el_tigre

I have always been one to burn as soon as I earn; with category creep, I have always held the belief that Starpoints will never go as far next year as they do in the current one. But for the first time, I'm not sure if that is currently the case. With new threads popping up wondering about category creep in the new year, I'm with those who believe that if anything, more properties will tend to go down. But I thought about taking it a step further. I'm wondering, if we hold on to our points until 2010, what are the chances our points will be able to go even further in the future?

We know that a property's category is based on average daily rate. But the truth is, I don't know what that really means. Does Starwood focus on the last part of the year, or do they count the whole year equally? When they focus on ADR at international properties, do they use the currency exchange rate for July rates in July, or what it is at the end of the year. Do they factor in rates for the first few months of the new year? I doubt if anyone here, save potentially the Lurkers, has any clue to the formula.

According to CN Traveler, it is predicted that 2009 hotel occupancy will be the lowest its been since 1971. If that is the case, ADR for many hotels will most certainly have to fall next year, particularly on the upper end. This could mean that 2010 recategorization could have the most drastic lowerings.

It is even more interesting for international travel. For the last couple of months, the dollar has been at its strongest point in many years. But for the majority of the year, most european currencies at least were at all time highs. So what's going to happen to European properties? For instance, with the Park Tower in London, will its July ADR be measured at the July rate of 2.05 dollars to the pound or the current rate of 1.45? While currency rates will certainly change next year, I am skeptical the swing will be as great as the previous few months. As an aside, Japan is the one place I would maybe try to lock in a future points stay now, considering the yen's recent 20% + gain again the dollar.

If you must redeem points in 2009, it might make sense to use another program's points if you have them. Lower hotel occupancy rates will most certainly hit every chain, so every program may see falling categories in 2010. However, the category increases are greater with Starwood than its competitors. Assuming a property's high and low season would be the same regardless of category, there is at least a 40% increase from cat. 6 to 7 and a 56% increase from cat. 5 to 6. For both Hilton and Marriott, it's a 14% and 17% increase to the top two levels, respectively; for Hyatt, it's 20% and 25%. The disparity is greater with Starwood categories. If a property falls a level, there's just much more to gain.

Now, I am not saying falling categories will make our points worth more, simply that they will go further. For example, if I wait a year and stay five nights in a hotel that falls from Cat. 6 to 5, I'll have almost enough additional points for a weekend at a different cat. 6. But the value of the points would be different too.

I have a feeling that points are thought of as a necessary evil to keep guests loyal when times are good. But when times are bad, they could be a welcomed way to entice guests into filling rooms, at least giving a property an opportunity to earn revenue on incidentals. I guess the bottom line line is we don't know how much change will occur for a few more months. Until then, for once, I'm holding onto my points. But am I missing something here?

money_opp

I think SPG may have to give more promotions on points redemption.. as competitors like Hilton has a lot more properties on its "point stretcher" promotion.. and many are prime properties like Conrad and Embassy Suites... IHG's "5000 point break" program also see a rise of hotels participating to give promotions.. so those members who have saved points are coming out as big winners to take advantage of the low hotel occupancy rates.

sfozrhfco

If rates go down and the award level stays the same, then by definition your points will be worth less. It is still best to calculate the costs for each trip. Some properties will always be better values than others depending on competition, currency fluctuations, location etc. If you have the cash and the rates are reasonable, pay for it. If you are short on cash or it is a much better deal to use points/cash and points go with that. Points have no value until they are redeemed so make the best of every redemption.

aussiechris

^^Yes I agree 100% with this comment

gozetta

True, with a slight amendment: "Points have no value until they are redeemed and you have actually checked-in successfully and completed your stay without the hotel being sold/leaving SPG/no longer participating in SPG!"

Sorry, my hopes for using points for the Bora Bora Nui late next year are now shattered after reading another thread. I guess I'll be paying South Pacific Francs for that stay if we indeed go.

