Exploring SPG Point Values by Hotel Category

Discussion in 'Starwood | Preferred Guest' started by Wandering Aramean, Feb 10, 2015.  |  Print Topic

  1. Wandering Aramean
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    Wandering Aramean Gold Member

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    A few months back I launched a hotel search engine/comparison tool which allows users to compare paid & award rates across 8 major hotel brands. Since its launch I've collected a whole bunch of data (anonymized, naturally) including average room rates for searched destinations and dates. With only one or three queries the data is somewhat biased. As the number of queries grows, however, the bias should mostly work its way out and lead to some interesting views on average numbers. Calculating average room rate and redemption value across each award category is one of those interesting bits, at least to me.

    [​IMG]

    The results suggest that Category 1-5 hotels are much more commonly available than Category 6 & 7 (~89% versus ~81%) and also that Category 1 & Category 2 hotels have, on average, much higher point values for redemptions.

    Also, the numbers do not change materially when C&P redemption is added to the mix, though the points do generally increase in value. There's another chart of that available if you click on the chart above and read the details on my blog post about it.

    Of course, there are many reasons average values are not a good proxy for overall rates, but I still find myself rather intrigued by the numbers. And it just might change the way you look at booking cheaper SPG hotels, especially if you can get them at the ridiculously low reward rates they often have.
     
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  2. MSPeconomist
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    MSPeconomist Gold Member

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    Interesting....I would have expected the good values to be the aspirational properties, assuminig that one doesn't make the argument that they wouldn't pay those rates or stay there otherwise. OTOH, I'm always making the comparison with the best flexible rate available to me, AAA or whatever, so I rarely see the saame values that others report. My strategy is normally to spend pointss for five night stays in order to take advantage of the fifth night free. I also lke to use points in places that have service charges and high tax rates.
     
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  3. jackplum
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    jackplum Gold Member

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    This is one aspect of SPG that is outstanding. There are some very nice properties for few points and the points and $ when available are just as good.

    Let's just say "Shhh!" and forget we discussed this.
     
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  4. MX

    MX Gold Member

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    I also like this 5th night benefit. But I recently discovered one limitation: the benefit is only available for Cat.4 and higher hotels. Does anyone know if this limitation has always been in place or is a recent "enhancement"? How does that compare to the competition (e.g. Marriott)?
     
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  5. MX

    MX Gold Member

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    In my limited experience I found SPG member properties in Cat.1-3 are overpriced compared to similar non-chain hotels by $20-50 per night. It's probably the SPG marketing markup. In higher cat's the markup is just not as visible.
    The reward rates should not include that marketing markup, since the point users are a captive market and can't take their SPG points elsewhere. So the SPG award rates in lower ranks are by no means an oversight.
     
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  6. jackplum
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    jackplum Gold Member

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    I was only referring to redemptions. I have stayed in a few properties that were at a very low point rate and, in one case, was at a 1 to 10 ratio to a competitor. The $ price was much closer. To me that is a good deal
     
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  7. Wandering Aramean
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    Wandering Aramean Gold Member

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    Even if you knock $30 off all the prices - and I'm not convinced that's entirely reasonable across the board - the trend remains quite similar.
    Code:
    1		2.773577601410934	
    2		2.575936423898071	
    3		1.533434181669811	
    4		1.545810076775431	
    5		1.711921286795923	
    6		1.576501222268731	
    7		1.837925780359990	
     
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  8. NYCUA1K

    NYCUA1K Gold Member

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    Last edited: Feb 11, 2015
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  9. mattsteg
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    mattsteg Gold Member

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    If that's the case, and you believe your own analysis, why aren't you focusing on club carlson or ihg?
     
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  10. NYCUA1K

    NYCUA1K Gold Member

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    Because I have been with HHonors for a long time (long before the analysis) and my travel pattern is an absolute fit for HHonors on every metric: ease of making top elite on base points, which only HHonors allows (I requalified for Diamond after just 7 stays/121K base points in 2014), affordability (my business travel subsidizes my leisure travel), and a large international footprint.
     
