Scaling Peaks of High Category Hotel Awards

Scaling Peaks of High Category Hotel Awards

SPG reinstituted peak season dates for Starwood Preferred Guest hotel rewards at 65 percent of its category 5, 6 and 7 hotels for 2011 and 2012. Over 100 Starwood hotels have peak season dates. Some hotels like the category 5 Westin Verasa Napa and Four Points Manhattan Chelsea have four months of 2011 peak season dates at 16,000 points per night.

Peak season dates master list:

Earning Free Award Nights

SPG is an outlier among hotel programs for the amount of hotel spend needed for a free night at a high category hotel–even without peak season rates. SPG altered its hotel award structure over the past decade, adding category 6 and category 7 hotel award levels. A similar pattern of new higher category awards played out across the hotel loyalty world in the past few years including Marriott category 8, Hyatt category 6, Hilton category 7 and Priority Club tiers for Holiday Inn and InterContinental brands.

The structure for earning points is the most stable aspect of hotel loyalty schemes. Base points are loyalty points earned per dollar of hotel spend before any promotion or elite bonuses. The base points earn rate for SPG is 2 points/$1. Hyatt uses 5 points/$1. The standard for most major hotel programs is 10 points/$1.

Scaling High Category Awards

An interesting pattern emerges when base points earned per dollar are correlated to the cost of award nights at various category levels in different hotel programs. The amount of hotel spend needed to earn sufficient points for a free night at the highest award levels is similar across hotel programs–except Starwood Hotels.

Marriott Rewards highest category 8 hotel nights are 40,000 points. Earning 40,000 base points requires $4,000 in hotel spend. Priority Club top-tier InterContinental Hotels at 40,000 points take $4,000 in base spend. Lower earning brands at 5 points/$1 are ignored in this analysis. Hyatt Gold Passport category 6 awards at 22,000 points per night equate to $4,400. Hilton HHonors category 7 hotels at 50,000 points range from $3,334 in hotel spend for Points & Points earners to $5,000 for Points & Miles earners.

In contrast, earning 12,000 base points for a SPG category 5 standard hotel award requires $6,000 in spend or $8,000 for peak season nights. Starwood Preferred Guest is an outlier in this award pattern at the category 5 level, let alone SPG category 6 and 7 awards requiring 20,000 and 30,000 points for a standard free night. This correlates to $10,000 or $15,000 in hotel base spend.

HHonors and Marriott Rewards also have higher cost award nights for some Waldorf Astoria and Ritz-Carlton properties.

A Competitive Set Comparison of Marriott and Starwood

A debatable argument is SPG program high category hotels are higher quality hotels than other chains.

Hotels in a specific location and similar hotel market segment are in the same competitive set. Hotels in different chains but the same competitive set tend to have room rates on any given day within about 10 percent of each other.

St. Regis New York and Ritz-Carlton Central Park are two New York City luxury hotels in the same competitive set. Both hotels had an identical room rate of $895 per night for June 7, 2011 when I checked.

St. Regis New York is a category 7 SPG award hotel at 30,000 points for a standard free night. SPG members need $15,000 in hotel spend to earn 30,000 base points. Ritz-Carlton New York Central Park is the highest tier 5 hotel award at 70,000 points for a free night. Marriott Rewards members need $7,000 in hotel spend to earn 70,000 base points. Marriott Rewards members earn two free nights for the same level of spend the SPG member earns one night at the St. Regis. And this is without peak season rates at the St. Regis raising the price to 35,000 points per night for part of December 2011.

Comparing award nights using base points value ignores key points-earning components for loyalty members: elite bonuses, promotions and co-branded credit cards. SPG has a slight advantage at the Gold level with 50 percent elite bonus points. Other programs offer 10 to 25 percent bonus at mid-level elite. SPG’s elite advantage is lost at the SPG Platinum level where most programs match 50 percent elite bonus points for top-tier elites.

SPG needs high-value promotions to compensate for an uncompetitive award scheme at high category hotels. Bridging the hotel spend gap of $4,000 to $7,000 to earn the highest awards in most programs with $6,000 to $17,500 for SPG awards necessitates better promotions than double points on stays. Otherwise, high category SPG hotel awards are geared more for high-spend SPG credit card points earners than frequent guests.

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