As I posted about yesterday, Starwood and Virgin America are cutting ties as of January 6, 2017. This has to do with Alaska’s takeover of Virgin America, and perhaps more specifically, with the fact that Virgin America Elevate points will convert into Alaska Mileage Plan miles at a 1:1.3 ratio.
As it stands, Starpoints transfer to Alaska Mileage Plan and Virgin America Elevate at a 1:1 ratio, with a 5,000 point bonus for every 20,000 points transferred. This presents a pretty cool arbitrage opportunity. Since Virgin America points will convert into Alaska miles at a 1:1.3 ratio, it means you can temporarily transfer Starpoints to Virgin America and then to Alaska, and get a 62.5% bonus in the end. In other words, 20,000 Starpoints will convert into 32,500 Alaska miles (when you account for the 5,000 point bonus, and then the 30% bonus on top of that).
I’m sure I’m not the only one who is trying to decide how many Starpoints I want to convert into Virgin America points in the next week, before this opportunity ends.
Starpoints are really valuable
I value Starpoints at ~2.2 cents each. Part of what makes Starpoints so valuable is how flexible they are. You can redeem them efficiently for hotels, convert them into Marriott Rewards points, or transfer them to airlines at a fair ratio.
So their flexibility adds to my valuation of them, though at the same time sometimes it’s a challenge how valuable they are. I hoard Starpoints, rather than redeeming them, which directly contradicts my usual “earn and burn” approach to points. When it comes time to redeem points I usually redeem all other points ahead of Starpoints.
A while back stvr left the following comment about how I paid for three Starwood hotel stays, rather than redeeming points:
I think you should change your valuation of SPG points. Three times you went in for a booking, three times you came out with paying cash b/c it didn’t meet your valuation. Maybe your valuation is wrong.
I guess the issue is that as far as my various points currencies go, I’m happiest hoarding Starpoints, since I feel like they retain their value better than individual mileage currencies.
At the same time…
I’d buy Alaska miles at 1.35 cents each
Assuming I value Starpoints at ~2.2 cents each and then get a 62.5% bonus when converting them (indirectly) into Alaska miles, that’s like picking up Alaska miles for 1.35 cents each. At that rate I’d absolutely buy Alaska miles, given how valuable they are.
At the same time, there’s an inherent risk to holding onto an individual mileage currency, which doesn’t exist as much with Starwood. For example, I used to love Alaska miles for Emirates first class redemptions, though they devalued that overnight (I don’t think they’ll do it again, but who knows).
So, how many points will I transfer to Virgin/Alaska?
I guess my personal conclusion is that it absolutely does make sense to transfer Starpoints to Alaska with a 62.5% bonus. In other words, I think that if Alaska has awards you find valuable, 1.625 Alaska miles are worth more than one Starpoint.
However, it only makes sense to make such a transfer with a short term use of points in mind, so you’re properly accounting for the holding costs of having a non-flexible points currency. So while picking up Alaska miles for ~1.35 cents each sounds like an amazing deal, realistically I’ll only transfer points that I could use within 6-12 months. So personally I have 700,000 Starpoints (I almost never redeem them and have been collecting them for a decade), and think I might transfer maybe 160,000 Starpoints to Alaska Mileage Plan, which would convert into 260,000 Alaska miles.
I’m curious about you guys — do you plan on transferring Starpoints to Virgin America before the transfer opportunity ends?