Maximise your Avios, air miles and hotel points

Why hotel credit cards became more important – except the SPG Amex

Links on Head for Points may pay us an affiliate commission. A list of partners is here.

My friend Andy was in a British Airways lounge in the US last week when he got talking to a fellow passenger who turned out to be a senior UK Amex employee.  The conversation turned to the Starwood Preferred Guest American Express card and its pros and cons.

As I know she will be reading this, here is my view.

Hotel credit cards in the UK are currently on a roll.  There are four reasons for this:

  • the card providers have done a good job of packaging points with hotel status benefits
  • recent rises in hotel room rates as the world economy improves make hotel points more valuable
  • the Avios devaluation has made Avios-earning credit cards less attractive
  • the aggressive airline sales recently have seen BA, KLM and Qatar selling business class seats for little more than the taxes required for an Avios redemption.  Passengers with flexible diaries are realising that paying 100% cash (and being willing to start their flight elsewhere in Europe) and being opportunistic is a better deal than using miles

The main UK Visa / MasterCard-based hotel cards each offer a decent reason for getting them:

IHG Rewards Club Premium Visa costs £99 and, even ignoring the generous sign-up bonus, offers long-term value.  You get top-tier IHG Rewards Club Platinum status and a free night every year in any of their properties for spending £10,000.  The latter is worth £250 at a good InterContinental.  The two points earned per £1 are worth 1p which is good.  If you sign up before March 31 you receive 60,000 IHG points which I value at £300.

Hilton HHonors Platinum Visa is free and has a great sign-up deal of a free night anywhere (including the Conrad Maldives, usually £1000 in peak season!).  The earning rate is only average (2 points per £1, worth 0.6p) but spending £10,000 gets you Hilton HHonors Gold status.  That gets you an upgrade and free breakfast on every Hilton stay, with the exception of Waldorf-Astoria.

Even the Marriott Rewards MasterCard has its good points.  It is free, you get Marriott Rewards Silver status and 10,000 points (worth £50-ish) and you get another 2,000 free points every year.  The earn rate is poor, though, at 1 point per £1, worth 0.5p.

Compared to these three cards, the Starwood Preferred Guest American Express card doesn’t have much to offer long term (I am ignoring the one-off sign-up bonus in this discussion):

There is a £75 annual fee

You earn 1 point per £1 – worth around 0.75p to 1.25p depending on whether you use them for airline miles or Starwood hotel stays

There are no bonus points for spending at Starwood hotels

You receive SPG Preferred Guest Plus status for signing up (this is an unadvertised benefit)

You receive Starwood Gold status for spending £15,000 – this has just been devalued now that SPG gives free internet to all guests

You receive a free weekend night in a Category 1-4 hotel for spending £25,000 per year.  Starwood has SEVEN reward categories in total.

It is the latter benefit that blows my mind.  I genuinely cannot get inside the head of the person who signed that off.  Unless you can charge business expenses to a personal credit card, I estimate that you would need to be earning £150,000 per year in order to make £25,000 of discretionary spending on an American Express card.  This substantially limits the market for the card.

No other UK credit card requires such a high spend target to trigger a reward.

There are few decent SPG properties in Europe in Categories 1-4.  The ONLY UK hotels in Category 1-4 are the Sheraton Skyline, Sheraton Heathrow and aloft at the Excel conference centre and in Liverpool.  These are not, to put it mildly, top weekend break destinations!

The sort of person who earns £150,000 in order to be able to put £25,000 of personal spend through an Amex does NOT spend their leisure time in Category 1-4 SPG hotels!

Even then, it is only one free night.  At a weekend.  It is unlikely the cash cost of such a room would be more than £75 – a poor return on £25,000!

What does the SPG Amex pay you back?

Let’s assume you can get 1.25p of value from a Starwood point, which is generous.

£5,000 annual spend earns 5,000 points (£62.50 back) – £75 fee = net loss of £12.50!

