How much is Starwood reimbursing a hotel for a Cash & Points redemption?

While we can’t draw conclusions about other properties based on this, I do find it rather interesting. When pulling up Cash & Points availability on the St. Regis Houston’s website, here are what the rate details say:

St. Regis Houston

Now I assume the website isn’t supposed to display that information since it’s intended for internal reimbursement, but it sure is interesting to know that Starwood is reimbursing the hotel all of $21.19 for 6,000 Starpoints. Now if only we could buy points at that rate!

This also suggests that hotels are compensated a consistent amount for Cash & Points bookings, regardless of how full they are. This isn’t surprising given that Cash & Points availability is capacity controlled and at the hotel’s discretion. Meanwhile for free night bookings the compensation from Starwood to the hotel is variable based on whether the hotel is close to occupancy or not.

(Tip of the hat to Chris)

Comments

  1. Wow! Just checked it myself and that description is still up. I assume it should be just this plain text – “Guest must redeem Starpoints for Cash & Points Award. Guest pays cash portion plus applicable taxes on check out” (shown for Sheraton Houston Near Galleria).

    Perhaps this is a typo, i.e. it should be $211.90? If we go by a retail value of SPG points (2.5 cents), 6000 pts + $110 = $260 which is more in line with what St. Regis charges. The lowest rate for the next month I found was $217 but mostly around $300-400/nt.

  2. @ Ivan Y — I think the amount is right. Keep in mind you pay the hotel the $110, so they’d be getting ~$131 for the booking. That’s definitely way above their marginal cost, so it could make sense to release space at that rate assuming they know they won’t be full.

  3. @ Ivan Y – also there’s no way spg would be paying a hotel 2.5cpp. If it was a fixed rate (as it probably is for guest satisfaction points) I would guess around 1cpp.

  4. You are correct — the hotel gets the same reimbursement amount for cash and points regardless of occupancy. That’s why cash and points is capacity controlled, the hotels won’t open up inventory when they expect to be full and the cash and points guest could be displacing a higher revenue guest.

    The way starwood gets last standard room availability for regular award stays is by paying the hotel its average daily room rate when occupancy exceeds 90%.

    That extra payment does not apply to cash and points award nights.

  5. Thanks everyone! I guess I was remembering what Gary mentioned (that SPG sometimes has to pay close to an average daily rate) so that’s why I thought they might do the same for C&P.

    Anyway, 6000 pts + $110 is probably a good deal for St. Regis (better than 12,000 outright) but for straight-up points redemption in Houston, a hidden gem IMHO is Sheraton Brookhollow which is somehow only a Cat. 2 hotel (4,000 pts reg/5,000 club) even though I personally like it more than newly-remodeled Sheraton Galleria (Cat. 4 – 10,000 pts).

    For last-minute weekend bookings though, both Aloft & Sheraton Galleria offer very cheap AAA rates (last weekend it was $69+parking @ Aloft and $71 (incl. valet parking) @ Sheraton Galleria).

  6. When staying at a SPG Category 5 hotel in Europe on a C&P rate (6,000 points + $110 USD), the hotel accidentally included the SPG reimbursement slip in my folio. I recall that the reimbursement from Starwood amounted to approximately 16 EURO or about $21.4 USD with today’s rate. This is consistent with what is accidentally disclosed by the St Regis Houston and what is described in this post.

  7. @ DJ – you are welcome! For Aloft the cheapest rate is “AAA Hot Rate”, for Sheraton Galleria – “AAA Local Package”. Right now they are kind of high for the upcoming weekend but usually get cheaper a few days closer to the stay.

  8. @Gary, does that reimbursement for award stays (when occupancy is greater than 90%) mean that SPG reimburses the property for the average daily rate for the night of the award or is the ADR based on a longer period such as a year?

    Also any idea as to what they reimburse if occupancy is below that 90% threshold? I’d assume some small amount given as stated above whatever it is is likely greater than the marginal cost.

  9. The way I look at it is slightly different.
    I can pay 12000 points vs pay 6000 points +110$;
    so I am “buying” 6000 points for about 110$ cash
    So an SPG point is about 1.9c with this and an AA mile becomes 1.5c.
    Better than buying AA, US etc to top up accounts.

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