In mid-November we learned about Marriott’s takeover of Starwood, which is expected to close in mid-2016.
I’ll be the first to admit that I’m a Starwood loyalist and have never voluntarily stayed at a Marriott, so I’m quite sad about this takeover. I know I’m not alone among Starwood loyalists. For Marriott loyalists I actually see little downside. Marriott has a huge global footprint, and does a good job managing elite expectations (which is to say that the program delivers well on the relatively few benefits they promise).
And I think that has represented the sentiment from both “sides” since the announcement was made. Starwood loyalists are scared about what this merger means for Starwood Preferred Guest, while Marriott loyalists are excited about some cool new properties they can stay at, and also the possibility of some more benefits being added to the Marriott Rewards program. There are lots of big questions remaining, which I think we’re all curious to know the answers to over the coming months.
Does the merger impact my redemption of Starpoints?
One question I’ve been asked over and over is whether the upcoming merger impacts how I’m redeeming Starpoints. Historically Starpoints are a points currency I hoard, since I consider them to be the most valuable currency on a per point basis. I have well over 500,000 Starpoints, and up until now have felt quite “secure” having such a large balance.
Why do I feel safe hoarding them? Because worst case scenario they can be converted into airline miles at a 1:1 ratio, with a 5,000 point bonus for every 20,000 points transferred. In other words, worst case scenario each Starpoint is worth 1.25 airline miles.
I haven’t been rushing to redeem Starpoints since I assume we’ll be given some notice before changes occur. If we find out that Starwood Preferred Guest will be shut down in the middle of next year as soon as the merger closes (which I really don’t see happening), I can transfer Starpoints to Alaska Mileage Plan or Japan Airlines Mileage Bank and feel like I didn’t lose all that much value.
I sure don’t mind turning Starpoints into Emirates first class redemptions!
I value Starpoints at 2.2 cents each, so that’s like placing a value of ~1.76 cents on transferred miles. I’ve purchased Alaska miles for more than that for years. Actually, the 1:1.25 transfer ratio is sort of the basis off of which I value Starpoints.
When the Marriott Rewards and Starwood Preferred Guest programs merge, the biggest question is at what rate the points will convert. Surely not 1:1. Hopefully not 1:2 (SPG:Marriott). I’d say 1:3 or 1:4 would be fairer. This will be a really interesting thing to see, as I don’t recall the last time we saw major loyalty programs with different points “values” merge.
I guess what I’m trying to say is that it’s “business as usual” for me when it comes to redeeming Starpoints:
- We have at least another six months of SPG (I would guess the program will run through at least the end of 2016, maybe even longer)
- I expect we’ll get notice of any changes, so worst case scenario we can transfer points to airline miles at a 1:1.25 ratio
- Aside from what the new program benefits will look like as such, the biggest thing we should worry about when it comes to the value of our points is at what rate Starpoints will convert into Marriott Rewards points
My Starpoints redemptions this year
I only very rarely redeem Starpoints, at least up until this year. This year I’ve actually redeemed quite a few Starpoints.
- I transferred 120,000 Starpoints to Alaska Mileage Plan (which turned into 150,000 Alaska Miles)
- I redeemed for a few Cash & Points nights in Germany when visiting my family, so they could also stay with me
- I redeemed 78,000 Starpoints for a stay at Al Maha, possibly my favorite redemption of Starpoints ever
- Don’t ask about the Disney redemption 😉
My upcoming 120,000 Starpoints redemption
What I realized after my redemption at Al Maha was that while some redemptions are super expensive, they’re also super memorable. I’d rather redeem Starpoints a few times for really awesome properties rather than all the time for more run-of-the-mill properties.
For example, a couple of years ago I redeemed 140,000 Starpoints to take my parents to the St. Regis Bal Harbour for Christmas. It was one of my favorite travel memories, as we also took our dog, Lucky, who passed away shortly after the trip. So it’s a trip I’ll cherish forever.
While parting ways with 28,000 Starpoints was rough, it was certainly better than the paid rate of ~$1,500 per night (including tax).
Which brings me to my next aspirational redemption. I’ve long been fascinated by the W Verbier, which looks like a stunning property in the Alps (about a two hour drive from Geneva).
In summer the rates are somewhat reasonable, while in winter the rates are insane, upwards of $1,000 per night.
This is a Category 7 Starwood property, meaning a free night redemption costs 30,000 Starpoints per night. If you factor in fifth night free, the cost is lowered to 24,000 Starpoints per night.
Full disclosure: I don’t actually like skiing (or perhaps more accurately I’m terrified of it), but I do love beautiful views and warm alcoholic beverages. Combine the two and it seems like a pretty cool experience. While I’ve been to plenty of mountainous places, I’ve never done anything I’d call a “ski vacation” (with or without actually skiing).
As far as “value” goes:
- I value 24,000 Starpoints at less than ~$1,000
- That being said, I’d never pay $1,000 to stay at this hotel, so that’s not the “true” value to me
- Using my valuation of 2.2 cents per Starpoint, 24,000 Starpoints per night is like paying ~$528 per night
- That’s still more than I’d be willing to pay to stay here, but that’s sort of the beauty of points sometimes — we don’t always act rationally when redeeming them, but I also do always say that the best use of Starpoints is something which makes for a memorable experience
Point being, I’m not actually sure I’d book this stay without the upcoming merger. While I’m not worried about the value of points, there’s something which makes me say “might as well make the most of stuff while the SPG system is a certain thing.”
And for that matter, if anyone has been to Verbier, I’d love to hear what you think — is it worth a visit in winter for the views?
I guess my point can be summed up as follows:
- I’m not worried about the value of my Starpoints decreasing immediately, since a large part of my Starpoints valuation is based on the ability to convert them into airline miles; since we’ll presumably get some notice of changes, we can always transfer them before the programs merge
- While I try to be a “numbers guy” with points, there is some “mystery” element to them which allows us to redeem them in non-ideal ways, at least based on crunching numbers; after all, the best thing you can redeem points for is a memorable experience, even if the math doesn’t check out as cleanly as a less “aspirational” redemption
How are you feeling about Starpoints in light of the upcoming merger? Are you redeeming them as fast as you can, or like me are you not worried, since presumably you can transfer them to airline miles before anything major happens? Am I crazy for wanting to redeem 120,000 Starpoints for a five night stay at the W Verbier?