Do the negatives outweigh positives in the new Marriott program?


After reading some of the rumors in advance of Monday’s Marriott announcement, I commented to Greg that I was excited about going to the Marriott event in New York to find out how they would put a positive spin on it if all of the rumors were true (going revenue based, eliminating transfers to airlines, etc). I think I went into the event with a healthy bit of skepticism. I found myself pleasantly surprised by the outcome. Of course, not everyone is happy.

In my post about the new sweet spot created at the top end of the chart the other day (See: The huge wins in yesterday’s Marriott announcement), reader Christian said that despite that bright spot, the negatives of the new program far outweigh the positives, calling the new program the “worst of both worlds”. While I certainly agree that there are some negatives, I thought that they were significantly less catastrophic than many anticipated. Since Christian disagreed with me, I was curious to get his thoughts and asked him about the key negatives in his opinion. Here was his response:

In today’s post, I wanted to take a look at some of those changes he highlighted. Many of them are negative individually. Are they collectively horrific? Let’s see.

1) SPG credit card holders are getting devalued

Can you get a second Amex bonus under a second business?

Without a doubt, SPG credit card holders are taking a big hit. The SPG cards will go from being cards I routinely used for unbonused spend to cards I’ll use strategically — in other words, they’ll become ordinary hotel credit cards. They won’t be the same. Truth be told, once the merger happened, I never expected they would be as generous for as long as they have been.

Everyone looks at these cards a bit differently, so I’ll break the losses into a few sub-categories:

SPG cardholders who viewed points as airline miles

If you primarily used your SPG card as a means of earning airline miles due to the 1:1 transfer ratio and 5,000 mile bonus when transferring 20,000 Starpoints, there is no doubt you are losing what has long been a great opportunity. Starpoints were very special in this regard, with no other hotel currency like them.

The good news here is that those who are flush with Starpoints don’t need to flush those points in order to get value from airline transfers. Marriott is essentially keeping the transfer ratio, with 60K Marriott points (the current equivalent of 20K SPG points) transferring to 20K airline miles plus a 5,000 mile bonus for transferring 60K. In other words, every 20K Starpoints that you have right now will still transfer to 25K airline miles in the new program.

Moving forward from August 2018, Marriott Rewards points will be harder to earn from credit card spend (since the everyday earning on the SPG cards is being slashed from 3 Marriott Rewards points to 2 Marriott Rewards points), so the airline conversions won’t be a compelling reason to spend on the cards after August. But those who have spent in anticipation of eventually transferring to an airline are going to come out fine.

SPG cardholders who used the card as a daily spender

Due to the strong value of Starpoints, both as a currency transferable to airline miles (as noted above) and towards rooms in the Starwood Preferred Guest program, many people have viewed the SPG cards as the best in the market for unbonused everyday spend. Between earning an effective 1.25 airline miles per dollar spent (as long as you transferred in 20K increments) and being able to redeem for free nights starting from 2,000/3,000 Starpoints, you could spend with confidence that you would pretty easily redeem each Starpoint for more value than you could have otherwise earned from a cash back credit card.

Starting in August, you’ll be earning less – just 2 Marriott Rewards points per dollar on unbonused spend. Since our Reasonable Redemption Value for Marriott Rewards points is only 0.72 cents per point, it won’t make sense to put unbonused spend on these cards in most scenarios since you could earn a better return with a cash back credit card.

SPG Business cardholders who frequently stay at Sheratons with a club lounge

The SPG Business credit card currently offers club lounge access during Sheraton stays. Starting in August, it won’t. That’s a big hit if you booked a Shertaton stay for August or later counting on lounge access from the credit card. I especially feel for anyone who made a prepaid, nonrefundable reservation counting on this one.

I’ve personally made good use of this benefit before. Lounge access at the Sheraton Maldives saved me a bunch of money on food a couple of years ago.

On the flip side, I’ve found some domestic Sheratons less enthusiastic in their offerings. At the Sheraton Tribeca, for example, they advertise access to snacks and drinks throughout the day. On the second day of my stay, here were the snacks:

That’s a few bags of Lay’s potato chips — barbecue flavor only — and a few bags of Lorna Doones, accompanied by a few nutrigrain bars. To be fair, there was also a basket with bananas. That photo was from Day 2. On Day 1, there were no chips or cookies — only raspberry flavored nutrigrain bars. Raspberry isn’t my flavor, so I went to grab a Pepsi from the cooler, only to find that they had no regular Pepsi – only diet. On Day 2, they did restock the regular Pepsi. My point here is this: the value of this benefit varies tremendously. In the case of the Maldives, my wife and I probably saved a couple hundred dollars on food and drinks over the course of our stay. At the Sheraton Tribeca, I got 3 cups of coffee and a bagel in the morning. Since there was an in-room coffee maker and a bagel shop literally right next door, I don’t place huge value on the club lounge there.

