Deal, or No Deal? Buy Starwood SPG Points with a 25% Discount

Buy points promotions occur across many programs on a fairly regular basis.  Let’s take a look at this latest one from Starwood SPG to see if it is worth jumping on or not.

Before we go into the analysis we need to give a nod of the head to subjectivity.  There could well be a person who simply wants to stay in the St Regis Bal Harbour (a fabulous hotel) which costs 30,000 SPG points per night.  A quick search for a random Thursday in June has the rate for that room at $619.

If you are that person that is adamant about staying there, then perhaps acquiring points would be an option? Let’s take a quick look at the SPG Points sale to see what it costs:

As you can see, the more you buy, the greater the discount. However this is capped out at 20,000 per transaction (for a cost of $525).  If we use that price per point and multiply by 1.5 we get a price for 30,000 points of $787.50 so Mr Bal Harbour would be better paying cash.

SPG Points are ALL about Transfer Partners

I have actually stayed in a Starwood property once or twice, but every other time I have SPG points I transfer them to Airline Partners, this is where the real value of these points resides.  For every 20,000 points transferred you get a bonus of 5,000 points.  This is a great way to build a store of points ready to transfer that offers some protection from devaluation, as I explored in the post Evaluating Risk and Exposure in your Miles and Points Accounts

If we use the same math to calculate value $525 for 20,000 points OR 25,000 Airmiles with a partner is an interesting price point.

Not only are SPG a good way to accumulate points in a program such as American Airlines AAdvantage, but they are really good for building balances in more obscure airline programs, Japan Airlines (JAL) is a great example.

JAL has a distance based award for Partner airlines, and a region based award chart for JAL metal. There are some really sweet booking zones with them, such as flying from NYC-Milan. Sadly an Italian Court recently banned Emirates from running this route, as it was a great way to experience Business Class for just 63,000 JAL miles.

While NYC-Milan seems off the table for now, there are other sweet-spots using this award chart, personally I think they exist in Business Class because I am too cheap to fly First:

Some interesting options would be NYC-DXB at under 14,000 miles round-trip that would cost 85,000 JAL Miles for Emirates Business Class.

Or another valid use of JAL miles is to use their own metal, they have a separate award chart for this, which is actually region based rather than distance based, and offers an interesting price point in Business Class again, NYC-NRT on JAL for 80,000 in Business (or 79,000 discounted!)

Calculating the Value of buying JAL Miles

Let’s do some mathematical acrobatics to find a fair value, since we can’t buy exactly 80,000 miles we could do the following:

• 20,000 SPG= $525 = 25,000 JAL Miles
• $525/25000 = 2.1 Cents per Mile Purchase Price
• 80,000 miles at 2.1 Cents= $1,680

Therefore, buying a roundtrip ticket from NYC- Tokyo in Business Class on JAL would cost $1,680 for the miles, plus any taxes and fees to issue the award. Again, we hit ‘subjective land’ again as to whether this is value or not. My personal approach is to look at the cost in Economy, which I ballpark at around $1300 and think of the extra $380 (plus T&F) as the cost to ‘upgrade’.

When considering whether to buy SPG points or not, this transfer route is definitely the way to maximize value.  If you are simply buying 20,000 SPG for $525 then it really isn’t a good deal, as you can pay cash and get a better deal at the same Starwood hotel, or a comparable nearby property.

Earning Cash, and Swapping it to points

The tricky thing with SPG points is that they are hard to earn.  The co-branded Amex card only earns a 1x rate, so say you were to spend $10,500 on cosmetics each month using it, you would only earn 10,500 SPG points.  However, if you were to use a cash back card offering 5% cash back you would earn $525.  You could then take this $525 and buy 20,000 SPG points, meaning that from an earning perspective you would be ‘buying them’ at about 50% of the opportunity price, making them quite the bargain.

Of course, not to beat a dead horse here, but if you then go onto to redeem them at hotels, you defeat the object of parlaying your cash back into SPG, rather than just using it to pay for the room.

So, is it a good deal… I have to say it is not for me, I don’t travel enough right now to need these points, but if I had a lot of travel plans ahead then it actually isn’t too bad when they are spent wisely. Here’s the link to the buy promotion if it is a fit for you.  Remember, how you burn is just as important as how you earn.