Why are Starwood Points the Most Valuable Type of Point?
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What's a point worth is a popular question to ask or ponder in the miles and points community. In many cases it is a question that doesn't have an exact answer, but rather an accepted range of answers. Basically a point (or mile for that matter) is only worth what you redeem it for, and then even in that case it isn't necessarily worth what you redeemed it for if you wouldn't have ever paid for that redemption with cash in the first place.
For example, if I get 10 cents in value for my international first class airline mile redemption that would have cost $10,000+ in cash I probably didn't really get 10 cents in value because I would have never bought that ticket. Or at least what I would have paid is something I take into account when determining what my points are worth.
There are lots of ways to calculate the value of a mile or point, but today the question I want to drill down on today is why are Starwood Preferred Guest points considered by many to be the most valuable type of point out there. This question often comes up when I talk about the Starwood Preferred Guest Personal Amex or Starwood Preferred Guest® Business Amex cards as being some of my favorites even though they only pay out 1x on most purchases.
As a point of reference, many traditional US airline program miles are generally considered to be worth somewhere between 1.4 - 2.0 cents each. In other words, a 25,000 mile round trip saver redemption is often worth $350 - $500, though of course that amount could be higher or lower based on how much tickets are selling for on the route you want. If you are redeeming for much less than that then I would consider focusing on fixed value points like those from the Barclaycard Arrival Plus World Elite Masterard.
What is an SPG Point Worth?
Unlike most airline miles, Starwood Preferred Guest points are often considered to be worth more than 2 cents each by almost every miles and points guru (see examples here and here). Personally I would peg their value conservatively at 2.3 cents each, but truthfully I think a good SPG redemption should be closer to a minimum of 3 cents in value.
Why are SPG Points Valued So Highly?
Their are a couple different reasons why SPG points are valued so highly and it has to do both with both their hotel and airline redemption options. First, SPG hotel redemptions start at just 2,000 points per night for Category 1 hotels on the weekend which by itself shows you it is easy to get big value. Rarely is a hotel room anywhere lower than $60 a night, so it is easy to see how 2,000 points can quickly return more than $60 in value (which is a minimum redemption value of 3 cents per SPG point) Their award chart is also pretty reasonable even for some nice middle tier hotels.
For example, the The Westin Resort & Spa, Los Cabos, Westin Swan at Disney World, and Sheraton Mountain Vista Villas, Avon / Vail Valley are Category 4 hotels that go for just 10,000 points per night. The Westin Maui Resort & Spa, Ka'anapali and The Westin Riverfront Resort & Spa at Beaver Creek Mountain are Category 5 hotels that go for as low as 12,000 points per night. That is pretty great considering that during peak season those Category 4 hotels can be $250 - $350 a night and the Category 5 hotels can be $400 - $500 per night. At $400 per night, 12,000 points is 3.33 cents in value per point. Remember that the fifth award night is free at Category 3 - 7 SPG hotels, which can drive the redemption value up even more.
Another reason SPG points are so highly valued is that they transfer to many different airlines at a rate of 20,000 SPG points = 25,000 airline miles. Some airlines that transfer at that rate include Alaska, American, Delta, Etihad, Singapore, and many more.
If you don't want to decide between hotel nights or airline miles, you can also use your SPG points for the best of both worlds via "Nights and Flights". With this redemption you get 5 nights in a Category 3 or 4 hotel plus 50,000 airline miles for 60,000 points for Category 3 and 70,000 points for Category 4 hotel redemptions. That is a tremendous value for five night hotel stays in those categories!
Great to Use, but Hard to Earn
The downside to all this huge value is simply that SPG points are hard to earn. There is no online shopping portal and the co-branded credit card doesn't have any bonus categories other than 2x at SPG properties. They only real way to earn points is through actual SPG hotel stays, the Starwood Preferred Guest Personal Amex or Starwood Preferred Guest® Business Amex, and everyday use of the cards.
Aside from perhaps the sign-up bonus, none of those are "quick fix" ways to rack up lots of SPG points, but that is why the SPG credit card is such a staple in my wallet on spending that is otherwise not getting a bonus payout anywhere (like daycare, insurance, dry cleaners, doctor's appointments, etc).