Rumored Delta Skymiles Devaluation Troublesome

[kjd]

The rumored devaluation of Delta Skymiles points casts a dark shadow over all points based systems. One of the initial questions raised of the Marriott DC points system was that the DC points could be devalued at the whim of Marriott. The Delta rumor is all over sites like FlyerTalk. While I hope the Delta rumor is not true it does serve as a warning that you should have a strategy in mind when using any point system. For example, does it pay to bank any points or should points be used a year or two after they are earned? The DC has rules about accumulation but no one has any idea when a devaluation may occur.

Devaluation of points is most likely to occur when the company wants to lower their liability for keeping an inventory. Some folks have banked large amounts of points in these systems thereby creating a liability for the issuer. The DC limits its' exposure but still needs premium weeks for inventory. Devaluation may be a way to lessen the liability for providing those weeks to members.

Most of us have both the DC points and the MRP's to be concerned about. That's why IMO, being an enrolled legacy owner or simply a weeks owner will prove to be the best form of ownership in the long run.

 

[Saintsfanfl]

These thoughts are new to me but doesn't the trust own the weeks already? Why would there be a liability for banked points when using them is just an exchange for something the trust owns? I can see the liability issue for air miles because they are not owned by the holder and the airline incurs an expense when they are used but with the DC those weeks are owned by the trust and not Marriott.

All that said, I am thinking the true value of DC points from the owner perspective changes all the time.

 

[kjd]

That is the theory of the "two buckets" that has been talked about here many times. As long as they sell points they need inventory for that bucket. That's why they buy units. That bucket can be easily devalued.

The other bucket contains exchanges and I assume some unsold inventory. Some of those unsold weeks are probably not in high demand. The problem arises with inventory when there are premium weeks in high demand. It's just not a case of what used to be "like for like" with the weeks system. Now there is the problem of nighly stays where some nights carry a higher point value than other nights. Marriott has the right to "adjust" the point structure as they see fit. While the devaluation might be in the mind of the points owner, it can still be real. Some here have already argued that point.

 

[dioxide45]

It isn't possible to accumulate more than two years worth of DC points through banking or borrowing. So devaluing DC points should have a minimal impact on many people. I think the better comparison with Delta is not DC points but regular Marriott Reward Points. Marriott Reward Points are something that you get for "free" when staying at Marriott hotels or using the credit card. It is treated as a rebate. DC points are given based on something you own. They are not free. I see devaluation of Marriott Reward Points before we see it for DC points.

 

[FractionalTraveler]

In any points based system de-valuation exists the same way the value of a dollar changes over time. This is just the natural progression of any market currency.

As far as MR points is concerned, I never stockpile them more than 12-18 months. These are usually de-valued every other year or so. Along with de-valuation, program changes over time can sometimes make their use more difficult. So I don't subscribe to the MR 401K concept that many Marriott sales persons try to use on potential customers.

Agreed that DC banking can have its fair share of risks as well. We have not seen any impact on this front yet but it is certainly possible.

 

[MALC9990]

I think this issue is more pertinent to MR points than DC points. We have seen effective devaluations of MR points over the years and they will happen again in one way or another. Either it will cost more points for a hotel reservation or a travel package or what you get for the points will decrease. Either way someone with lots of points in the bank will lose out.

 

[mjm1]

I agree that the devaluation would apply more directly to the MRP than DC. With DC, my understanding is they can change the number of points needed for a particular week based on history and demand, but would have to adjust another week to offset the increase.

Of course, when they bring any new properties into the program, they could set a higher points requirements than is currently being used for a similar property in the same area, thereby devaluing the points already owned in the system.

It will be interesting to see how things develop with the DC.

As for MRP, we have been accumulating points to use for a package in 2014. We are hoping they don't make any changes between now and the end of this year when we try to redeem the points.

Cheers.

 

[pipet]

I also agree there is minimal devaluation in the DC system.

Of course, when they bring any new properties into the program, they could set a higher points requirements than is currently being used for a similar property in the same area, thereby devaluing the points already owned in the system.

I've thought about this, too, as they are entirely free to do this. However, with the DC, there is a limit to how much they can do or they will end up skewing requests too much (i.e. if new resort cost too many points then people will go elsewhere) and end up with a system that doesn't work.

With MRPs, like the others here, I count on them being devalued by Marriott. Now we have cat 8s and although Marriott brags about the few places that drop in category, every year many hotels move into higher categories, and some of the changes are really baffling, like some so-so places being cat 6 and not really reflective at all of the rates charged. Travel packages are the only value left with MRPs IMO, but because those come with air miles, the suspected future Delta changes will hurt a lot if other airlines head in the same direction. If the miles redemption for FF tix is based on the fare charged, using miles for international business class flights might no longer be a viable option for many.

 

[FractionalTraveler]

If you are staying at MVCI properties with DC points, then I agree that there has been no de-valuation to date.

One place where I can see them de-valuating DC points already is in the Explorer Collection. The points requirements for cruises, hotel stays, experiences, etc. that relate to third-party travel service providers. These have been in flux since the DC inception since 2010. I can see the point’s requirements for these activities changing every year.

 

[Saintsfanfl]

If you are staying at MVCI properties with DC points, then I agree that there has been no de-valuation to date.

One place where I can see them de-valuating DC points already is in the Explorer Collection. The points requirements for cruises, hotel stays, experiences, etc. that relate to third-party travel service providers. These have been in flux since the DC inception since 2010. I can see the point’s requirements for these activities changing every year.

Do you think that has to do with Marriott's direct cost in booking with the third parties or do they have a fixed contract for the explorer collection? I have always thought of using any type of points for third party services as a comparison to using cash and since prices constantly change so will the amount of points needed. That doesn't seem like a devalue of the actual points.

 

[BocaBoy]

As far as MR points is concerned, I never stockpile them more than 12-18 months. These are usually de-valued every other year or so.

Actually, the history with Marriott Rewards is more like every 5 years, with the exception of certain hotels changing category within an existing award chart.

 

[FractionalTraveler]

Actually, the history with Marriott Rewards is more like every 5 years, with the exception of certain hotels changing category within an existing award chart.

Yea, well in 2012 they got rid of the elite $1000 certificates. That de-valued the program for me considerably!

In 2011 they changed hotel categories and introduced CAT 8.

In 2010, they increased points required for MVCI properties. Today they are extremely rare. I used to be able to get 1 week for about 150K MR Points. Now they are about 220K points.

This year 2013 they de-valued the Lifetime Elite status. Now that is good for many but not in my case where I had to meet the previous standards.

In my mind the MR program is de-valued in some shape or manner just about every other year.

 

[Cobra1950]

As a Delta Platinum FF just retired I would hate to think there will be further devaluations of those points (they have been doing it often over the last few years anyway, much as Marriott has done with their Marriot Rewards points), so it would not surprise me to see another round of devaluation in both.
I am sure both companies are being "inspired' by the out of control US government devaluation of the US Dollar currently underway monthly via the $40 Billion USD "special" currency printing that punishes every retiree who has worked enough to have any savings set aside-forcing them to gamble in the stock market as fixed return funds or CDs are total duds now.
That is a far bigger inflationary concern going forward than anybody's reward points