“Buy low, sell high.” Or, in the points world, “Buy cheap, redeem expensive” might be more appropriate. That’s the common refrain we hear and aim for. But what if that’s not really the best value? What if the cheaper rates are the ones we should be redeeming our points for? How would that skew your views??
I’ve previously looked at a revenue-based airline program in this context and the cheaper flights were the ones to book on points to maximize value. A bit unnerving and counter to the common theme. But what about hotels? How do they fit in the mold? Here are some interesting numbers from Starwood Preferred Guest average room rates as shown through the searches performed on Hotel Hustle.
The data is quite counter to the typical story being told. The cheaper rooms are, on average, the best redemption values. By far.
And in some ways that makes sense. Cheaper rooms are the ones the company wants to fill no matter what as they’re likely to spoil so getting anything for them – points or cash – is a win versus having it stay empty. But there’s also the exclusivity factor at play. Should we be surprised that the SPG Category 6 & Category 7 hotels have a 18.3% rate of no awards available in this data set, compared to only 11.5% for the lower category properties? When the properties are not getting reimbursed from the program at a rate which more closely covers the marginal costs it should be somewhat expected that access to those bookings are harder to come by. In Starwood‘s case that comes in the form of limited numbers of specific room types or other games with inventory, but it absolutely happens.
“But there are Cash & Points awards,” you’ll hear. And those are the bestest value ever. Perhaps, though the data does not necessarily bear that out. Partly because C&P availability is but a subset of regular award availability (good thing I have alerts for it) and partly because the numbers are still tied to the room rates. And it doesn’t necessarily add up in your favor as much as you’d like to think. (n.b. – C&P CPP calculated as (Cash Rate-C&P Cash)/C&P Points; there are lots of ways to approach that one but this is the method I chose as it is most consistent)
So, does this mean that there are no good redemptions at luxe hotels? Of course not. They definitely exist and I’ve seen more than a few results in the Hotel Hustle data which suggests travelers are finding them. But it also raises the question of just where the best results really are. For SPG it would appear that lower category hotels are where the sweet spot is. Even if they aren’t the luxury properties your aspirations have you reaching for.
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