In my article yesterday on the latest announcements concerning the merger of Marriott Rewards and Starwood Preferred Guest, I reported what Marriott’s big chief of loyalty, David Flueck, had told me on the ‘phone on Wednesday: that Marriott is thinking of voiding non-redeemed Marriott Travel Package hotel certificates on merger day, 18th August.
(Because this article is discussing a slightly risky strategy, I am not going to start with all our usual links explaining what Travel Packages are etc. If you are not a regular reader and don’t know what we’re talking about, what I’m about to discuss is not for you.)
Doing a fair like-for-like transition of unused Travel Packages bought under the current scheme will be very hard.
There are currently an astonishing 140 (yes, one hundred and forty) Travel Package price points. There are seven hotel category bands multiplied by four permutations of the miles you receive. This entire structure is then duplicated for three other tiers of airline partners where Marriott gets less generous. On top, there are 28 additional price points for United Airlines members where Marriott has a preferential deal.
The current Travel Package pricing is here (click). The chart below covers “just” 28 of the possible price permutations:
From 18th August, those 140 price points collapse to just TEN, with a flat 10% bonus if you convert to Marriott’s preferreed US airline partner United:
If existing but unused Travel Package hotel certificates were kept open, Marriott would need to find a fair way of collapsing 140 into 10. Tricky, but not impossible.
It gets messier though. Marriott has always allowed you to ‘buy up’ after the initial purchase. If you had a Category 6 package and decided you wanted a Category 7, you could simply pay the extra at the time of the booking. Because there were no refunds the other way (if you bought a Category 7 and ended up redeeming at a Category 6 you lost out) most people just bought the cheapest Category 1-5 package with the intention of upgrading at the time of booking.
The requirement to find an equitable way of charging for this after 18th August is probably what is making Marriott think that the best thing to do is clear the decks.
So, what happens if an existing Travel Package is refunded?
On paper, there are three options. However, I think two are unlikely to happen.
At present, if you cannot use a Travel Package within the 12 month validity, Marriott will take pity on you and give you 45,000 points (for a Category 1-5 certificate) as compensation. This is a nice gesture but doesn’t begin to cover your outlay. I would be shocked if Marriott did this and, legally, it would be hard.
The second option would be to deduct the current number of points required to redeem for the airline miles you’ve received. For example, imagine you used 270,000 points (see the top chart above) for 7 nights in a Category 1-5 hotel plus 120,000 Avios. Marriott could just reimburse you the difference between the points needed for a direct 120,000 Avios redemption and what you paid.
However, that certainly isn’t happening! As you can see from this chart, you would usually need 340,000 Marriott points (140k + 140k + 30k+ 30k) to redeem for 120,000 Avios. This is why a Travel Package (270,000 points for seven hotel nights AND 120,000 Avios) is such a bargain. We can safely assume this will not be the route taken.
Option three is to refund the equivalent number of points that the hotel stay would have needed if booked on its own.
Here is the current redemption chart BUT you need to remember that Marriott Rewards offers ‘five for four’ so you need to multiply the number below by six and not seven to work out your potential refund:
In this scenario, here is what would happen:
You have a Category 1-5 Travel Package and paid 270,000 Marriott points for seven nights plus 120,000 Avios.
Marriott would refund you (6 x 25,000 points ie the cost of a Category 5 hotel) which is 150,000 points.
You have, effectively, paid just 120,000 Marriott Rewards points for 120,000 Avios. This is an exceptional exchange rate.
The maths is the same on all of the other packages. For example:
You have a Category 8 Travel Package and paid 360,000 Marriott points for seven nights plus 120,000 Avios.
Marriott would refund you (6 x 40,000 points ie the cost of a Category 8 hotel) which is 240,000 points.
Again, you have, effectively, paid just 120,000 Marriott Rewards points for 120,000 Avios.
The maths is slightly worse if you redeemed for an airline in the 2nd tier of Travel Packages. Such airlines include Lufthansa / Miles & More, Singapore, Turkish, Qatar, South African, Emirates, Etihad and Air France / KLM.
With those airlines you would have redeemed 120,000 Marriott Rewards points for 85,000 miles.
The million dollar question – is it worth redeeming for a Travel Package if you have absolutely no intention of using the hotel room?
If we knew with 100% certainty that Marriott was going to refund unused Travel Package hotel certificates after 18th August, my advice would be clear – you should be redeeming every single Marriott point you have for a Travel Package in order to pick up some exceptionally cheap airline miles.
However, we do NOT know this.
If you redeem 270,000 Marriott Rewards points for seven nights in a Category 1-5 hotel plus 120,000 Avios, and Marriott does NOT choose to void your hotel certificate, you will have either a) some expensive Avios or b) a requirement to spend seven nights in a low end Marriott property.
Many people, especially without children, are not very keen on spending seven nights in the same hotel. You may have ended up ‘wasting’ hard earned Marriott Rewards points.
I’m certainly not going to recommend what you should do in this scenario.
What I WILL say is that there is evidence elsewhere that Marriott is planning to void unused Travel Package certificates. The Starwood official representative on Flyertalk stated it as a fact a few weeks ago, although he is clearly not ‘management’. Other US bloggers have been suggesting the same idea in a way which suggests they have inside information.
What David Flueck said to me yesterday – to be clear – is that they were still hoping to find a way of migrating existing Travel Package certificates but that the alternative (voiding them all and doing a refund) is a very real possibility.
Given that the new Marriott / SPG scheme will have 110 million members and there are probably less than 1,000 unused Travel Package certificates in circulation you can see why he doesn’t want to spend too much time on this, and would happily ‘overpay’ to refund them at a generous rate to make the problem go away.
Up to you ……
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