What Are The Chances That Starwood Devalues Airline Mileage Transfers?

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Yesterday I wrote about the increased sign-up bonus on the Starwood Preferred Guest® Business Credit Card from American Express. The card is offering a sign-up bonus of 35,000 Starpoints after spending $7,000 within three months, which is the best sign-up bonus we’ve seen on the card. The card’s $95 annual fee is also waived for the first year.

On that post, reader meegabroad asked the following question:

What are the chances that the SPG 5k bonus per 20k transfer to airlines will remain in effect?

I’m sure it’s something a lot of people are wondering, so in this post I’ll share my thoughts on that.

The value of converting Starpoints into airline miles

One of the great uses of Starpoints is converting them into airline miles. Starwood Preferred Guest has 35 airline transfer partners, most of which allow 1:1 transfers:

Aegean Airlines Miles+BonusAmerican Airlines AAdvantageHainan Airlines Fortune Wings ClubQatar Airways Privileges Club
AeroMexico Club PremierAsiana Airlines Asiana ClubHawaiian Airlines HawaiianMilesSaudi Arabian Airlines Alfursan
Air Canada AeroplanBritish Airways Executive ClubIberia PlusSingapore Airlines KrisFlyer
Air China CompanionCathay Pacific Asia MilesJapan Airlines (JAL) Mileage BankThai Airways Royal Orchid Plus
Air France/KLM FlyingBlueChina Eastern Airlines Eastern ClubJet Airwaystopbonus loyalty
Air New Zealand Air PointsDelta Air Lines SkyMilesKorean Air SkypassUnited Mileage Plus
Alaska Airlines Mileage PlanEmirates SkywardsLATAM Airlines LATAMPASS KmsVirgin Atlantic Flying Club
Alitalia MilleMigliaEtihad Airways GuestLifeMiles of AviancaVirgin Australia Velocity
ANA Mileage ClubGol SmilesLufthansa Miles & More

What makes this so valuable is that you get a 5,000 point bonus for every 20,000 points you transfer, meaning that you can effectively earn 1.25 airline miles per Starpoint. Not only is this a great value, but the way I see it, it hedges your bets against any sort of a devaluation of Starpoints. Typically there’s a cost to holding onto points currencies because of the fear of devaluations, but with Starpoints we have so many airlines we can transfer the points to that I’m happy just to hold onto the points and redeem them last.

The ability to essentially earn 1.25 miles per Starpoint is also one of the things that makes the Starwood Preferred Guest® Business Credit Card from American Express and Starwood Preferred Guest® Credit Card from American Express so valuable — for someone who largely spends money in non-bonused categories, earning 1.25 miles per dollar spent in your choice of 35 different programs is compelling.

With that in mind, is this transfer ratio just ripe for devaluation, given that in general I expect we’ll see cuts with Marriott? I don’t think so…


Transfer Starpoints to American for redemptions in Qatar Airways business class

Marriott has an equally compelling airline transfer option

I think the reason people are concerned about Starwood devaluing their airline transfer ratio is because Marriott Rewards points can freely be moved to Starwood Preferred Guest at a 3:1 ratio, so this greatly increases the number of people able to redeem their points that way.

What most people don’t realize is that the value of converting Starpoints into airline miles isn’t actually disproportionately rewarding. That’s good news, as I see it, since it makes it less likely that we’ll see an imminent devaluation.

Marriott offers Hotel + Air Packages, which are also an excellent value. With this option you can redeem points for a combination of airline miles and free nights at a Marriott property (the cost in points is different depending on the category of property you want to stay at).

You can see my previous post on this for full details, but just to give an example, here are the costs if you want miles with programs like Air Canada Aeroplan, Alaska Mileage Plan, American AAdvantage, etc.:

Hotel + Air Package 17 Nights + 50,000 Miles7 Nights + 70,000 Miles7 Nights + 100,000 Miles7 Nights + 120,000 Miles
Category 1-5200,000220,000250,000270,000
Category 6230,000250,000280,000300,000
Category 7260,000280,000310,000330,000
Category 8290,000310,000340,000360,000
Category 9320,000340,000370,000390,000
Ritz Tier 1-3350,000370,000400,000420,000
Ritz Tier 4-5470,000490,000520,000540,000

These prices are in Marriott Rewards points, and points transfer from Starwood to Marriott at a 1:3 ratio. This means that 90,000 Starpoints will get you 120,000 airline miles plus seven free nights at a Category 1-7 property. Even if you take the free nights out of the equation, that’s 1.33 airline miles per Starpoint, and you get seven free nights on top of that. So you’re actually getting a better transfer ratio through Marriott Rewards than Starwood Preferred Guest, and you’re getting seven free nights thrown in.