£10,000 annual spend earns 10,000 points (£125) – £75 fee = £50 of benefits (0.5% back)

£15,000 annual spend earns 15,000 points (£187.50) – £75 fee = £117.50 of benefits (0.78% back) plus any value you derive from SPG Gold status

£25,000 annual spend earns 25,000 points (£312.50) – £75 fee = £237.50 of benefits (0.95% back) plus at most £75 of value from your free Cat 1-4 weekend night – in reality most people would let this go unused

You can get substantially better returns from other fee-paying cards (eg two airline miles per £1 on some Amex cards) or equivalent returns from a card with no fee.

What can be done?

As I said at the top of this article, hotels cards are undergoing a renaissance at the moment in the UK.  How can SPG stop itself missing the boat?

This is my proposal:

Reduce the spend threshold for the free night from £25,000 to £10,000 or £15,000

Make the voucher valid for any category of hotel

The ‘weekend only’ limitation can remain

Offer a 2nd night, when booked with the free night voucher, at a 50% discount to Best Available Rate

Remember that, even if you brought in all the changes above, you are still only matching the free night benefit of the IHG Rewards Club Premium Visa – and the free night voucher on that card does NOT have a ‘weekends only’ restriction.  It is also easier to rack up spending on the IHG card as it is a more widely accepted Visa.

Starwood has one advantage that IHG does not, however.  There are a long list of genuinely impressive European properties – the Gritti Palace in Venice, the Imperial in Vienna etc.  These are very fine hotels indeed.

Speaking personally, I would put £10,000 or £15,000 per year through my SPG Amex if I could get a cheap (1 night free, 1 night at half-price) weekend away each year at a luxury European SPG property.  This could easily become an annual ritual for some couples and drive substantial loyalty to the card.

Reducing the spend limit from £25,000 would also make the Starwood Amex a realistic ‘second card’ for holders of the British Airways Premium Plus Amex.  A significant number of BA American Express holders stop using the card once they have triggered their 2-4-1 voucher at £10,000 of spend.  With the SPG free night set at a realistic level they may be willing to move their next £10,000 – £15,000 of annual spend to the Starwood Amex.

Is Starwood willing to do this?  I have been told, via a member of SPG’s private online community forum, that Starwood is planning a radical change – the card will have a new design!  That may not be enough in the current market ….

(Want to earn more miles and points from credit cards?  Click here to visit our ‘Credit Cards Update’ page or use the link in the menu bar at the top of the page.)

Comments (81)

  • James says:

    Another 20,000 point sign up bonus period would drive a few more sign ups (me included!) 🙂

    • Brian says:

      I think Starwood/Amex have cottoned on to the fact that most or all of these sign-ups then cancel as soon as they can. They need to change their product in order to encourage at least a few people to stick with the card.

  • Tracy says:

    I am trying to sign up for the Hilton Honours Credit Card but when I click the link it takes me through to Barclays and this credit card isn’t listed. Any ideas please?

  • Paul says:

    Interesting analysis. My wife and I took these cards last year for a short time when there were sign up bonuses and when SPG allowed points to be freely transferred. I have 2 double room booked for 7 nights each in August in Indonesia coming up as a result. This is worth around £1000-£1500 based on best room only rate.
    I am one of those who stops using BAPP at £10k and am constantly on the hunt for churning opportunities. These have been pretty poor of late though I have done the hilton card (free night at St James Contad) and now on the IHG following 60k sign up. My wife was the other way around.
    My main issue is that I have grandfathered the BAPP for free so my churning is restricted and my better half.
    My main issue with hotels is the lack of consistency in terms of recognition and property benefits. IHG is woeful, other than ambassador. Hilton has been hit and miss also. Surprisingly my best card is the free Accor platinum from Amex and property recognition and tangible benefits have been consistently delivered. Perhaps they should also offer a branded credit card!

    • sandgrounder says:

      +1 on the Accor card!

    • The_Real_A says:

      +3 The gaurenteed benefits have seen me shift several stays to the Sofitel. Non gaurenteed benefits do not drive me to change my behaviour in any way. If only Accor had a more “interesting” loyalty program…

      • Brian says:

        I don’t see that as a problem – 2 cents per points is much better than your own valuation of all other points (Avios 0.75p, Starwood up to 1.25p). One might assume that those who get the card would be those who stay at Accor hotels, and can therefore use the points. For all others, there is always the chance of transferring to airlines and getting less value.