Furthermore, I never really understood the target market on this benefit. I think it’s a confusing benefit for anyone who isn’t a credit card enthusiast. Lounge access at 1 brand out of 30 in the combined program is a weird benefit for the average consumer to follow. It also created confusion at the hotel level — while you neither need to pay with your SPG Business card nor physically have your card with you to access the lounge, there were periodic reports of hotels that misunderstood the benefit. I’m not terribly surprised to see it go.

2) SPG Platinum devaluations

SPG Platinum benefits

The majority of negatives in the new program (and indeed in Christian’s comment) affect SPG Platinum members, who will become Marriott Platinum or Platinum Premier members in the new program. Again, I’ll break the negatives into a few separate groups.

SPG Platinums who qualified on stays

In the old Starwood Preferred Guest program, you could qualify for Platinum with 25 stays. In the new program, Platinum will require 50 nights. If you only stay 25 times each year and most of your stays are only 1 night, you’re deifnitely going to lose out.  What percentage of SPG Platinum members qualified based on stays? I have no idea, but I would suspect that most people who came to enjoy Platinum benefits probably stay more than 1 night on average. My guess is that this affects some Platinum members, but probably not the majority.

On the flip side, Marriott Rewards members didn’t previously have this option, so they aren’t losing.

SPG 50, 75, and 100-night Platinums

Starwood offered very generous benefits for the various tiers of Platinum. The 10 suite night awards at 50-night Platinum status will now drop to just 5 and the ability to check in at the time of your choice and stay for 24 hours for 75-night Platinums (known as Your24) will become a benefit reserved for 100-night Platinums who spend an average of $200 per night. Those are definitely hits that will sting those counting on them.

The flip side of this is that Marriott Gold members will become Platinum under the new program, meaning that they should qualify for 5 suite night awards starting in August. That’s awesome news if you are a Marriott Gold member (including one who has matched from SPG Gold). In years of being a Marriott Gold member, I only recently received my first upgrade to a suite (via Marriott chat — see: Marriott chat upgrade success). Getting 5 guaranteed suite nights will be a big win for people who matched over from SPG Gold or for 50-night Marriott loyalists who have earned status the old-fashioned way.

While the revenue requirement for Platinum Premier Elite 100-night status sounds very steep at $20,000 per year, I wonder if there isn’t a healthy number of 100-night elites that aren’t that far off of this number. After all, if you’re spending 100 nights a year in hotels, you are likely traveling for business and expensing your room, meals, etc. I would think that a fair number of people with a job that requires this much travel are spending a lot of nights in cities where room rates are expensive enough to make this attainable. It’s clearly a negative for those who regularly spend less than enough, and maybe I’m off in my assumption that a fair number of 100-night members spend somewhere in this vicinity each year, but I would think there is at least a substantial number of people who are unaffected by the revenue requirement. It will clearly affect some – will it be most 100-night members that are hurt by this? I’m not sure.

SPG Platinums who counted on earning status from multiple rooms

If you frequently travel with others and have been able to book and take credit for those extra rooms for additional elite nights, you’re going to be losing that benefit in August. Starwood currently lets you receive elite night credit for up to 3 rooms in one night. Marriott will only award 1 elite night per calendar day.

No club lounge access at resorts

This is again a loss for SPG Platinum members, who have had access to SPG club lounges even at resorts. I’m not sure how many SPG resorts offer club lounges, but it’s a loss at those that do.

Breakfast at The JW Marriott Phu Quoc Emerald Bay Resort & Spa

On the flip side, Marriott Platinum members and above are gaining breakfast at Courtyard, AC Hotels, Protea hotels and at resorts. While I’ve long griped about the lack of free breakfast at Courtyard hotels, I certainly don’t think that getting it makes up for club lounge access at a resort. However, a much bigger gripe (and therefore bigger win in my book) is the breakfast situation at Marriott resorts. I regularly ignored Marriott resorts for reservations because of the lack of free breakfast on vacation, a time when it matters more to me than when I’m working or on a road trip. This won’t mean much for SPG Platinum members, but it’s a huge win for Marriott members.

3) No elite benefits at Ritz-Carlton resorts

While this is disappointing, it’s not a change. Platinum memembers don’t currently get free breakfast or lounge access at Ritz-Carlton properties and they won’t moving forward. I wish Marriott would have changed this to at least offer free breakfast, but it’s not a negative change.

4) No elite night for every $3,000 spent

Previously, Chase Marriott Rewards Premier credit card holders have earned an elite night credit for every $3,000 spent on the Marriott Rewards Premier (or Premier Business) credit card. That will be going away with the new Chase Marriott Rewards Premier Plus card. Current cardholders will keep their current product for the time being, though my bet is that this benefit will end in 2019 as it doesn’t line up with the new product offerings.