Currently the ability to convert Starpoints into airline miles isn’t a much better value than converting Marriott points into airline miles, so I don’t necessarily see this as a benefit on the chopping block. There are two considerations, though:

  • Starpoints can be converted in virtually any quantity, while Marriott requires specific quantities for converting points as part of a package, which probably eliminates a lot of people
  • A lot of people probably don’t know about Marriott’s amazing packages, which limits the number of people using this option


Transfer Marriott points to Alaska for redemptions in Japan Airlines first class

Bottom line

Personally I don’t think Starwood’s mileage transfer options are at risk of being devalued in the short term, since Marriott offers what’s arguably a more attractive mileage transfer option. This continues to make the Starwood Preferred Guest® Business Credit Card from American Express and Starwood Preferred Guest® Credit Card from American Express a great options for everyday spend.

It’s possible that eventually the option to convert points into airline miles will be adjusted, once Marriott forms a single loyalty program. However, in the short term I don’t personally think this transfer option is at risk. At a minimum I think we’d get some notice of this option changing, which is why I continue to feel comfortable hoarding Starpoints (and it’s one of the few currencies I hoard).

Do you think adjustments will be made down the road to Marriott and Starwood airline mileage transfers? What do you think these changes would look like?

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Comments

  1. What is “in the short term?” I thought they were going to combine loyalty programs within the next two years?

  2. I still like starpoints better. You don’t need 90k starpoints to be able to get a good transfer ratio, 20k will do it. Also, 90k starpoints, or 270k Marriott points will get you 120k miles and 7 nights at a category 1-5 property, not 1-7. I can’t find any category 1-5 properties I would like to stay at.

  3. I have been concerned since the merger was announced that this benefit would be pulled quickly or without notice. I have been burning spg points and never keep more than 20k. I am considering phasing out my spg cards after the next transfer due to the uncertainty. I value flexibility but I don’t think it’s wise to hold on to a large number of these points

  4. Since the Marriott takeover began, my SPG corporate discount went from comparable to some prepaid rates to worse than AAA in almost every instance. So likelihood of Marriott chipping away at other benefits is 100%.

  5. You can cancel the 7 night certificate and get 45000 Marriott points back = 15000 starpoints. So for 75000 you get 120000 miles…so you can get 1.6 miles per starpoint with Marriott Travel Pkg

  6. @MarkG not to mention there are frequently bonuses for Marriott Travel Pkgs like the 35% for BA now. Starwoood a lot less frequently.

  7. But you need a much larger number of points to complete a transfer as you mentioned AND you have much less flexibility because of that. If I’m booking an award and I find one way on one of Marriott’s partner airlines am I really going to get a much larger number of miles than I need in that currency? It potentially leaves an odd number of miles stranded after the award. Marriott is not a transferable currency because of the packages. It’s a nice option if you have exactly the right situation.

  8. @MarkG, how do you go about cancelling the free night certificate? I recently redeemed one of these packages and am curious….

  9. As others have mentioned, Starwood has been cutting corporate discounts. My company used to use Starwood almost exclusively in Asia. My rate at the HK Sheraton was $125. The W was $200. They ‘re $200 and $300 respectively now. There are AAA and senior rates that are less now. My company only used Marriott at very specific properties, even then it was a contracted rate with just that hotel.Our biggest discount is on Hilton and they have even less properties in Asia than Marriott. So changing the SPG points transfer rate, possibly not. But devaluing by changing earning rates that is very possible. Like no more 30K, 35K Amex sign ups.

  10. @ma’am, one way to convert the 7-night certificate back into 45k points is to simply book a reservation with the cert. by calling Marriott and then to go online and cancel the res. Some also report being able to convert during that first phone call, telling the rep you cannot find any hotels where you can use the cart. Keep in mind that 45k Marriott points are only worth around $360 (if you value them at 0.8 cents per point), so using for a cat. 5 Marriott for 7 nights should get you much more value. Plus you can upgrade to a higher category Marriott by paying 5k points per category per night, so cat. 9 for 1 week would cost your cert. plus 140k points, if I’m not mistaken. (Marriott allowed me to do this a year ago.)

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