Starwood devalues award points in a “pretty sneaky” way

Why cut your frequent flier program and face public humiliation, as US Airways did last week, when you can quietly chip away the value of your awards in relative private?That’s what Starwood Hotels, which owns the Four Points, Sheraton and W brands, must have been thinking when they announced changes to their rewards program yesterday.The announcement began harmlessly enough, as these announcements always do:

To help you maximize your Starpoints, we wanted you to be aware of our annual award chart update taking place on March 4, 2008.

Ah, maximizing Starpoints. Who wouldn’t want that? But it soon becomes apparent that Starwood isn’t talking about your maximization, but its own.

On a yearly basis we adjust our award categories based on each hotel’s average annual room rate for that year. Among our most popular hotels for Free Night redemption, only a handful are moving this year. However, if you are thinking of using your Starpoints for a getaway we suggest you view the upcoming changes to decide if you should book now or wait until after March 4, 2008. To see which hotels are moving categories, click here. 

Reader Jonathan Yarmis isn’t sure how “routine” Starwood’s devaluation is. And he’s not pleased with the changes.

Talk about inflation. A quick perusal of the changes shows 9 hotels whose category declined and I would estimate 10 times as many that increased in category. I didn’t count the increases nor did I do any analysis of the pattern but this inequity jumped out at me. They’re not changing the redemption rates, they just change how they categorize the hotels. Pretty sneaky.

Sneaky, yes. And brilliant. Instead of a large and public cut, which seems to be the preferred method of devaluation used by the airline industry, Starwood is whittling away the value of its program incrementally. Almost so slowly that practically no one will bother noticing.Is this a model for airlines to follow?Why not? If it can prevent another PR disaster, it’s worth a try.

  • Joe F.

    points here, miles there – anyone who ever joins any program offered by a retailer and thinks they will get any real benefit in the form of free anything is always like the fool and his money – soon parted from reality.

    The ‘loyalty’ programs are designed to make you think you are getting something when in reality all the program does is link you to the retailer by the hip. Look at American’s AAdvantage program. They actually charge MORE for airline tickets than other airlines – they RARELY come up as the least expensive in Expedia or Travelocity / Orbitz listings. This is intentional – they think [correctly it appears] that people will fly them preferentially because they make it so EZ to accrue miles from partners, and some drivel I’ve heard that people see them as a premium product.

    I use airline miles exclusively for guaranteed upgrades at coach fares. Period. I have NEVER – and I mean NEVER – found a free coach ticket at the times and dates I needed it. That being said, I HAVE found First Class for 45,000 miles instead of coach at 50,000 – which is a nice surprise. But never the exact date or time you want.

    Hotel and car rental plans are worthless – all they do is create a point of comparison where the company can TELL you are a very good customer and treat you accordingly. I would rather get a good room, a nice discount, a free breakfast or bottle of wine or upgrade to the Club Floor NOW, than try to figure out later how to get a free room night and then get ripped off paying for subsequent nights.

    True Story – Starwood Chain. We had a free night anywhere. Enough points to avoid all the blackouts and limits and reprices. When I called to redeem – and had enough for 2 nights of a 5 night stay, they tried to charge me the full rack rate for the next 3 nights which would have cost more than simply booking online at the discounted rate – and they tried to claim that my nights were not combinable with a discount. So, I did what any half way intelligent person does – I made the reservation for 2 nights – and then booked the other 3 online at a discounted price.

    When we got to the hotel the desk clerk told me we’d have to move to a different room after the 2 free nights – with no reasonable or logical explanation – other than the discounted room entitled us to a less desirable location in the hotel I guess. I spoke to the manager who overrode their computer system and took care of it – so I tipped him $20.

    Just remember – ask – and if you get – tip. $20 goes a long way in this world with folks making $10-12 an hour.

    Airline and hotels make lots of money on the frequent traveler programs – never rely on them for anything other than better service NOW – if you think that you will be able to use them for some benefit in the future – you are now forewarned that the value of previously earned units are devalued on a regular basis – just like real money!

  • Jasper

    @ Joe F: You are right that people should not expect too much from loyalty programs. There is no such thing as a free lunch. On the other hand, I have happily used my United miles twice now to fly for free*. Once to Amsterdam, and once to the USVIs. No problem with that.

