Not long ago I wrote about the value of hotel points and how to figure out what they are worth. This is a key piece of information to have when it comes time to redeem them. However, there is much more to the story as many tricks exist to increase the value of your points. Each rewards program has its own unique programs and promotions.
SPG offers a variety of ways to increase the value of your Starpoints including: Cash & Points, 5th Night Free, Room Upgrades, and 50% Off Rack Rates, and Nights and Flights. See the redemption schedule at this link. The table below should help you understand a couple of the redemption options available through the SPG program and how to make your Starpoints go a very long way.
Free Nights vs. Cash & Points
The first section of this table compares the value exchanged when opting between Free Nights and a Cash & Points approach. When using a Cash and Points approach, you are effectively buying a fixed amount of points instead of using only points already accrued. There is a fixed fee for this (depending on the Category), so it’s easy to determine how much you are paying for Starpoints. From Line B, you can see that you are paying anywhere between 0.7 cents and 1.4 cents per point. This is a pretty good rate when you consider that Starpoints are probably worth at least 2.5 cents each. See my post from August 11 for the methodology that supports this valuation.
A good starting point is to use a value of 2.5 cents per hotel point (shown in Line C) to determine the amount of value exchanged for a single night redemption in both a Free Night Redemption (Line D) and a Cash & Points Redemption (Line E). As you can see from the results, Cash & Points will always result in a superior exchange of value, sometimes resulting in nearly a 50% savings.
You could also take the opposite approach and start with the cost of a hotel: assume you found a Category 4 hotel in New York that cost $329 per night (The New York Helmsley is currently priced at this level). Using the 10,000 required points would result in a redemption value of 3.29 cents per point, which is very good. However, if you used Cash & Points, you would pay $60 and use 4,000 points. Since 4,000 points gives you an effective discount of $269, the redemption value per point is 6.73 cents each. Again, Cash & Points results in a dramatically superior return on your points.
50% off Regular Rack Rate
The second part of this table highlights the value of Starpoints when used under the 50% off Regular Rack Rate promotion. It takes 1,000 points to participate in this deal regardless of the Category. This becomes an exceptionally good deal at the higher Category levels. The Room Cost assumption used in Line G is the same as the breakeven cost you would consider when deciding whether to use points in a Free Night Redemption or whether you should pay cash (that is, Room Cost = Free Nights Redemption Requirement x 2.5 cents).
Line I shows that you can really get a lot of value for your points, up to 40 cents per point! Most people I know tend to stay in the range of Category 3 to 5 for their redemptions. At this level, the redemption value is between 10 and 20 cents per point. It should be noted that when using the 50% off promotion, you will still pay a fair amount of cash out of pocket for your room, but you will be getting a very high amount of value for your points. Also, taking advantage of this deal requires calling the Customer Contact Center to find out if the promotion is available for the hotel in which you want to stay.
The bottom line here is that there is tremendous value in understanding the Starpoints promotion offers and doing a little research to find the best deal. As always, feel free to comment with questions or insight.
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