As hoteliers Marriott and Starwood prepare to combine their loyalty programs next month, changes to Starwood’s widely used credit card are sparking anger among travelers.
Beginning in August, users of the Starwood Preferred Guest
card will earn one-third fewer reward points for most every dollar they spend. The changes, which come as Marriott merges Starwood’s rewards program into its own after acquiring Starwood in 2016, could reduce loyalty rewards for heavy users by thousands of dollars annually.
“It’s a pretty big hit,” says
a Santa Monica, Calif., attorney who uses credit card rewards for free travel around the world. The card he’s pulled out for everyday spending the past 10 years “just doesn’t make sense anymore,” he says.
In the competitive credit card rewards world, there are premium cards that people use for special benefits and high earning in specific categories like airline, hotel and restaurant purchases; airline cards that are good for avoiding baggage fees and gaining some boarding priority, and everyday cards that pay back well at the grocery store, department store, utility bill and everywhere else.
For many travelers, the best everyday spending card has been the SPG Amex. The points were a prized currency, often giving back about double the value that you’d get out of a basic airline card or cash-back card. You get a 25% bonus when you transfer points into airline miles at 35 airlines, including American and Delta, or you can use points for high-end resorts.
People who maximize credit card rewards can dramatically boost luxury when traveling. Your spending can result in free business-class international tickets, free hotel nights, access to airport lounges around the world, entry to special events like concerts or even hundreds if not thousands of dollars in cash back a year. You have to pay the balance every month to avoid finance charges, of course.
After Marriott acquired Starwood, the parent of Sheraton, Westin, W and other brands, the company decided that Starpoints, as they were called, were three times as valuable as Marriott Reward points. The two loyalty programs were operated separately for an interim period but you could transfer points between them at a 3-to-1 ratio: 10,000 Starpoints got you 30,000 Marriott points.
The SPG Amex card had paid one Starpoint for each dollar spent on everyday items. Beginning in August, each dollar spent will get you two Marriott points, not three. Before, you had to spend $20,000 on the card to get 25,000 airline miles. Now you’ll have to spend $30,000 to get the same miles.
Marriott and Amex say they added a new benefit—a free night at a lower-priced hotel—that actually makes the card more valuable for average consumers, people who haven’t been using the card a lot for everyday spending. Marriott says as it weighed perks, it opted for the free night over richer points-earning.
For average consumers not earning big point totals, “the card actually got richer,” says
Marriott’s senior vice president, loyalty. “If you look at everyday spend and add in the free night certificate it’s still one of the best and most-rewarding cards in the market,” he says.
Marriott tried to preserve generous bonus points-earning for actual spending at Marriott hotels along with an easier path to elite status from the Starwood program, Mr. Flueck says. About 50% of the 6,500 hotels under the Marriott umbrella will go down in the number of points required for award stays; 30% will get more expensive in points and 20% will stay the same, Mr. Flueck said. Overall, it’s a slight decrease in what hotels cost in points.
American Express won’t say how many SPG consumer and business cards are in circulation, but says the portfolio is the second-largest among co-branded cards after Delta co-branded Amex cards.
With the free night offered, plus increased payback on dollars spent at Marriott properties, “we are confident that our card members will see the value in our new and refreshed cards and the broader Marriott loyalty program soon,” American Express said in a written response to questions.
Travelers have generally been pleased with the way Marriott has integrated Starwood’s loyalty program overall, but the card changes have drawn ire. Frequent flier and credit-card blogs are filled with posts from consumers angry about the devaluation of the SPG Amex card, which costs $95 a year.
founder and chief executive of The Points Guy, a travel advice site, says that while seasoned travelers would never consider a cash-back card five years ago, the decreasing value of points has made cash more enticing. He notes an overlooked aspect—you can earn miles and points on travel you buy with the cash you get back.
“I’m the Points Guy but now more than ever they sure are making the case for cash-back,” he says.
Mr. Kelly values Marriott points at about 0.9 cents each and says current Starpoints are the most valuable currency out there at 2.7 cents per point. Mr. Flueck of Marriott says he thinks estimates like that are valid.
With Marriott points worth less than a penny, earning two points per dollar spent puts the payback on the SPG Amex at less than 2%.
That’s not enough for
a Dallas attorney who’s used the SPG Amex card extensively since 2006 for vacation hotels and first-class tickets on
For credit-card gamers, “I feel like the Starwood card was the perfect card and now it’s not,” he says. He says he’ll now use it primarily for spending at Starwood and Marriott hotels, where he can get bonus points for those card charges, rather than everyday spending. That will reduce his spending from close to $100,000 in business and personal charges on the card annually to just $10,000 to $12,000 a year spent on the hotels.
Both Mr. McCoy and Mr. Parker are considering shifting everyday spending to the Chase Freedom Unlimited card, a no-annual fee card that pays 1.5% back in Chase points. Those points can be pooled with a Chase Sapphire Reserve account—a popular high-end card that pays a 50% bonus on points redeemed for travel. So redeeming for airline or hotel bookings, you can get 1.5% plus a 50% bonus on that, or 2.25%.
That alone is better than 2% cash-back cards like Citi Double Cash and Fidelity Rewards. But savvy frequent fliers often transfer Chase points to foreign airline frequent flier programs where business-class tickets are easier to score and often cheaper than U.S. airlines. You can end up with 5% to 6% back on your credit card spend.
Write to Scott McCartney at firstname.lastname@example.org