Rambuster

If I were responsible for marketing & sales at SPG I would focus on more promotions to achieve higher occupancy rates in a recession, like e.g. stay 3 pay 2, 5th night free, double points, etc.

I would not lower rates at high end properties. The people who really want to stay at these properties will pay the regular price! Anything else will devalue your product.

3Cforme

That works so long as competitors follow and customers don't see the superior value of discounted properties in a slightly lower tier - not sure things.

lambrettaStarr

The other piece is that companies which may have had more relaxed rules about hotel rates for traveling employees will start to pay more attention. I am sure of it. Many companies still do not have effective ways to track the price their employees pay the hotels. Some don't even have published maximum allowances.

el_tigre

Sure, but I think this misses the main point of my post. I don't think anyone really cares how someone else spends their points. For instance, I'm sure plenty of folks spend their point on the St. Regis Bora Bora, even though I may not since redeeming for such a stay would yield a rate much less than the 2.5 cents I value Starpoints. Some FTer's obviously do more work maximizing the value of their points than others.

Trying to maximize how far my points could take me was what I was driving at. It has been a pretty common held belief here on FT that it is a good idea to spend points as quickly as they are earned to have them go further. I'm just not sure that is currently the case. While I think the next round of category readjustment will tend downwards, I feel 2010 could likely have the bigger fall if indeed 2009 sees the lowest level of hotel ocupancy in almost 40 years. This would in turn likely mean lower ADR's. If that happens, it would seem that holding onto your points through 2009 will be the best way to go to get the most out of them.

quinella66

Even with the economy in as much trouble as it is, I would rather horde dollars than points in any program. When I have a chance to redeem points for a reasonable rate (apparently your threshold is 2.5 cents/point) I do it. The only reason I can see to wait to redeem is if there is strong reason to believe a hotel will drop a category, but that is hard to predict and unlikely. If the hotel keeps the same category or increases, it is always better to redeem now since money gains interest and points do not. Not to mention, this program like all others, are at the complete mercy of the company who can change T&C's at any time. For example, can you imagine the hurt it would be to the SPG program if they decided to put airline-like capacity controls in place?

PHL

I want more bonus point promos so I can transfer my points to AA for lifetime Gold. I'm almost there! So, property/category values aren't of much use to me at the moment. And if occupancy levels are low, the rates will be low too, which means I'll be more prone to pay for rooms than use points....

canadianpilgrim

Yes, time to hoard. Check out this thread as an example.

http://www.flyertalk.com/forum/miles...-bookings.html

BTW Starwood stock popped up 16% today. It looks like they are in the market for selling off part of their assets. If they're selling assets, I think they need to show high occupancy and revenue rates and steady market share. You don't get that by offering good point redemption deals, but giving out points like they're cheap candy. Like other posters, I would expect lots of extended stay bonuses, free nights, multiple stay point bonuses, and at higher end properties, lots of non-room discounts and freebies, 1/2 off spa purchases, restaurant vouchers, etc.

In 1971, we didn't have Pricline and Hotwire. I think this will drive the spread between posted rates and actual rates really high. Just speculation on my part, but you have to have minimum occupancy rates to maintain quality in your amenties and drive sales of incidentals.

troyintn

I was thinking that or to start useing them for the new flights deal.

cxn

I am one who is going to continue to burn them as fast as I can. I do not see any value in holding onto points. Looking back, I wish I had spent them quicker instead of running my balance at one point. That was the day of 5,000 points for the St. Regis NY!

Just like the Feds, SPG can just 'print' more points and make them worthless going forward .

MichaelColey

Another factor is that with lower room rates the "pay vs. redeem" decision is much more likely to go the way of "pay". There have been some tremendous deals lately ($49/night at Planet Hollywood, etc.).

Yet another factor is that many are having their travel schedules cut, so they may choose to pay more rather than redeem Starpoints, just to maintain status.

I think it certainly makes sense to save Starpoints until a good redemption opportunity comes along. Once the economy recovers and room rates go back up, things will tilt back the other way.