'd say that any future point devaluations (e.g., in 2008) will probably be unjustified...
But in any event, in those period of "excess inventory", you're more likely to find an attractive paid rate, given the recent proliferation of revenue management techniques in the hotel business. Anyone can do the math to figure out the relative value of using points or paying cash. I think most people would consider $0.03 of value per point (e.g., $300 for a Cat 4; $210 for Cat 3) good, and frequently achievable. At the end of the day, I would MUCH rather have the ability to use the same number of points when rates soar, then the ability to use a reduced number of points when rates are weak.
Say, $600 for a Cat 4 would be $0.06/point, and that's not unrealistic (I'm getting $0.09/point in Mexico over New Years!). If they cut the point requirement to 5,000 when rates fell to the $150 range, you'd only be getting $0.03 per point, which is good, but hardly "great". The no-capacity-control system is much better for finding those "great" opportunities, which are usually the periods I want to travel anyway. Not the Carribean during hurricane season or Minneapolis in February, which is when you might find those $150 Cat 4 rates.
The "economics" of SPG is basically that it is a marketing expense for the corporate entity, to generate loyalty. It is NOT a profit center, like I think the AC frequent flier program is given the spin-off. When Starwood designed the program, they chose to have zero capacity controls, and obviously there's a cost to that -- having to reimburse properties at significantly higher rates when occupancy is high. The good news is that occupancy has basically plateaued in recent months, and probably won't go any higher in the next few years. On the other hand, the SPG program collects 5% of total (room?) revenues at all participating *W hotels. (I don't know how this compares to Hilton or Marriott -- would be interesting to find out). So, as room rates continue to rise, so does the program's revenue stream (and so do our point balances!). With flat occupancy rates, the program's expense stream shouldn't increase any further, except to the extent that rising operating costs (e.g., labor) adversely impact the hotels marginal costs and thus the reimbursement from SPG. If you had to ask me, I'd say that any future point devaluations (e.g., in 2008) will probably be unjustified...
But in any event, in those period of "excess inventory", you're more likely to find an attractive paid rate, given the recent proliferation of revenue management techniques in the hotel business. Anyone can do the math to figure out the relative value of using points or paying cash. I think most people would consider $0.03 of value per point (e.g., $300 for a Cat 4; $210 for Cat 3) good, and frequently achievable. At the end of the day, I would MUCH rather have the ability to use the same number of points when rates soar, then the ability to use a reduced number of points when rates are weak.
Say, $600 for a Cat 4 would be $0.06/point, and that's not unrealistic (I'm getting $0.09/point in Mexico over New Years!). If they cut the point requirement to 5,000 when rates fell to the $150 range, you'd only be getting $0.03 per point, which is good, but hardly "great". The no-capacity-control system is much better for finding those "great" opportunities, which are usually the periods I want to travel anyway. Not the Carribean during hurricane season or Minneapolis in February, which is when you might find those $150 Cat 4 rates.
Your comments are interesting, and I appreciate the time it took to develop your thoughtful response.
It is not my experience that Category 4 and above hotels have rates that flucuate between $150 and $600 for an identical room based upon the date. Now, I am excluding ultra-high season events like New Orleans Mardi Gras and NYC New Year's Eve. (Current SPG program is a HUGE value for those who travel to these events). For instance, rates at the LC Pulitzer Amsterdam on a busy summer weekend will be roughly the same as during a mid-week period in March (Maybe $400/$300). Certainly not a difference similar to $600/$150.
My travel patterns are high season like yours. However, I just elect to vacation the week of July 11 and not the week of July 4. Doing so allows me to easily book award first class air reservations at saver mileage rates. By being flexible one-week during high season, I am saving SPG alot of money in it's reimbursment for my award stays. Shouldn't SPG incent behavior like mine (via lower cost awards) and dis-incent award travel for the July 4 week in Hawaii (via higher cost awards)?
Dec 19, 2006, 10:30 pm
#374
Join Date: Jun 2004
Programs: united airlines
Posts: 4,967
Well first, the hotels do NOT lose money on award bookings. If the hotel is nearly full (over 90% occupancy IIRC), then the SPG program (i.e., corporate Starwood) reimburses the property the average daily paid rate for the date of that stay. The hotel is indifferent. If the hotel is NOT full, then the SPG program pays the hotel its marginal cost of "operating" that room, which is prenegotiated. Again, the hotel is indifferent at that point whether the room goes empty or they make zero profit. (I don't know whether potential ancillary guest revenues are factored into the negotiated reimbursement).
