Devaluation of Hotel Points

The points and miles game is a little bit of a self-fulfilling prophecy – find a program that you can get a lot of points/miles from through credit cards, bonuses, stays/flights, etc – and you will also find that program eventually devaluing their points program. So, while it may be easy to get a particular points currency, that is usually an indicator that a devaluation is on the way. This time, we see a devaluation of hotel points.

It all started last month with SPG and Marriott. Some of the other programs, like Wyndham, also began to see a restructuring of their redemption programs. Today, Hilton, one of the largest hotel chains, also announced a devaluation. Well, of course they did not call it a devaluation, but that is indeed what it was. Let’s look at three of these hotel programs and what is changing and then see what you can do about it.

Starwood Preferred Guest

Cash and Points is one of the excellent point redemption methods available within the SPG system. Basically, it allows you to do a mixture of points and money for a room that you would otherwise have to pay with all points or all money. Simple, yes? One of the chief problems with the program since it was introduced was the availability of Cash & Point rates at many of the hotels. With SPG hotels, if there is a standard room available, you can get it with points. You can always pay with cash. But the hotel may not release much of the room inventory for Cash and Point redemptions. So, SPG says with this new swing changes, they are increasing the cost of points and cash so that they can help increase availability (because there will not be as many people using them).

What really happens is that it sticks a lot of potential guests as they may be trying to stretch both cash and points and the increase of both makes for a higher bill for stays of multiple nights.

Here is how the current vs the upcoming Cash&Points redemptions compare:

Current Cash&Points Redemption

• Category 1 – 1,200 points and $25 (offered at Asia Pacific, US, and Canadian hotels only)
• Category 2 – 1,600 points and $30 (offered at Asia Pacific, US, and Canadian hotels only)
• Category 3 – 2,800 points and $45
• Category 4 – 4,000 points and $60
• Category 5 – 4,800 points and $90
• Category 6 – 8,000 points and $150
• Category 7 – 15,000 points and $275

Revised Cash & Points Redemption (as of March 5, 2013)

• Category 1 – 1,500 points and $30 (now offered on all SPG category 1 hotels)
• Category 2 – 2,000 points and $35 (now offered on all SPG category 2 hotels)
• Category 3 – 3,500 points and $55
• Category 4 – 5,000 points and $75
• Category 5 – 6,000 points and $110
• Category 6 – 10,000 points and $180
• Category 7 – 15,000 points and $275

As you can see, the hardest hit hotels will be in the category 4 – 6 range with both cost increase and points. SPG is trying to emphasize that this increase in cash and points is going to allow more room availability. IF they do push out more availability, that will be great. But the point increase is not appreciated. I recently helped a friend reserve a category 6 cash and points hotel for four nights. It totaled 32,000 points and $600. If the room was reserved after March 5th, the cost would be 40,000 points and $720. Quite an increase!

Also with this devaluation comes the announcement that they are allowing you to use points for upgraded rooms and suites with Cash & Points. This is actually a good thing. It is nice when traveling with your family to be able to secure something larger for your stay, even if you may be able to get an upgrade because of status. This takes a little bit of the sting out of it.

Summary of Starwood Preferred Guest Program Devaluation:

So, what should you do with this knowledge? For most people, this isn’t going to derail your holiday if you are planning a couple of days at a lower category hotel. For others, this increase might create separation as to how long they are able to stay in a certain hotel for their holiday. With those two things in mind, if you have the points, book before March 5th! Because you can cancel before days before arrival, by all means, make your speculative Cash & Point reservations now. Yes, your points will be locked up in those reservations but you can always cancel – after March 5th, there is no going back to book at the lower rate. SPG will honor bookings made before March 5th, so go ahead and make your bookings that you think will make sense for your upcoming travel. The SPG calendar wil go up to August of 2014 right now (though individual hotels may not be releasing reservation space that far in advance) so you have until then for reservations (which still must be booked by March 5, 2013).

