The New Marriott Rewards: What We Know So Far

Last month, we saw the official announcement from Marriott International about the impending changes to Marriott Rewards. As part of these changes, which are scheduled to go into effect as of August, we’ll be seeing Marriott Rewards, The Ritz-Carlton Rewards, and Starwood Preferred Guest moving under one roof. 

 
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Many details about the new program were confirmed as of the news release, while some key bits of information remained unconfirmed. I thought it’d be useful to take a look at what we know so far and what we’re still waiting to find out and to analyze the implications for those of us who like to use Marriott Rewards and SPG exclusively to attain airline points and free hotel stays. 


What’s Happening to Co-Branded Credit Cards?

American Express made some surprise moves on the day after the announcement, drastically cutting the signup bonuses on the Amex SPG Card and the Business SPG Card. What was once a very compelling bonus of 20,000 Starpoints became a paltry $250 in statement credits, and the referral bonus was slashed from 5,000 Starpoints per referral to $25 in statement credits as well.

One can only assume that these moves were made to begin phasing out the SPG series of co-branded credit cards, and that a new product will be launched in conjunction with the new program. Marriott has confirmed that American Express will be the financial partner for their new program in Canada, so I think it's likely we'll see something like an American Express Marriott Credit Card not too long after August.

What's not entirely clear is what existing cardholders of the SPG credit cards should do. We don't know if these cardholders will be transitioned to the new product automatically, or if the existing SPG cards will be discontinued and you'll have to apply for the new product separately. (The latter scenario would be quite farcical for original Chase Marriott Visa cardholders who were encouraged to apply for the Amex SPG products after that card got discontinued earlier this year.)

I'd advise to hold on to your SPG cards for now, unless an annual fee is coming due, in which it's totally not worth it to pay $120 just for the privilege of continuing to earn 1 Starpoint per dollar spent, given the uncertain circumstances of the credit card and loyalty program. After all, the usual optimal strategy is to cancel your card and reapply later to get the bonus again; since we know there will be a new credit card to apply for sometime around August (likely with quite a juicy bonus as a brand-new card), that strategy remains very much a valid one. 


What Will Be the New Amex MR Transfer Ratio?

Here's a question on which Amex has declined to comment so far. At the moment, the transfer ratio between American Express Membership Rewards and SPG is 2:1. This isn't the best use of Amex MR points, but remain a very compelling option in certain scenarios that contributes to the overall versatility of MR points. 

Since Starpoints are being converted into the new Marriott Rewards program at a 1:3 ratio, that means that the new transfer ratio ought to be 2:3 in order to preserve the status quo. Call me a pessimist, but I don't think that's very likely to happen, although I'd love to be proven wrong.

In my opinion, there's every chance that the new transfer ratio might be 1:1, which would represent a 50% devaluation in terms of this particular transfer opportunity. I say this for a few reasons: 

  • In the US, the transfer ratio has always been 3:1 between US Amex MR and SPG, making the Canadian ratio of 2:1 relatively outsized (especially accounting for the difference in exchange rates); a new 1:1 transfer ratio in both countries would go some way towards correcting this imbalance
  • As far as devaluations go, this would be an easy one for Amex to spin as a positive change – "you now get twice as many points as you did before!", even though one point is now worth 1/3 of its prior value; in fact, this is already happening in the US, where existing SPG credit cards had their earn rates changed from 1 Starpoint per dollar to 2 Marriott Rewards points per dollar, and disgruntled customers were basically being told that "2 is greater than 1" when they complained

Of course, it's entirely possible that Amex will uphold the status quo and give us a 2:3 ratio, but I wouldn't hold my breath for it. The outcome to this question also greatly affects the value proposition of the Amex Cobalt Card, whose MR Select points can only be transferred to hotel partners and not airlines.


What Will Be the New Hotel Categories?

This question likely won't be fully answered until later on in the summer, or perhaps even in August when the new program launches, given that there's over 6,500 hotels that need to be reorganized into the new categories. Marriott has shared with us a sneak preview of new hotel categories in select markets, from which one can tell that there's a mix of upward and downward movements in terms of the real cost per night.

We know that the new award chart will debut in August without Category 8 or peak/off-peak pricing. Category 8 and peak/off-peak pricing will come into effect in February 2019. This implies that all hotels, even the most high-end ones, will be at most Category 7 come August – and will therefore cost at most 60,000 points. 

 
 

For former Starwood hotels that used to be in SPG's Category 7, that means a savings of up to 43%, since those hotels would have cost up to the equivalent of 105,000 points before the changeover. It goes without saying that making bookings at these hotels between August and February of next year represents an extreme sweet spot.

Furthermore, Marriott allows members to make points bookings without having the points in their account; you just need to top off your account up to two weeks before your stay in order to confirm the reservation. This has allowed members to make "speculative" hotel bookings; it's a very generous feature that's offered by precious few other programs. 

I'm not sure how this is going to work come August. Think about it, if the ability to make speculative bookings is left unchecked, the first thing people are going to do is book up the top hotels in Category 7 which will soon become Category 8s – like the St. Regis Bali or the Prince de Galles Paris – for whatever dates they want in the remainder of 2018 and throughout 2019. Since you don't need points in your account to make bookings, you could even book unlimited overlapping stays at a single hotel and cancel the ones you don't need later on. In a matter of hours, these hotels would become fully booked through the end of schedule, only for the vast majority of bookings to eventually be cancelled.