The "economics" of SPG is basically that it is a marketing expense for the corporate entity, to generate loyalty. It is NOT a profit center, like I think the AC frequent flier program is given the spin-off. When Starwood designed the program, they chose to have zero capacity controls, and obviously there's a cost to that -- having to reimburse properties at significantly higher rates when occupancy is high. The good news is that occupancy has basically plateaued in recent months, and probably won't go any higher in the next few years. On the other hand, the SPG program collects 5% of total (room?) revenues at all participating *W hotels. (I don't know how this compares to Hilton or Marriott -- would be interesting to find out). So, as room rates continue to rise, so does the program's revenue stream (and so do our point balances!). With flat occupancy rates, the program's expense stream shouldn't increase any further, except to the extent that rising operating costs (e.g., labor) adversely impact the hotels marginal costs and thus the reimbursement from SPG. If you had to ask me, I'd say that any future point devaluations (e.g., in 2008) will probably be unjustified...
But in any event, in those period of "excess inventory", you're more likely to find an attractive paid rate, given the recent proliferation of revenue management techniques in the hotel business. Anyone can do the math to figure out the relative value of using points or paying cash. I think most people would consider $0.03 of value per point (e.g., $300 for a Cat 4; $210 for Cat 3) good, and frequently achievable. At the end of the day, I would MUCH rather have the ability to use the same number of points when rates soar, then the ability to use a reduced number of points when rates are weak.
Say, $600 for a Cat 4 would be $0.06/point, and that's not unrealistic (I'm getting $0.09/point in Mexico over New Years!). If they cut the point requirement to 5,000 when rates fell to the $150 range, you'd only be getting $0.03 per point, which is good, but hardly "great". The no-capacity-control system is much better for finding those "great" opportunities, which are usually the periods I want to travel anyway. Not the Carribean during hurricane season or Minneapolis in February, which is when you might find those $150 Cat 4 rates.
The "economics" of SPG is basically that it is a marketing expense for the corporate entity, to generate loyalty. It is NOT a profit center, like I think the AC frequent flier program is given the spin-off. When Starwood designed the program, they chose to have zero capacity controls, and obviously there's a cost to that -- having to reimburse properties at significantly higher rates when occupancy is high. The good news is that occupancy has basically plateaued in recent months, and probably won't go any higher in the next few years. On the other hand, the SPG program collects 5% of total (room?) revenues at all participating *W hotels. (I don't know how this compares to Hilton or Marriott -- would be interesting to find out). So, as room rates continue to rise, so does the program's revenue stream (and so do our point balances!). With flat occupancy rates, the program's expense stream shouldn't increase any further, except to the extent that rising operating costs (e.g., labor) adversely impact the hotels marginal costs and thus the reimbursement from SPG. If you had to ask me, I'd say that any future point devaluations (e.g., in 2008) will probably be unjustified...
But in any event, in those period of "excess inventory", you're more likely to find an attractive paid rate, given the recent proliferation of revenue management techniques in the hotel business. Anyone can do the math to figure out the relative value of using points or paying cash. I think most people would consider $0.03 of value per point (e.g., $300 for a Cat 4; $210 for Cat 3) good, and frequently achievable. At the end of the day, I would MUCH rather have the ability to use the same number of points when rates soar, then the ability to use a reduced number of points when rates are weak.
Say, $600 for a Cat 4 would be $0.06/point, and that's not unrealistic (I'm getting $0.09/point in Mexico over New Years!). If they cut the point requirement to 5,000 when rates fell to the $150 range, you'd only be getting $0.03 per point, which is good, but hardly "great". The no-capacity-control system is much better for finding those "great" opportunities, which are usually the periods I want to travel anyway. Not the Carribean during hurricane season or Minneapolis in February, which is when you might find those $150 Cat 4 rates.
Thanks, I do appreciate informative posts like yours.
Dec 19, 2006, 10:46 pm
#375
Join Date: Jan 2005
Location: SMF
Programs: Bonvoy Titanium, SPG LTP
Posts: 1,526