    Last edited: Feb 11, 2015
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  11. Wandering Aramean
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    Wandering Aramean Gold Member

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    Only if you earn based on spend at the properties. If you earn based on CC spend or other partner activities then there are other metrics worth considering.

    And there's the part where knowing that the redemption value - no matter how you accumulate the points - is better at the lower category hotels can help to further maximize the "ROI" realized. (Yes, I understand that it is not really an investment.)

    I have similar charts for the other programs as well. Lower category hotels are nearly universally better values.
     
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  12. newbluesea
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    newbluesea Gold Member

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    And lets not forget the by far way more rewarding (multiple annual) promos run by SPG.
     
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  13. NYCUA1K

    NYCUA1K Gold Member

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    This is definitely true. Hilton, IHG, Marriott, and Club Carlson would be a terrible choice for people who depend on CC spend for their redeemable hotel points because of the high or large number of points required to redeem award stays in these programs. Hyatt and SPG would be better for CC spend point earners because of the relatively low number of points required. For my pattern of stay (long stays at generally mid-level hotels) the on-property spend-per-free-night is very favorable and the way to go. My relatively long stays have also benefited greatly from the 2x/3x promos that HHonors has run in recent years. Last year, I end up with just over 700K points in the bank after starting from about 20K. I made Diamond with 121K base points after 7 stays, and since with various bonuses I earn roughly (3 x base points) on every revenue stay, it means that my points from revenue stays were roughly 121K *3 = ~363K in a grant total of ~700K. This also means that 50% of all my redeemable points in 2014 (and 2013 as I also hit 700K points then) were from promos, which is huge. The way this year is shaping up, I suspect that about 60% of my redeemable points will be from promos and I will end up with 1MM points... to allow me to include a truly "aspirational" award stay in my 2015 year-end escapade; well, at least that is the goal. ;)

    NB: If this post seemed cryptic, read it again because I have this terrible habit of first posting and then proofing and editing the already posted text.
     
    Last edited: Feb 11, 2015
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  14. NYCUA1K

    NYCUA1K Gold Member

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    BTW, the reason for this is also explained by the preceding.
     
    Last edited: Feb 12, 2015
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  15. mattsteg
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    mattsteg Gold Member

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    I wonder how muxh this has shifted since the depths of the recession? A lot of new levels added over the past years as demand at the top recovered. Also how availablravailable are the cheapest awards?
    hyatt and spg are ok for cc earn, but club carlson could be argued to be better, if you like their properties. Why do you try to make comparisons of programs that you are ignorant of?
     
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  16. NYCUA1K

    NYCUA1K Gold Member

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    Club Carlson could be "better" with respect to what? Let's see who is "ignorant."

    Below is a graphical explanation to simplify things so that even you would get it. I am going to do the modeling for top elites only and use the highest redemption rate for each program. Things would scale up and down the award charts.

    Chart 1. Top Redemption Rates in "Raw" Points
    Comparing award rates in "raw" points among the programs is meaningless because it does not take into account the ability to earn points under each program. As you can see, Club Carlson would be among the worst programs for folks who earn their points mainly from CC spend because the award rates cost a lot in "raw" points. At a return of 1 point or 2 points or even 5 points per $ spent on a CC, one would have to spend a lot to earn enough points to redeem a stay at a Club Carlson property, especially at those designated as "premium". SPG and Hyatt offer the best value for folks who earn most of their points from CC spend.