    However. The thing that makes customers angry is that airlines make all kinds of promises** to customers. Airlines are not required to have these programs. They invented them. They made all kinds of promises**. Customers simply do not appreciate the fact that they were given nothing***.

    In short: It is rude to ‘give’ someone (a customer) something he didn’t ask for, and then later take (part of) the ‘gift’ away.

    Again, airlines can do as they please. But that includes the option of angrying, frustrating and disappointing customers. I am not a business expert, but it seems to me that angrying, frustrating and disappointing your customers is among the smart business moves.
    ___________________
    * Free only after paying airport taxes, terror non-sense charges, and a small handling fee
    ** Well, promises, more like legal proof marketing impressions that are better than reality
    *** Blacked out flights/hotel room/car rentals, i.e. frustration.

  • Mike

    I find that the main benefit I get is having elite status with airlines and hotels. It does mean better service, especially when something goes wrong. Hotels may upgrade you to a better view or a suite. Airlines will give you priority in rebooking, etc.

    I recently had an American flight cancel and there were very few options for the remainder of the day. I think because I am Platinum I was confirmed in First all the way home, with no miles or electronic upgrade points subtracted. Many other people were rebooked on another airline. I would have taken the other airline, but both situations involved overnight flights so I naturally took the upgraded flight.

    What I found distasteful about the Starwood change was the phrase “only a handful are moving this year”. There were dozens of changes, primarily to higher categories. I don’t consider dozens of changes to be a handful.

  • Deja Vidor

    Mike I agree with your point about points helping you get better service: “If you have points, we will treat you nicely.”

    But the more accurate description is like a protection racket: “if you DON’T have points, we will freely abuse you as a customer”.

    That is why I will never fly United again, unless I absolutely have to (unfortunately, more often that I like, due to schedules and destination). Early on, I had few points, and they bumped me in the worst way. Now I have points and I get better treatment, but I remember the past insult.

  • Mike

    Deja Vidor, I agree with your point. I am faced with a business trip that will require either UA, US or WN. No matter which airline I choose, I will be a nobody for that trip.

    I stopped flying UA after the disruptions of 2000 (and the way they treated their employees in bankruptcy). I don’t like US’ new no-minimum mileage policy or the merger with the former HP. I guess I will pick WN by default.

  • Jeff

    I really dont see what all the complaining is about. I travel for business and am a UA 1K, Northwest Plainum, Emirates gold and Starwood Platinum. In the last year I have redeemed FREE FIRST CLASS tickets from NY to Dubai, Germany, Amsterdam, London, South Africa, Singapore and Hong Kong. (7 tickets valued at close to $100,000.00) (All flights on UA, AF, EK, LH, SR and SQ) As for Starwood, I enjoy the upgrades, etc you get by being a platinum member so I never used any points. Last summer I had 2 months off and finally used my points for a free month – 1week each in Mauritius, Sharm El shek, Fankfurt and Doha (28 nights valued at close to $10,000) Yes, I give the airlines lots of business but this is a great way for them to say thanks. (better yet, if you are like me and most of you are, its our comapnies who pay for our busesss trips anyway. This allows us to take our vacations for free. (PS – I just decided to go to Germany next week for 5 days. I went on the Emirates web site, put my dates from NY to Hamburg in, chose first class and 5 minutes later had my FREE ticket. dates and class I wanted. I always here the exerts saying to book way in advance. I find it much easier to book a week or 2 before my trip…this is when the airlines free up inventory.

  • https://www.starwoodhotels.com/preferredguest/account/starpoints/redeem/point_comparison.html Michael

    I discovered the Starwood American Express card a couple years ago, and it has been my primary card since then. I charge several hundred thousand dollars a year in business expenses through the card, so i accumulate a ton of points which I use for family trips and vacations.

