Marriott Travel Package Arbitrage

In a post written over a year ago about the Marriott SPG merger (Investing in change: Marriott / SPG / Ritz new program opportunities) I wrote the following about Marriott Travel Packages: “there’s a chance that having an active 5 or 7 Night Stay certificate in-hand will be a big win.”

My thinking was that the merger would open up the ability to use the Marriott stay certificates at Starwood properties. I also thought that there was an outside chance (far outside) that the hotel category system would go away and that the certificates would temporarily be available to book any hotel.

Now that we know more about how the programs are coming together in August, many readers have asked me what to do now.  Is it worth investing in Marriott Travel packages before the programs merge in August?  If you have a travel package stay certificate, should you upgrade it to a higher category, or downgrade it to a lower category before August?

Travel Package Background

First, a little background.  Marriott Travel packages offer a great way to convert hotel points to airline miles at a favorable rate.  Below you’ll see one of several current (pre-August) travel packages.  Focus on just the right-most column, since that’s where you’ll find the best deals.  There, you’ll see that you can purchase a Category 1-5 7 Night package for 270,000 Marriott points (90K SPG), and you’ll get 120,000 miles.  Incidentally, you also get a 7 night certificate good at any Category 1-5 property.  But, the key value for many of us is the ability to transfer SPG points to miles at a great rate: 90K Starpoints to 120K airline miles.  If you transfer to United, you get even more miles (132K).

You don’t need to have actual travel in mind when purchasing a travel package.  You immediately get the miles and you get a 7 night certificate loaded to your account.  The certificate is good for a year, but can be extended another year simply by calling and asking.  It can also be extended by a year by calling Marriott Rewards to upgrade or downgrade the package to another category (you pay the difference in the package price if upgrading, or you get back the difference if downgrading).

What happens to travel packages in August?

In August, anyone with active stay certificates will then be able to use them across the Marriott / SPG portfolio.  That is a potentially big win since, in my opinion, SPG has more desirable mid-tier properties.  We don’t yet know exactly how the current categories will map to new categories, but we have been told that the goal is to base the mapping on the number of points required for a stay.  For example, category 5 Marriott hotels in the current award chart cost 25,000 points per night.  In the new award chart, category 4 hotels cost 25,000 points per night.  So, it’s safe to assume that category 1-5 certificates will become category 1-4 certificates in August.  Since Marriott has said that more properties will go down in price than up, this means that the category 1-5 certificate should have the same or better value in August then it does today.  Not all categories map perfectly 1 to 1 though, so there are some risks and opportunities with keeping a certificate until August.  More on that below.

What about buying new Travel Packages?  Should we buy now or later?  In a conversation with VP of Marriott Rewards, Bob Behrens, I was told that Travel Packages will still be available in the combined program and they’ll offer similar value. He also told me that he hopes to reduce complexity.  Currently there are four different packages.  The package you choose depends upon which airline miles you want.  In the current system, the United package offers the most miles.  And packages 1 and 3, which cover most mainstream airlines, offer the standard number of miles (up to 120K).  Packages 2 (a collection of foreign airlines), and package 4 (JetBlue), though, offer relatively poor value.  Bob is hoping to chop this down to one or two packages.  On the plus side, this means that a number of foreign programs (JAL, Asiana, Korean Air, etc.) will then be a much better deal in August than they are today.  On the negative side, this may mean that United will no longer offer more miles than other programs.

A look at how the stay certificates may map from old to new

The following chart shows by best guess of how Marriott will map old stay certificates to new in August.  Most of the categories are predictable because they are one to one mappings, or close enough.  Current categories 6 and 8 are less certain, though, so the chart below shows two possible mappings for each.  For example, the chart shows what happens if old Category 6 maps to New Category 4 or to New Category 5.

Cells shaded red indicate that your Stay Certificate will lose value in the new system, and cells shaded green indicate that your certificate will gain value.

The only “sure win” in the chart above is in Old Category 9 which is very likely to map to New Category 6.  In this case, your certificate will go from being able to book 45K per night rooms to 50K per night rooms for a maximum added value of 30K points if you book a 7 night stay (5th night is always free, so this is calculated as 5K x 6 = 30K).  On the other hand, by the same reasoning, Marriott will probably place many current category 9 hotels into new category 6 and so they’ll all cost 50K per night in the new system.  In other words, despite the numbers above, you won’t really gain anything at all other than locking in today’s award prices.  Worse, it’s my opinion that the best current Marriott category 9 hotels are the most likely to be re-categorized upwards in the new system.  If you’re eying a great category 9 property right now, you’re better off booking it before August because it’s likely that it will jump to 60,000 points per night in the new program.  In other words, this “sure win” isn’t likely to be a win at all.

Category 6 certificates are interesting because their current value falls exactly in the middle between new categories 4 and 5.  If Marriott maps category 6 certificates to New Category 4, then we lose (unless most category 6 properties also map to New Category 4).  If they map them to Category 5, then we win… unless most category 6 properties also map to New Category 5.  My best guess is that holding onto a Category 6 certificate will be a small win.

Category 8 certificates have the most likely upside.  Marriott may generously map old Category 8 to new Category 6.  The downside is that they may instead map to New Category 5 (which is the same mapping that I predict for Category 7 certificates).  If that happens, you may have essentially lost 30K points (the difference in price between Category 7 and 8 certificates).  My bet, though, is that if they do map old Category 8 to New Category 5, they’ll make you whole by giving you 30,000 points.  Overall, in my opinion, Category 8 appears to be the only category worth investing in today in the hopes that it will be more valuable in August.

Ritz Tier 4-5 have the potential to offer a huge win, but only when category 8 is introduced in 2019.  Given that category 8 won’t exist when the mappings happen, it seems unlikely to me that the travel package will be mapped to this not-yet-existent category.  Personally, I wouldn’t risk it.

Recommendations

If you already have a stay certificate from buying a Travel Package in the past, then consider rolling the dice and upgrading or downgrading it to Category 8.  Of course, if you are upgrading, you’ll need to have enough points in your account to cover the difference in package prices.  You must talk to the Marriott Rewards department to upgrade or downgrade a package. General Marriott customer service agents won’t know how and may even tell you that it can’t be done.  I called on Wednesday and successfully upgraded my category 5 certificate to category 8, but the process did involve very long hold times.

If you are trying to decide whether to buy a package now or wait until August:

Buy now if:

• You need the miles right away, or
• You want United miles (the new packages might not offer as much value for United miles)

Wait until August if:

• You want to get miles in any of the following programs: Aeroflot, Air China, Air France/KLM, Alitalia, ANA, Asia Miles, Asiana Airlines, Avianca-TACA LifeMiles, China Eastern, Emirates, Etihad Airways, Japan Airlines, Jet Airways, Korean Air SKYPASS, LAN, Lufthansa Miles & More, Multiplus, Qantas, Qatar Airways, Saudia Airlines, Singapore Airlines, South African Airways Voyager, TAP Air Portugal, Turkish Airlines

Before you buy

In my opinion, the potential upside of category 8 packages is not enough to warrant buying now if you aren’t in the market for exchanging points for airline miles.  Also consider the fact that if you buy now, you’ll have fewer points available for the outstanding award night values that are likely to appear in August (see: The huge wins in Marriott’s announcement).  That said, if you already have a stay certificate and you have enough points to do so, I do think that upgrading to category 8 makes sense just in case it pays off.  Keep in mind, though, that there is some risk that you’ll lose the equivalent of 30K points if things don’t play out as we hope.

See Also

• 12 things you need to know about Marriott Travel Packages
• All posts about the upcoming Marriott / SPG merger

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