This is a loss for those folks who regularly spend almost enough nights to qualify for the next tier, but fall just a few nights short. For example, if you were staying 48 nights this year, it would be helpful to earn 2 more nights for spending $6,000 on a Marriott credit card.

However, given the very low earn rate (since we value Marriott Rewards points around 0.72 cents per point, it’s like a return of 0.72% on spend), there is a huge opportunity cost to spending at 1x on a Chase Marriott credit card. Since you could earn 2-3% cash back on other cards, you’re essentially coming out behind $38.40 for every $3K spent on this card (versus a 2% cash back card — $68.40 versus a 3% card). If you’re manufacturing spend to meet these requirements, you have to further include your MS costs. Even in the bonus categories, the return just doesn’t beat other cards on the market, which makes it hard to justify earning more than a couple of elite nights this way in my mind.

5) Lifetime elite status changes

We’ll cover this in another post. Christian isn’t wrong; SPG Lifetime members get the short end of the stick. On the other hand, some people who weren’t yet lifetime members in either program but have enough combined activity may now reach lifetime status when the programs combine. There are pluses and minuses here for different people.

Why I don’t think the negatives outweigh the positives

No doubt, the list above includes a number of negative points — most of which apply strongly to SPG Platinum members. However, I wouldn’t say that they are collectively horrific for one big reason: there isn’t a lot of overlap between the groups affected. In fact, there is no one person affected by all of the negative changes.

Here’s what I mean: Someone who is spending 100 nights but not spending $20K or who is losing Your24 for 75 nights probably couldn’t care less about not having a 25-stay path to Platinum status or not getting an elite night for every $3K spend on the Marriott credit card. Those folks who count on getting elite credit for 2 or 3 nights when booking multiple rooms probably aren’t concerned about Sheraton club lounge access (because I’m not going to travel with my sister and parents and go eat breakfast in the club lounge while they fend for themselves). Someone who spent money on SPG credit cards primarily to earn airline miles probably wasn’t staying enough for elite benefits to matter to them (otherwise they would presumably be using more points for stays). Someone like me who is losing guaranteed 4pm late checkout that was gained from the Amex Platinum card partnership was never going to have an Ambassador, so that change isn’t relevant for me.

I think each of the negatives hurts a set of people for sure, and I find myself hurt by a few of them (mostly by the loss in value of the SPG card as a daily spender). That said, the fact that Marriott didn’t go revenue-based, didn’t get rid of benefits for current Marriott Golds who got that status because they stay at Marriott hotels (and in fact increased benefits for that group), didn’t create an award chart with a top end that is higher – but rather is lower — than today’s top tier, and didn’t get rid of a favorable transfer to airlines are all nice surprises.

SPG Platinum members knew that the writing was on the wall when the chain sold; the program was very generous because it had to be. Being loyal to Starwood required real effort due to its smaller footprint. Being loyal to Marriott is easy with its massive global footprint. We knew they wouldn’t have to offer as many benefits in order to retain loyalty, and yet they have maintained benefits like guaranteed 4pm late checkout for 50-night elites and added suite night awards for that group, which I would not have expected when the merger was first announced. I’m personally very bummed that the SPG Gold status I got from the Amex Platinum card will no longer give me guaranteed 4pm checkout, but I am also glad that it’s a benefit that will stick around for those folks who spend 50 nights a year in hotels.

Furthermore, while SPG Platinum members are losing some benefits, they are maintaining access to a pretty good set of benefits (let’s not forget that comparably-sized chains like Hilton and IHG do not guarantee late checkout or suite upgrades to anyone) at a massive number of hotels around the world. While I know that’s not a trade that any SPG Platinum member asked for, it’s nonetheless got some value to it.

Bottom line

I think that individually, there are obviously some losses, the biggest being the devluation to the SPG cards. We’ve yet to see what will happen with mapping existing hotels to the new award chart, so there is room for more negative to come in that regard. On the other hand, I think that the negatives weren’t as catastrophic as might have been expected: let’s not forget that when this merger was first announced, many assumed that Marriott would just absorb SPG into Marriott Rewards and not add any of Starwood’s benefits. Furthermore, I think that each of the negatives affects some people, but there isn’t a lot of overlap in the groups hurt by the changes (apart from the fact that the SPG card earning devaluation hurts everyone). Overall, I think the benefits that are sticking around look pretty good in comparison to Marriott’s closest competitors in terms of scale. They didn’t keep everything great about Starwood, but I definitely wouldn’t call it the worst of both worlds.

What do you think? Are the changes more bad than good? What additional negatives affect you? Let me know in the comments.

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