Starwood Preferred Guest Adjusts Hotel Award Categories

Starwood Preferred Guest announced changes yesterday to the award categories for many of its properties. Although the award chart itself is not changing (good news after last year’s devaluation) properties that move up will require more points to book.

Changes go into effect on March 4, less than two weeks away. You have until then to book rooms at the current rates even for travel after March 4. If you happen to book an award at a property that is going down, then you can call after March 4 to get it repriced at the lower rate. You might still want to book now to lock in that award availability.

There are seven pages in the announcement of properties moving up or down. The general trend in North America is for properties to move up, which isn’t good if you’re staying close to home. But after scanning the list I didn’t notice a lot of familiar names that would cause me to worry. Outside North America, a lot of properties are actually moving down, particularly in Asia. What struck me as most interesting was that nearly every Starwood hotel in Bali — except the St. Regis, which I love — is going down a step.

  • Le Meridien Bali Jimbaran — 5 to 4
  • Sheraton Bali Kuta Resort — 4 to 3
  • The Laguna Nusa Dua — 5 to 4
  • The Westin Resort Nusa Dua — 5 to 4

Starwood has some particularly aggressive award prices at the high end. (Check out the graph below to see how it matches up against other programs, originally from a post before recent devaluations by Hyatt and Club Carlson.) Moving from Category 5 to 6 results in a 67% increase for standard rates and a 56% increase for peak rates. Moving from Category 6 to 7 results in a 50% increase for standard rates and a 40% increase for peak rates.

Spend per Free Night

These data are adjusted for the number of points a non-elite member would earn for each dollar spent.(Necessary since, e.g., Hilton hands out lots of points but also has expensive awards in absolute terms.)

Even though the number of points required in each category isn’t changing, why move hotels between categories? One Mile at a Time reminds us that compensation to individual properties is linked to to the potential revenue had it been sold to a guest, and that in turn is linked to both the typical rate at the hotel and its occupancy.

An expensive hotel will get more compensation than a cheaper hotel, but both will receive only a fraction of their published rate if it would have otherwise gone empty. When properties are full, reimbursement is much closer to the published rate even though customers are redeeming the same number of points. For two otherwise equal hotels, Starwood will be providing much more compensation, on average, to the one that is staying close to capacity, and that hotel will need to be placed in a higher award category.

I don’t take issue with these kinds of shifts. It’s a sign of good management that the program is taking regular steps to match award levels to their costs, although I would like to have had more than a couple weeks to make reservations before new rates take effect.

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  • Andrew

    Great chart that shows how bad of a value SPG is on a pure ROI level. Amazing how many people just get caught up in the allure of SPG points without considering their value on a relative scale when comparing to other currencies but rather only consider it as on a strict point-point value basis.