    Starwood is an incredible value. When you transfer points to miles, you get a 5k bonus for every 20k you transfer, essentially giving you 1.25 miles per dollar. The selection of airlines you can transfer to is better than anywhere else (including Membership Rewards, which doesn’t include American Airlines). You can get many of their lower end hotels (such as Four Points and some Sheratons) for a little as 2-3k/night. I find it harder to justify the 5, 6, and 7 star hotels at 12-35k/night. Nights & Flights is a great option for their 3 and 4 star hotels. 5th Night Free is a good option for 5 and 6 star hotels if staying 5 nights is convenient. Cash & Points can be a good option for their 4, 5, and 6 star hotels.

    They had a similar reclassification last year, although I don’t think they did much notification of it. (I don’t know if they have done it before that, because I’ve just been a member for a year and a half.) It’s only natural that most would increase in value (especially ones where there was extensive rennovation). Only a relatively small percent of their properties changed classes.

    I’m a Starwood Gold, and I get frequent upgrades (even for rooms paid for with points, which is almost exclusively how I pay). I’ve been very pleased.

    Also, I should note that I put the link to Starwood’s Point Comparison as my website, for easy reference to the myriad of hotel redemption options. I have no relationship with Starwood other than being a happy customer.

  • Brad

    Hotel programs by definition work differently than airlines, because they are dollar-based instead of mile-based.

    If we assume a customer’s average flight is 1000 miles one-way, then it takes 25 one-way flights to earn one free round-trip. If airfare gets more expensive, then the customer pays more to earn, but earns a more expensive rewards — so from the airline’s perspective, it all should work out in the end.

    With dollar-based hotel programs, inflation alone is going to cause hotel redemption rate inflation. If hotel rates rise, customers earn more points (which doesn’t happen with the airline miles model). It only makes sense then that the reward should also require more points.

    As a customer, would I prefer that reward levels stay the same? Of course. But I also understand the business model and see why this hotel reward inflation occurs.

    At least Starwood was nice enough to let everyone know of the upcoming changes and provide time to book rewards at the current level. Among hotel brands, this reward inflation certainly isn’t unique to Starwood, and it seems most hotel programs just raise the redemption rates with no warning. The no-warning changes from other hotel programs are the ones that ought to be labeled “sneaky.”

  • Kris

    I just realized today that Starwood is also doing something else that saves them a lot of points – I checked my balance after having stayed some nights at Sheraton Fishermans Warf recently, and realized that I had only been given points for the value of the extras, not the room. So I called Starwood today to complain only to learn that only some rates qualify for points. Problem is, that the websites and the central customer service does not show if a rate earns points or not. So you’d in principle have to call the actual hotel you’re planning to book to find out if a rate earns points. Also those stays does not count towards membership level. Let me just say that I’m really dissapointed…

  • http://spg.com steve

    i use to love starwood until i started to dig further into their website and rates. in being an spg member you get one 50% off certificate per year. here’s the thing, you call, you get 50% off “rack rate”. EVERYTIME i’ve done this i was able to go onto the hotels direct website and find lower rates then the 50% off. It’s as if the jack the rate so high to make it look like a great deal. it’s not. you might as well throw the certificate away, it’s spg’s way of getting more revenue from you. even their reservation agents agree with this.

  • Coffee

    Just last night we were supposed to use SPG points for a Sheraton en route home from a spring break vacation. Without going into all the boring details, a miscommunication by a Starwood employee resulted in us not having been credited in time with the points we were going to use. A manager made a big show of being very apologetic (we’re talking Broadway performance caliber here) and graciously gave us a 50% off certificate to “help us out” with our hotel costs and make up for the inconvenience we’d been caused. When I called, the rack rate via Starwood was $291 for the hotel in question; so with the 50% off “help” offered us, we’d have paid nearly $150. A call directly to the hotel got us a room for $79.

    Dishonest and sleazy.

  • carver

    I strongly disagree that hotel and car programs are worthless. Like anything else they must be managed to provide the best rate of return.

    I’m a President’s Circle member with Herz. The guaranteed upgrade to a premium car is the perk that makes it worth while for me.

    With regards to hotel programs, I belong to several. Twice I redeemed points to spend a week at the Champs-Elysees Marriott. Another time i got a free week at the Westin Paris.

    The problem is that ppl get confused and believed that these programs are rewards. Of course not. They are to incentivize you to spend you travel dollars with them. Just make sure you get a good rate of return.