In July 2009 Starwood Hotels extended the terms of its co-branded credit card agreement with American Express to June 15, 2015. Starwood Hotels received $250 million in cash towards the purchase of future SPG points by American Express.
SPG points liability increased from $634 million at year-end 2009 to $702 million year-end 2010. That is 10.7% more liability added in one year.
The average daily rate worldwide for Starwood Hotels at year-end 2010 was $160.00.
$702 million in liability at $160 per room night = 4,387,500 room nights in free rooms waiting to be redeemed. I have no idea how liability is actually calculated, but needless to say that members are holding points for millions of free room nights.
I just redeemed 16,000 points yesterday for Category 4 Cash & Points award nights to save $800 at a hotel in June.
Speculation on how many points $250 million buys.
I was thinking American Express probably pays about $10/1,000 points for something like 25 billion points for $250 million. After running some numbers I now think American Express must buy points for far less than a penny a point to cover all the 20,000 points new cardmember bonuses and points given for credit card spend.
Any guesses on how many points $250 million buys?