        • Rob says:

          The problem being that Accor would never go for it! These are REAL costs to Accor because it has to reimburse the hotels 2 cents per point when you redeem. Unless it was getting 2 cents from the credit card company per £1 spend it wouldn’t make sense.

          Compare that to the hotel chains who typically only pay hotels £20 or so when you redeem your points, unless the hotel is 95% full at which point they pay the standard rate.

      • Lady London says:

        +1. Unless hotel benefits like early checkin or late checkout or whatever are guaranteed, they’re not worth having. The whole point of them is that you can count on them. If they’re not guaranteed then I totally ignore them.

        • Brian says:

          It seems a bit harsh to totally ignore these things. In practice, you generally can get these benefits. By not guaranteeing them, the hotel is only insuring itself against unusual situations where it is completely full.

  • sandgrounder says:

    Liverpool is a fantastic weekend destination! The Aloft is often £200+ at the weekend (see 11th April for the first such example I found), especially if their is a big match on. There is a lot more to the city than football, I suggest anyone looking for a weekend break takes a look at the city tourism website. Despite the slander Scousers often suffer, Liverpool also has just about the lowest crime rate of any large city in the UK. Many new hotels have been built in Liverpool over the past few years, but there is still a real shortage of capacity. Still, one excellent value redemption option doesn’t make a scheme!

    I think the real gems are the mid range hotels. I’ve got a five night stay in New York coming up which is retailing at $2k for which I paid 48k points. Some of the lower category properties such as the Aloft above can also be similarly rewarding.

    A big signup bonus might help a few readers here to churn, but if the card is to be a viable option for the long term the earning rate must be improved or at the very least the benefits enhanced as proposed by Raffles.

    • PGW says:

      I endorse your defence of Liverpool as a weekend destination. Quite dissapointing to read the slightly offensive comment about it in the main article. All You Need is Love!!!

      • Brian says:

        Indeed – Liverpool certainly has a lot more to offer than Dubai, where some people like to spend most of their holidays… :)))

      • Rob says:

        I wrote a positive article on the aloft in Liverpool just last week!

  • Waribai says:

    ” I estimate that you would need to be earning £150,000 per year in order to make £25,000 of discretionary spending on an American Express card. This substantially limits the market for the card.”

    Maybe they were trying to aim for a select market in a similar vein to HSBC Premier?

    • sandgrounder says:

      Maybe in London this is true- but up in the frozen North were housing is much cheaper, I know plenty of people who earn £40-50k pa and waste £2k a month on rubbish! It makes a frugal guy like me shudder! 🙂

      • joe says:

        I consider myself very frugal, but I used to reach the £20k threshold on the basic BA Amex on a salary of £36k, before I knew better. I then wasted the vouchers on such uninspiring redemptions as an economy return to frankfurt!

    • Rob says:

      Don’t give out a free night at the Sheraton Heathrow then!

      • Waribai says:

        Yes true, that is the bit that doesn’t add up. While Catt 7 might have been expecting too much, they could at least have extended it to Cat 6.

  • Gordon says:

    Combine what Rob said with a generous dign up bonus and i will 1. Apply for the card 2. Spend on the card. 3. Most important for Starwood keep the card and spend on it every year. Its vital that the free night is annual otherwise people just cancel the card and reapply

  • Kipto says:

    You didn’t mention the 10000 points sign up bonus Rob

    • Rob says:

      Because I was trying to focus on the long term value of the card rather than the short-term churning value.

  • Britbronco22 says:

    I love most SPG properties I have been to, but sadly the economics of this card only make sense to me on a churn basis (done this twice now).
    I’d like to see them lower the threshold for Gold to £10k (ideally lower, but I’m trying to be realistic), and also introduce the same benefit the club Carlson visa has in the US, which is a 3 redemption nights for the price of 2. I know US cards have better deals, but since this card stands out as the only UK hotel card to charge a fee, I feel they could up their benefits a lot!

    • Lee Thornton says:

      The US Club Carlson card is event better than that offering the last night of any stay paid for with points free starting with two night stays (so is effectively a BOGOF offer).