I imagine some controls will be put in place to prevent this from happening, although you'll definitely be able to take advantage – within reason – of the "promotional" period for luxury hotels between August 2018 and January 2019. Marriott even says so themselves on their website!

 
 


What’s Happening to Existing Reservations?

Marriott was quick to confirm what's going to happen to reservations that are made for after August 2018. Basically, it's a no-lose situation: if the points pricing is more favourable under the existing old structure, that price point will be honoured. If it's more favourable under the new structure, you'll have the opportunity to rebook at the lower price.

 
 

It's my understanding that any changes to your reservation made after August, though, will cause a repricing to occur and any potential savings under the old pricing structure will be lost.
 

What’s Happening to Existing Free Night Certificates?

Many of you will have earned free night certificates under Marriott Rewards or Starwood Preferred Guest. For example, Marriott Travel Packages give you 7-night certificates at hotels of a certain category, and the recent closure of the Chase Marriott Visas gave all cardholders a free night at a hotel of up to Category 5. How will these free night certificates be handled upon the switch to the new program, given that the entire hotel categories structure is experiencing a shakeup?

We have little information to go on here, besides one snippet from the FAQ section of Marriott's dedicated mini-site for the new program:

 
 

While the question refers to free night certificates earned from a co-branded credit card, I think it's safe to assume that Travel Package certificates would be handled the same way. Marriott says that "outstanding Certificates will be updated from Category-based to points-based values in the new combined redemption chart".

To me, this means that if you were holding a 7-night certificate for Categories 1–5, Marriott would calculate the "value" of that certificate to be 175,000 points (7 × 25,000 points required for a Category 5 hotel under the current structure). You'd then be able to use that certificate of 175,000 points towards hotel reservations under the new category structure. Whether or not you'd still be restricted to a 7-night booking, or if you could use the certificate for, say, 23 nights at a Category 1 hotel that's worth 7,500 points a night, is anyone's guess.

This is definitely an area in which there are still more questions than answers. I'm sure we'll get some clarification before August as to what exactly will happen to outstanding packages of varying category and duration, at which point we'll know whether it's optimal to hold on to the packages or cash them in before the changes kick in.


What Will the New Flight & Hotel Packages Look Like?

Speaking of Marriott Travel Packages, we know that they have represented one of the most outstanding points redemption opportunities in recent times. In light of this, whether or not these packages would survive in the new program was a point of concern for many. 

The good news is that Marriott has confirmed that Flight & Hotel Packages will remain part of the new program, although no details have been released as to the exact pricing structure. There have been murmurs from Marriott's loyalty executives that they'll be looking to "simplify" the packages; at the moment, there are four separate redemption charts depending on the type of airline miles you're looking for, and we'll likely see a movement towards a single unified redemption chart for everything from Air Canada Aeroplan miles to Asia Miles to Turkish Airlines Miles&Smiles.

My guess is that the value will not be as good as what we have right now, since what we have right now effectively gives you double the value compared to all the other ways to spend SPG/Marriott points. However, the Flight & Hotel Packages will likely still offer a compelling proposition, especially as provides access to esoteric points currencies that you wouldn't otherwise be able to easily earn here in Canada.
 

What Status Will Existing SPG Gold Members Attain?

When Marriott announced the upcoming changes to elite status, they published the following mapping table in terms of old and new Marriott Rewards elite tiers:

 
 

As it currently stands, the American Express Platinum Card and American Express Business Platinum Card bestow cardholders with SPG Gold Elite status, which gets instantly status-matched to Marriott Gold Elite status. The above mapping chart would seem to indicate that your Marriott Gold Elite status would then turn into Platinum Elite status as of August, meaning that you'll retain access to premium benefits such as lounge access and free breakfast after the transition.

However, Marriott has since moved to clarify that the status you earn in the new program will depend on whether you earned your original status from SPG or from Marriott Rewards. In other words, the status-matching that currently takes place will not be taken in to account, and SPG Gold Elite members who earned their status as a result of being Amex cardholders will only be matched to Gold Elite under the new program. Indeed, a separate chart shows the mapping between current SPG members and the new elite tiers:

 
 

So the bad news for those of us who earned SPG/Marriott Gold Elite status via the Amex credit cards is that we'll lose our lounge access and breakfast benefits come August, unless we attain the new Platinum Elite status by attaining 50 nights per year. The good news, however, is that you get up to 15 elite night credits per year from co-branded credit cards, you have a much wider range of properties to select from if you're shooting for those 50 nights, and if you do attain Platinum, you get to enjoy lounge and breakfast benefits at a much wider selection of hotels as well.


Conclusion

While the major updates to the new Marriott Rewards program were revealed last April, there were and still are quite a few loose ends that need to be tied up. In particular, I'll be keeping an eye out for any information on the new Flight & Hotel Packages, what will happen to free night certificates, and the new hotel categories, and I'll of course share the details with you as they become available.