A case for gambling on top tier travel packages

In the past couple of months I’ve presented quite a few theories regarding Marriott Travel Packages and the transition from the current program to the new merged Marriott / SPG program.  The issue is that stay certificates are based on hotel categories (higher categories cost more points) and there is no clear mapping from current categories to new categories.  Theories I’ve presented include: all certificates will be refunded for points back; certificates will be converted from category based to points-based; certificates will all be downgraded to category 1-4 (with the difference in price refunded); and multiple versions of mapping old categories to new.

The truth is, we simply have no idea what will really happen.

This begs the question… If you want to buy a travel package today, is there a best strategy?  In a recent post, I wrote: “If you have a fortune in points and you believe that Marriott will continue to allow certificate category downgrades in the new program, then consider buying Ritz Tier 4-5 packages.  I’ll explain my thinking in a follow-up post.”  This is that post.

Safe options

Before I explain the “buy Ritz Tier 4-5” strategy, I should cover the only strategies that are truly safe…

Book now: find a Marriott property that you really want to stay at, make sure it has award availability for when you want to go, and buy a travel package specifically for that stay.  This is the only way you can be 100% sure that you’ll get what you want.

Book category 1-5 for the miles: If you primarily want to convert hotel points to airline miles, then the best strategy is to buy as many of the cheapest category packages as you can that will result in 120K miles (or 132K United miles) each.

Book category 1-5 for the miles and for a new category 1-4 stay: If you want a 7 night stay at a future category 1-4 property, I’m confident that a category 1-5 certificate will get you there.  If it’s not bookable now, though, you’ll have to wait until September 18th to book the property.

Gambling on top tier

Consider this postulate:

• It will be possible to upgrade and downgrade certificates (as of September 18th) and you will pay or get back the difference in price between categories based on new pricing.

Here’s the new pricing (beginning August 18th) for travel packages:

If the above postulate is true, then upgrading from new category 1-4 to new category 5 will cost 60,000 points (that’s the difference in price between the two categories.  Similarly, downgrading from category 8 to category 7 will result in refund of 750,000 – 570,000 = 180,000 points.

Now consider this: if Marriott truly converts old category certificates to new based on preserving similar value (which they explicitly told us they would do), then it seems extremely likely that current top tier certificates (Ritz 4-5) will convert to new top tier certificates (category 8).

The Ritz Tier 4-5 7 night package with 120,000 airline miles currently costs a whopping 540,000 Marriott Rewards points (180K Starpoints).  If you were to purchase this package, and if it is converted to new category 8, then we can look at the points you’ll get back by downgrading:

Points returned if you downgrade new category 8 to a lower category:

• Downgrade to cat 1-4: 420,000
• Downgrade to cat 5: 360,000
• Downgrade to cat 6: 240,000
• Downgrade to cat 7: 180,000

Now let’s look at your final point price to get the category you want by starting at the top.

Pay 540K now for the Ritz Tier 4-5 package, and get a category 8 certificate in the new program, then downgrade to a lower category:

• Downgrade to cat 1-4: 540K – 420K = 120K final price
• Downgrade to cat 5: 540K – 360K = 180K final price
• Downgrade to cat 6: 540K – 240K = 300K final price
• Downgrade to cat 7: 540K – 180K = 360K final price

How good are these final prices?  They’re awesome.  Consider that the cheapest option under current pricing is 270K points (as long as you pick one offering the most miles).  With the above plan (if it works out as hoped), that same bottom tier package can be bought for less than half price!  Even better, if you’re hoping to book a top tier hotel, category 7 will be top tier until early 2019.  So, if you can book before the introduction of category 8, you can get 7 nights at the best of the best Marriott/SPG/Ritz property in the world plus 120,000 airline miles for only 360,000 net Marriott rewards points (120K Starpoints).

What if I’m wrong?

Let’s look at several alternate scenarios:

What Can Go Wrong #1: Marriott doesn’t allow upgrading/downgrading certificates

This would be a big bummer.  If you would use the certificate for a top tier property, it’s still an OK deal.  If not, then not so much.

What Can Go Wrong #2: Certificates are all downgraded to Category 1-4

I presented this theory in the post “Yet another new Marriott travel package conversion theory.”  In the comments of that post, our own Nick Reyes makes the case that this theory is unlikely.  Still, if it happens, you’ll come out even.  That is, your net cost will be the same whether you buy a category 1-5 package now or a Ritz 4-5 package.  The main downside of going big is that your extra points would be tied up until the point difference was rebated to you.

What Can Go Wrong #3: Marriott’s category mapping is more generous than expected

One reader was recently told by a call agent that all travel package certificates would simply drop down one category.  If that happens, then the mapping would look like this:

• Category 1-5 –> New category 1-4
• Category 6 –> New category 5
• Category 7 –> New category 6
• Category 8 –> New category 7
• Category 9, Tier 1-3, Tier 4-5 –> New category 8

This would be awesome for almost everyone, most of all those who buy category 9 certificates.  The losers would be those who buy Ritz certificates but end up with the same value as those who paid much less for category 9.

In this case, you still end up with an excellent deal, but not nearly the unbelievable deal that those with category 9 certificates would have.

What Can Go Wrong #4: Top tier Ritz 4-5 package results in a new category 7 certificate

If Marriott maps old to new based on new peak pricing (and there’s a good argument that they might), they might map Ritz 4-5 to new category 7.  I don’t think that’s likely, but it is possible and it throws the rest of my argument out the window.  This chart shows how they might map old to new based on new peak pricing:

If this happens, then your final cost for each category (if you started with Ritz 4-5) would be as follows:

• Downgrade to cat 1-4: 540K – 240K = 300K final price (30K more than if you had bought category 1-5)
• Downgrade to cat 5: 540K – 180K = 360K final price (30K more than if you had bought category 7)
• Downgrade to cat 6: 540K – 60K = 480K final price (60K more than if you had bought Ritz Tier 1-3)
• Keep category 7: 540K

With this scenario you can lose by as many as 60,000 points.

Wrap Up

If you’re in the enviable position of having a near limitless supply of Marriott Rewards points (or SPG Starpoints), then it is worth considering purchasing Ritz Tier 4-5 Travel Packages.  The potential upside if you later downgrade to lower category packages is quite high.  There are ways to lose with this approach, though, so please review the above “what can go wrong” sections to decide for yourself how likely those outcomes are and how bad they would be.

Another serious consideration is whether it is worth locking up so many points.  Ritz Tier 4-5 packages cost twice as much as category 1-5 packages, so you can alternatively buy twice as many of the latter.

If you want to gamble, but not so much, another sweet spot may be category 8 certificates if they do indeed convert to new category 6 as I’ve previously hypothesized.  This won’t get you into the top properties in the world, but it would perhaps let you downgrade to category 1-4 for a final net price of 180,000 points.  That would be an outstanding value too, but it’s far less certain than the Ritz 4-5 approach.

What will I do?

I have two category 9 certificates already booked at the Domes of Elounda (which will go up to category 8 in the new program).  Plus I have one unattached category 6 certificate that I’m hoping to apply to a future category 5 resort if things map the way I hope they do.

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