Starwood Points Vs. Cash Vs. Cash and Points, and More Amex Shenanigans

So I got my gazillion points from the “Big Delta Promo” and booked my trip to Israel for next winter. Israel however, is not known for it’s great winter weather, and my wife and I thought that we would treat our hosts, her aunt and uncle, to a few nights at a nice hotel some place where there is better weather.

Specifically, I was thinking of the Le Meridan hotel and spa at the Dead Sea. Here was the choice I faced: I could merely purchase the rooms for $110 a night. Frankly, that is not a bad rate in a country like Israel where hotels tend to be somewhat pricey. I could also book a room with points for 7,000 of my precious StarPoints. Finally, I could choose the “Cash and Points” option.

Note that the “Cash and Points” option was not listed online as being available, yet I read somewhere that their online reservations tool was notorious for not listing this option. It turns out that the option is frequently available only when you call the reservations office.

Let’s Do The Math

If I used the 7,000 Starpoints instead of paying the $110 price, it would return a mere 1.57 cents of value per Starpoint. That is pretty darn mediocre in my opinion. At that price, I would barely been coming out ahead of just having used my Capitol One card for cash, and used the cash for a room. Actually, it is even worse. Since I am now Starwood Gold, thanks to my generous patronage of my Starwood Amex last year, I would get 3 Starpoints per dollar spent. So really, I would have to divide $110 by 7,330 Starpoints paid and not earned, netting me almost exactly 1.5 cents per Starpoint used/passed up.

Using the “Cash and Points” option is intriguing possibility. They want 2,800 Starpoints plus $45. Essentially, I am “ing” 4,200 Starpoints for $45, or 1.07 cents per Starpoint. If I factor in the points received for paying $45 for the room, 135 points, it goes down slightly to 1.04 cents per Starpoint. Frankly, I will as many Starpoints as I can get at 1 cent each.

What is the value of the 2,800 Starpoints spent? Well, subtracting $45 from the $110 a night room rate availability, I get $65 for 2,800 Starpoints, or 2.3 cents per point used. Not great, but still better than the value I would have gotten from most airline cards and any cash card out there, not counting spending on “special categories” of course.

The value of my Starpoint here is not great as this particular property is inexpensive for it’s redemption rate of 7,000 Starpoints a night. It was raised last year from a lower rate of 3,000-4,000 points per night. Perhaps in a more peak travel period, this hotel would be more expensive an thus return a better utilization ratio.

There are two other factors making the “cash and points” option a good value for me. First, I just don’t have that many Starponts, having redeemed tens of thousands of them for the “Big Delta Promo”. Second, being Starwood Gold, I will get some nice amenities such as an upgraded room and a late checkout. I actually came across postings by others who have been upgraded to a suite at this hotel because they are Starwood Gold. The late checkout is really quite nice since there is little to do at the Dead Sea outside of the resort. Unlike many vacations destinations where you spend little time at the hotel, at the Dead Sea the hotel and spa is the destination.

Amex Costco Cautionary Tale

I recently read this story and some others like it about the Costco Amex. I am a big fan of Costco. I shop there frequently and I support them because they are a far better company to both their employees and their customers than other discount retailers, specifically Wal Mart. Their co-branded Amex seems like a good deal with a decent reward rate. Unfortunately, the reward comes due once a year, in February. If, for some reason, you decide to cancel your card before February, or Amex decides to cancel you, your reward for the entire previous year is forfeited. When you combine that policy with Amex’s new found penchant for closing their customer’s accounts for littel or now reason, you have a recipe for disasters.

I will reluctantly give Amex the benefit of the doubt. If they were to cancel 52 cardholder’s accounts at random, there is a very good chance that three people would claim that they were cancelled within two weeks of receiving their annual award. Perhaps 5 would be upset they were cancelled within a month of getting their reward.

That said, I would be very upset if Amex pulled that on me. That is one of the reasons that while I shop and Costco, and use my Starwood Amex there, I will not sign up for the Costco Amex.