wWhen Stewart Sheinfeld redeemed 10,000 Starwood points for a night at the W Chicago Lakeshore, he found a strange new rule at the bottom of his confirmation. It said if he canceled his room after 6 p.m. on the day of his arrival, he wouldn’t just lose his points — he’d also have to pay $689.

“I was shocked,” he says.

Sheinfeld checked the W’s rates on its site, and found that they were $279. That meant instead of forfeiting his points for being a no-show, Starwood was threatening to charge him the rack rate — the hotel equivalent of sticker price — for the room.

“This makes the airlines’ rules look good,” he says.

Has Starwood lost touch with reality here?

I asked. A hotel representative responded with a prepared statement:

At Starwood, we understand that travel plans can change at the last minute and our Starwood Preferred Guest loyalty program has a generous cancellation policy. Our members can cancel their Free Award Nights by 4 p.m. the day prior to their stay. There are NO fees charged for these changes and ALL Starpoints are fully refunded.

We are aware there have been concerns raised about fees associated with the rare occasion when a guest does not show-up for their reservation, or cancels the day of the planned stay. While these fees were communicated at the time the reservation was confirmed, we have heard these concerns and have taken immediate action to better meet the needs of our valued members.

As of this week, guests who are “no-shows” for their reservations will be charged the typical rate for that night. This will be consistent across all hotels and, again, will be communicated upon reservation confirmation.

Does this mean that Starwood was charging its no-shows rack rate, and has changed to what it calls a “typical” rate?

A review of a popular online discussion forum, in which questions about this policy were first raised earlier this summer, suggests that may be the case. (An earlier discussion showed the company’s attitude toward those who question its policies. My favorite exchange is a Starwood rep telling angry frequent guests, “Frankly, I’m done here.” Ah, now that’s what I call customer service!)

But do customers lose both the points and have to pay the “typical” rate? Since each Starwood property sets its own cancellation policy, the answer is unclear.

More to the point, is this policy wrong? I can only imagine what would happen if airlines began charging its frequent fliers a “typical” fare if they missed their flights.

I think these rich cancellation fees undermine the point of a loyalty program. The idea is to reward your best customers — not to punish them.

(Photo: youngdoo/Flickr Creative Commons)