    Of special note is that Chart 1, in "raw" points, shows why folks thought HHonors' "devaluation" was so bad, with standard award rates as high as 95K/night vs. 30K/night for top Hyatt category. However, that comparison is meaningless because it does not take into account the fact that HHonors members also earn loads of points from the spend on their stays and other CC activities. Below (Chart 3), it will be shown that the purported "devaluation" of HHonors points is nowhere to be seen when the earning and redemption sides of the equation are incorporated to allow the programs to be compared head-to-head and meaningfully...;)

    Top Rates in Raw Points.png

    Chart 2. Earning Ability under each Program in points/$
    Comparing the relative point earning abilities among the programs is also meaningless because award rates differ from program to program. Note that a HH Diamond paying for their stays with a CC would earn up to 32HH/$, and a Club Carlson top elite would earn 45 pts/$. At the other end are Hyatt and SPG elites who earn a lot less per $ spent. One can therefore see how the award rates are meaningless without taking into account the relative abilities to earn redeemable points. Hilton awards are too "high", you say? Well, so is one's ability to earn loads of HH points, so that , as shown in Chart 3, things balance out!!!

    Earning Potential.png

    Chart 3. Spend Per Free Night
    The 'spend per free night' metric can be compared among the programs because it incorporates the two sides of the equation: earning ability and redemption rates, i.e. Content of Chart 1 divided by Content of Chart 2. For Marriott, I combined their programs because there is no reason for Ritz-Carlton to be separated. I also did the same for Club Carlson 'standard' and 'premium' rates. Those separations are arbitrary because it is like Hilton putting the Waldorf-Astoria Collection in a "program" by itself, while keeping the rules the same as those of the rest of the HHonors program.

    SPFNIGHT.png

    Figure 3 Legend: The chart above compares the "spend per free night" for the major hotel loyalty programs, with and without the bonus points earned from the co-branded credit cards. The benchmark in the chart is the number of points required to afford one night at each program's highest redemption rate for a standard room.

    To be able to afford a single night at a very top SPG property, not taking into the CC bonus points, a top SPG elite would need to spend almost as much as it requires to qualify for HHonors Diamond on spend ($12K)! Hyatt GP, HHonors and Marriott Rewards are virtually identical sans CC bonus points (blue bars); but HHonors edges the other two programs when the CC bonus points (red bars) are included. By far the best (least expensive) program in terms of "spend per free night" is Club Carlson, followed by IHG, and then (in that order but very close) by HHonors, Hyatt GP and Marriott Rewards, and lastly, all by themselves, SPG.

    SPG, for standing out alone as the most expensive frequent-guest program, you've earned "congratulations!"...or somethin
    '.
    Any questions?

    N.B. The quantitative modeling demonstrated in this post and the conclusions drawn from it have independent corroboration in the travel blogosphere. The travel "gurus" out there already knew that the purported "Hilton devaluation" was a myth, nevertheless they still peddled the canard!!!...
     
    Last edited: Mar 9, 2015
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  17. Wandering Aramean
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    Wandering Aramean Gold Member

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    For starters, why do you continue to insist that only top-category redemptions matter? Or that only earning based on spend at properties matters.

    And, FWIW, the Club Carlson Visa Premier card earns 5 points/dollar for all spend which is 2.5x more than the Hilton Visa offers. And the max award rate is much lower.
     
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  18. NYCUA1K

    NYCUA1K Gold Member

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    Fort the same reason that folks went on and on about the terrible "devaluation" of Hilton Honors points when only a mere 3% of some 4K properties were made tough to redeem stays at. Also, we hear a lot about "aspirational" awards, so I concentrate there. At the lower end, everyone would do well (HHonors still better) so it is not as "interesting." I personally travel to enjoy the places I visit and am not so much about how aspirational the properties are, although I would like to continue my tradition of spending New Year on some aspirational SE Asian location, so I am aiming to be at Conrad Koh Samui on 31 December 2015.;)

    My charts account for CC earning and for on-property spend and you can see that Club Carlon's earning potential (Chart 2) is the highest and their spend per free night (Chart 3) is the best -- but this is based on points from revenue stays.
     
    Last edited: Feb 11, 2015
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  19. Wandering Aramean
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    Wandering Aramean Gold Member

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    Right...you only account for earning (CC or otherwise) at on-property spending. Why??

    Because there is generally a whole lot of spending happening elsewhere.
     
