I’ve been a Starwood Platinum for several months now after previously being loyal to InterContinental/Priority Club and Hyatt, and I’ve found the experience interesting to say the least. I’ve spent several days trying to figure out how to describe the program, though whenever I come up with an explanation I contradict myself.
Let me start by saying this — I feel like Starwood over promises and under delivers when it comes to in-hotel elite benefits. Contrast that to Hyatt, which I feel under promises and over delivers.
Starwood promises unlimited suite upgrades based on availability which sounds nice in theory. The issue is, that’s awful for managing customer expectations, since you never know what you’ll get. It means you always have to have your “guard up” when you check-in. Sometimes you’ll automatically be offered a suite, sometimes you’ll have to ask nicely, sometimes you’ll have to argue, and sometimes you’ll just get nothing.
Unlimited upgrades works well with airlines, because there’s transparency. When you board the plane and your upgrade hasn’t cleared, you’ll notice the whole first class cabin is full. In other words, you won’t feel like you got screwed. Conversely, with hotels, you’ll see they’re still selling suites on spg.com at the time you check-in, but the front desk will claim there are none available. You have no way of verifying that.
I’ve had fantastic Starwood stays, like the one I had at the Le Meridien Kuala Lumpur (aside from the initial snafu). As a Platinum member I got an upgrade to a beautiful one bedroom suite, free internet, club lounge access, and even restaurant breakfast at one of the most amazing buffets I’ve ever seen. How can you beat that?
At the same time, a few nights later I stayed at the Le Meridien Vienna using points. A basic room wasn’t available, so I had to pay a mild points premium to book an “executive room.” At check-in I was given a room key, and I asked about the potential for an upgrade. “Sir, it has been our pleasure to upgrade you to an executive room,” the agent responded. No, I paid for an executive room. “We have no further upgrades available.” The issue is, if you don’t get an upgrade, you have absolutely nothing to fall back on. The hotel didn’t have a lounge. They don’t provide Platinum members breakfast either. So for all practical purposes, aside from free internet and a welcome amenity, I wasn’t getting any benefits for being a Platinum member.
Nonetheless I had a great stay. The hotel was beautiful, my executive room was nicely appointed with a huge balcony, and I loved Vienna. At the same time, at Hyatt I’ve never had a more or less “benefit-less” stay. If the hotel doesn’t have a lounge I get complimentary restaurant breakfast. I always know what I can expect.
And then sometimes stays are just hype. Last week I stayed at the Sheraton Suites in Tampa for a mattress run. The stay was “standard” in every way, and I got everything I expected. It’s an all suites hotel, and I’m not even sure if they have any “premium” suites. I really don’t care, because I didn’t expect an upgrade. But what I find annoying is that they not only put your key into a Platinum envelope (as they do at all Starwood properties), but they placed that envelope into an even larger envelope which read “We have upgraded you to our best available room,” which I had never seen before. What was I assigned? A standard room. Again, I was perfectly happy with it, it’s just the “hype” they try to create.
But here’s where it gets really interesting, in my book. My biggest gripe with Starwood, long before I had top tier status with them, is that high end award redemptions are so damn expensive. For me the value in miles and points comes from being able to redeem for “aspirational” awards, vacations I otherwise couldn’t afford. That means redeeming miles for Cathay Pacific first class, the Park Hyatt Paris, etc. In other words, taking a $50,000 vacation having spent nothing more than miles, points, and a few hundred dollars for meals and taxes.
The issue is, Starwood’s truly high end resorts are priced astronomically high, while their mid tier resorts are bargains. Right now I don’t have any travel planned for a couple of months, so I get antsy and start looking at pictures of hotels and resorts I want to visit. Places like the W Retreat Koh Samui and St. Regis Bali catch my eye. However, they go for 30,000-35,000 Starpoints per night.
Then there are other resorts like the Le Meridien Chiang Rai that I’d also love to visit. Ever since Gary reviewed it a couple of years ago I’ve been dying to visit. That hotel goes for 3,000-4,000 points per night, a tenth of the price of the hotels mentioned above. Even better, you can book the hotel using Cash & Points, whereby it would cost 1,600 points plus $30, which is an incredible deal. The thing is, the normal revenue rate is only a bit over $100USD, so it’s a hotel I could otherwise afford.
Obviously the price difference is huge between the Le Meridien Chiang Rai and the W Retreat or St. Regis mentioned above, and the hotels are in totally different leagues. At the same time, the price differential in points is even greater.
Look at airline award charts, for example. A business or first class award ticket typically costs somewhere around double what a coach award would go for. If you were booking a revenue ticket, a first class ticket might be ten times as much as a coach ticket in cash, while it’s only double as much in points.
Along the same lines, look at the Hyatt award chart. The cheapest hotel (category 1) goes for 5,000 points per night, while the most expensive hotel (category 6) goes for 22,000 points per night. So you’re never paying more than 4.5x as much for one hotel over another, even though the difference in revenue rates might be much more than that (and keep in mind in the example above, the Le Meridien isn’t even a category 1 hotel, so the difference is even greater for other hotels).
The funny thing is, the more I think about it, the more I disagree with just about everything I wrote above to some extent. Starwood’s problem is that they’ve actually made their points too valuable because of the ability to convert them into airline miles.
What am I talking about? Well, Starwood lets you convert points to airline miles in over a dozen programs at a 1:1 ratio. For every 20,000 points you transfer, you get a 5,000 point bonus. In other words, when transferring in chunks of 20,000 points, you’re actually earning 1.25 miles per Starwood point.
Let’s keep the math simple here. US Airways miles regularly sell for 1.5 cents each, and almost everyone that places any value on premium cabin travel agrees that’s a great deal. Pre-tax, that’s a $1,500 business class ticket to Europe, a $1,350 business class ticket to North Asia, a $1,650 business class ticket to Australia, etc.
In addition to the 1.25 miles per point that Starwood offers when transferring in chunks of 20,000 points, US Airways runs at least an additional 25% transfer bonus for transfers from Starwood once or twice a year. That essentially means that a single Starwood point is worth 1.56 US Airways miles. Multiply that by 1.5 cents per mile, and you’re looking at each Starwood point having a value of 2.34 cents.
For me, that’s more or less the opportunity cost of redeeming Starwood points for hotels. So if I use 30,000 points per night at the St. Regis or W Retreat, I’m really “paying” $702 worth of points for the night. For that rate I can easily book a revenue room, not to mention I’d be earning stay credits and points if I booked a revenue room.
The funny thing is, most people view points as “monopoly money” — they don’t care how many points something is, because they view a points redemption as a “free” trip. In my case, when I book a Priority Club hotel I have two options — I can pay for it with money or points. When I decide whether I want to use points or pay cash, it’s typically more of a function of whether my wallet or my points account is thicker that week. There are limits to that, but I’m talking about stays that would cost $200+/night. That’s because the only “good” deal I can get with Priority Club points is hotel redemptions.
So my point, if anyone’s still with me, is that Starwood makes it too easy to determine the value of their points. There’s a huge direct opportunity cost to every redemption. 1,600 points plus $30 for the Le Meridien Chiang Rai? That’s a steal! 30,000 points for a night at the St. Regis? Hmm, I could have about 50,000 US Airways miles instead.
So I’m guessing there’s a good reason that most hotel programs have crappy conversion rates when transferring points to airlines… they don’t want you to know just how valuable your points are!