Marriott

Marriott’s change this year came in the form of hotel category changes, as well as an additional, top-tier category. Now these category changes happen with every hotel chain every year but for Marriott this year, it was quite drastic. They raised a large number of hotels to a higher category and by adding a Category 9, make some of the hotels cost a lot more with the addition of a category redemption amount. One of the worst parts about Marriott’s category shifts is that it makes the anniversary bonus of a free category 4 hotel night become a lot less valuable. If you are paying an annual fee for that certificate, it may be time to consider letting the card go (especially since there are so many other fine Chase cards you could apply to replace it with). Here is the list of the hotel changes – list. I have to say, I have never been a huge Marriott fan just because their hotels never quite fit my travel plans and points as well as some others. In addition, something that always soured my view towards them is the fact that they are a 1:1 point partner with Chase Ultimate Rewards. You say, what’s wrong with that? The problem with that is now, to get a free night at a top-tier Marriott, you would have to transfer 45,000 Ultimate Reward points. In contrast, to get a free night at a top-tier Hyatt, you would only need to transfer 22,000 points. So, if you went the route of using your Ultimate Reward points for hotel transfers, the amount of points it now requires to secure a top-tier Marriott room is the amount that it takes to secure two nights at a top-tier Hyatt! Ouch!

Summary of Marriott Hotel Category Changes:

It’s not good. Over 1/3 of the Marriott hotels went up a category. If you want to stay at any of these hotels before the new changes take effect, you will need to make your booking by May 16th. I understand that the Marriott chain has a lot more hotel offerings than either Hyatt or SPG and that by itself may demand your loyalty. But, if you are just looking for a hotel to be able to get free nights at, I would start looking elsewhere than Marriott, especially if the hotels you are looking at are on the change list.

Hilton

The Hilton HHonors announcement yesterday was the absolute worst of all. They are really messing up the redemption system as they add new categories for the top tier hotels as well as introducing seasonal redemption rates at most of the categories. They are trying to help it go down better by introducing 5th Night Free program (similar to Marriott and SPG) but that will not help much when the new top category requires 95,000 points per night at high season as opposed to the current 50,000 points year-round. That is just ridiculous. Now, they did lower the redemption amount for the bottom 4, so if you are looking to stay a Category 1 – 4 Hilton hotel, this will actually work better for you. But if you are trying to stay at the higher end of the list, it will be almost double the points for your stay.

If you want to see the list of hotels and the categories they will be in after the structure change, you can see it here.

Summary of the Hilton Hhonors Category and Point Increases:

Again, this is terrible for most of the redemptions at Hilton hotels. But, it was going to be happening at some point. I mean, you could apply for 4 credit cards and get almost 400,000 Hilton points! You could use some of their cards at CVS to buy Vanilla Reload cards and earn 6 points per dollar because of the drugstore category. For someone who is maxing out their Bluebird account each month using their Hilton card, that is an additional 360,000 points per year! Something had to break with that type of award currency on the books. What did break was their redemption charts. So, what do you do? Book before March 28, 2013. With Hilton, you can actually book well into the middle of 2014, so take advantage of that and do it if you have hotel plans at hotels that are going to rip your points away. What stinks is my over 400,000 points that had been accruing for an anniversary in a couple years. Guess I may have to do something different now, hmm? Or, I can just keep earning them to get to the amount I will need by then – stinks, but doable.

What Does All This Mean For You?

As you may notice with these three programs, the biggest changes are going to effect the more luxury properties within the chains. If you like to get a hotel that happens to be convenient to a race or you are trying to find some hotel that will work based on your choice of destination and you don’t need to stay in a room that regularly goes for over $500 a night, you should be just fine. I will admit it, I do like to stay at a really nice hotel sometimes, but I would actually prefer a really nice room/suite at a mid-tier hotel than a standard room at a luxury hotel. That is just me, but when my family is traveling someplace, it is nice to be able to spread out and enjoy ourselves in the room without having to think of the butler coming to perform turn-down service for us :). For most people, how much time do you spend in a hotel when you are visting some destination anyway? So, if you are just looking to use your points for the most convenient, nicest place at your destination, then this probably won’t mean all that much to you. If you are saving for a luxury vacation someplace exotic, I would simply move the date up a year or two and make it this year or next year. If airfare points are holding you back from getting someplace sooner, know that you can always earn more points for that too! In fact, look for an upcoming article on some ways to add to your mileage totals when you think you already have all the cards for that program that you can get!

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