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  20. NYCUA1K

    NYCUA1K Gold Member

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    Because that is what I am interested in based on my travel pattern. You are free to consider any other sources of points. For me, points from CCs that are not from on-property spending are insignificant. I use only one CC all year, the Chase UA Explorer visa, until I hit $25K and earn the 10K bonus miles, and then I switch to other cards depending on the occasion. If I have also requalified for HH Diamond and I still have business travel to do, I would start staying at Hyatt or Marriott and use the associated CCs to pay for the stays and stock up on points for those programs to diversify my stays during my leisure travel, especially since some overseas locations that I may wish to visit may not have a Hilton presence...
     
    Last edited: Feb 11, 2015
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  21. Wandering Aramean
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    Wandering Aramean Gold Member

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    So then perhaps not so much with judging other people for having different approaches? And, calling someone else ignorant when they actually got the math correct seems rather unfortunate.

    There's nothing wrong with each person tailoring their approach to the game to their spend and travel patterns. Suggesting there is only one set of relevant data, however, is quite likely to be wrong.
     
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  22. NYCUA1K

    NYCUA1K Gold Member

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    BTW, You got that backwards. I was called ignorant and I just proved who really was. What math did they get correctly?:confused:
    Anyone can do what they wish. For those who happen to have travel patterns that are similar to mine, I hope they would find my modeling useful.

    More to the point is that my modeling is completely general and in many, if not most, cases the conclusions would apply. Just substitute or combine your major sources of points. I have provided the complete anatomy of how I do my big-time redemption every year, successfully I might add, largely using insights from my modeling (e.g., I do not include SPG in my plans because they are not rewarding enough for me -- stayed at a Sheraton in CSX a couple of years ago and it was sort of bland).

    I am done here. Gotta go play with the new UA website (beta), which I just got invited to check out ;)

    G'day.
     
    Last edited: Feb 11, 2015
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  23. Wandering Aramean
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    Wandering Aramean Gold Member

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    That CC-based earning in the CC program is more lucrative than most the others.

    Perhaps you are not ignorant of that fact and merely chose to ignore it, but your "Let's see who is ignorant" retort fails in that regard.
     
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  24. mattsteg
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    mattsteg Gold Member

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    Given the obsession over top-category awards, enough spend on the SPG amex to redeem at a cat 7, high season (excluding the suite only properties) for one night gets you 4 nights (booked in pairs) in the top CC category 7, with points (and change) left for a pair of nights in a CC category 3.

    Or enough spend for a air of nights in a cub carlson cat 7 gets you into a cat 5 spg hotel in low season, using the SPG amex.

    At the low end, $1800 on the CC visa gets a free night (well actually 2 sequential nights) cat 1, vs 2000-3000 (depending on the day of week) for SPG cat 1 using the spg amex.

    cut either of these in half if the spend is in hotels, but relative positioning doesn't change.

    Choosing the earn of the SPG amex over the CC visa comes down to preference for the SPG product, not a lack of valuation on CC earn! The earn on the CC visa is very strong.
     
  25. NYCUA1K

    NYCUA1K Gold Member

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    Do you even have a clue about what point you are trying to make?
    Unless one does volume spending which they put on a CC, like a small business owner or an entrepreneur, which does not include that many people here or out there, it is tough to beat the miles or points that can be earned by using a loyalty CC on purchases from the associated loyalty program. Case in point: You'd written earlier:
    But look at Chart 2. A Club Carlson elite with a CC spending on a revenue stay at a Club Carlson property would earn 45 points/$, i.e., 9 times what they would earn from general spend. A HHonors Diamond with a CC would earn up to 32 points/$ for Hilton associated stays. Therefore, forgive me if I do not buy the ridiculous notion that CC-based earning is more lucrative than others. It can be lucrative if one spends really big on the CC, but that would be counter to the whole point of spending less and earning more points, would it not?. I would say that earning 45 points/$ is much better than earning 5 points/$, but you can argue otherwise if you wish because I am convinced that you have no clue about what you are arguing for or against.

    The soapbox is yours. Knock yourself out...
     
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