[2008] SDKath's guide to 5* platinum [merged]

[Kildahl]

I got phantom options for a resort that is not even Starwood.

Wow!

 

[Kildahl]

The way I understand it is that they're only given when you are close to reaching the next elite plateau. For instance, say you are closing on a developer purchase and you need 452,000 SOs to get to 4* status, but your new purchase will only get you to 432,000 SOs. Starwood may award you 20,000 "phantom" SOs to get you to 4*. The phantom SOs are for elite status perks only; you can't "spend" them to book TSs.

I don't know what the max phantom points they'll award.

Thanks for the response, Lisa. Are they awarded in an amount just sufficient to get the buyer to the next elite level or in a "rounded" number (ex: 20k,30l or ?k) such that you could use any excess toward the next plateau?

 

[jarta]

pj, ... "just converted enough starpoints to Southwest and i just got a companion pass which i will give to my Mom and the trips and adventures we can now go on is fantastic."

That was a great conversion program. I rolled $1,200 of 2010 MF at Lagunamar into 12 round trip tickets anywhere SW files (6 for me and the companion pass for my wife).

SW has just announced a new Rapid Rewards program this week. I think the program you (and I) got into will no longer be available.

The roll out of the new SW program is 3/1. We will know more about the new program then.

The best perk in Starwood is the 10% bonus converting StarOptions to Starpoints for 4 and 5* Elites and then the 20% bonus when converting the StarPoints out to air miles. ... eom

 

[DeniseM]

Please note that this thread has been in moth balls for a year since Jan. 2010, and then was posted to today. Everything before post 147 is a year or more old, and may not be current info. It's confusing, because you see posts/questions from Jan. - but they were from Jan. 2010, so they are not current questions or statements.

 

[Sunset100]

How to get to 4 star elite cheap

I own 2 weeks, 2 b room lock off at Westin Kaanapali North worth a total of 296,200 Star Options. My goal is to achieve 4 star or maybe platinum status and maximize my starpoints connversions. What is the cheapest way to do this, while keeping maintenance fees low as well?

 

[DeniseM]

I own 2 weeks, 2 b room lock off at Westin Kaanapali North worth a total of 296,200 Star Options. My goal is to achieve 4 star or maybe platinum status and maximize my starpoints connversions. What is the cheapest way to do this, while keeping maintenance fees low as well?

Honestly, there is very little reason to spend the money to reach 4 Star Elite. You can usually buy Starpoints from Starwood for less then the cost of converting your timeshare to Starpoints. If you have the time and money to reach 5 Star Elite, reaching Starwood Plat has some value for people who regularly stay in Starwood hotels, and travel abroad, but it's not for everyone. The financial commitment to reach 5 Star Elite is in the range of $100,000 up front, and $10,000 per year. That will buy a lot of hotel stays.

 

[jarta]

DeniseM, ... "You can usually buy Starpoints from Starwood for less then the cost of converting your timeshare to Starpoints."

I'm not sure what conversion factor you are using, but for a 4 Star Elite (what you were replying about):

148,100 StarOptions usually converts to 72,000 Starpoints.

There is no charge for a 4 or 5 Star Elite to convert and it can be done every year up to October 1 of the use year.

When a conversion is made, Starwood gives 4 and 5 Star Elites a 10% Starpoint bonus.

4 and 5 Star Elites own more than 2 weeks so the total SVN fee for the year is capped. In the numbers below it is disregarded. I own 7 Starwood weeks. The SVN fee per week for me is pretty minimal.

My Platinum Lagunamar 2-br 2011 MF is $1,244.05. Cost per Starpoint = $1,244.05/79,200 = $0.0157. (I have 3 of them.)

My Platinum WKV 2-br 2011 MF is $1,211.08. Cost per Starpoint = $1,211.08/79,200 = $0.0153. (I have 1 of them.)

Usually Starpoints are sold by Starwood for 3.5 cents per Starpoint. Sales are usually 25% off. So the price then is 2.625 cents per Starpoint.

You are correct for Hawaii. Nobody who owns there should convert. But, Hawaii is unusual.

As another example, my Platinum 3-br at Harborside converts (with th bonus) to 113,520 Starpoints. The 2011 MF is $2,734.94. Harborside has notoriously high MF. The cost per Staroption converted would still only be 2.41 cents.

Plus (and not just for Elites), upon transferring the Starpoints out to air miles programs, Starwood gives a 20% bonus. So, 100K Starpoints transfers as 120K Starpoints. If you make the transfer when the receiving air miles program is having a special, the 120K Starpoints can be increased by 50-100% by the airline. All this further reduces your cost per air mile.

Buying voluntary and using II for trades can result in some terrific deals. But, so can buying within the SVN and making Starpoint conversions when you are 4 or 5 Star Elite. ... eom

 

[RoshiGuy]

I own 2 weeks, 2 b room lock off at Westin Kaanapali North worth a total of 296,200 Star Options. My goal is to achieve 4 star or maybe platinum status and maximize my starpoints connversions. What is the cheapest way to do this, while keeping maintenance fees low as well?

Were these 2 weeks purchased from Starwood? If so, you just need a few more SOs to get to 4-Star. However, I'd purchase a resale unit (SDO true plat or SMV plat) that you can retro to give you more bang for the buck. Cancun (EY Gold or EOY Plat) would be the new developer purchase to retro and get to 4-Star. You'll end up with approx. 518,000 SOs for "additional" outlay of approx. $25K and annual increase in MF of approx. $2000 - $2500. 4-Star gives you all key Elite benefits other than SPG Plat (which only 5-Star's get).

Assuming your 2 weeks are resale weeks, you have to buy 2 EOY Cancun weeks to retro these and get to 4-Star. You'll end up with 444,000 SOs annually for an additional outlay of approx. $45,000 and increase in annual MF of approx. $1500.

Depending on how you use your TS, this may or may not be worth it.

 

[DeniseM]

You are correct for Hawaii. Nobody who owns there should convert. But, Hawaii is unusual.

That's my point exactly - the OP owns two 2 bdms. in Hawaii. Converting to Starpoints is never going to be a good deal for him.

If he wants more Starpoints I'd recommend that he:

1) Apply for a Starwood AMEX in both his name and his spouse's name, and start making maximum use of the cards, and paying them off every month so he has no interest charges - we essentially use ours like a debit card and charge every cent on them. Since not every merchant accepts AMEX, we have a backup Hawaiian Air VISA that earns Hawaiian Airline Miles, that we use where the AMEX is not accepted. I recommend 2 Accts., because they usually offer a nice chunk of Starpoints as an incentive to open the Acct., and he can double the incentive points by opening two Accts.

2) When Starwood has Starpoints on sale, which they do at least once a year, he can maximize his puchase by opening SPG Accts. for everyone in his immediately family, and buying the Max. number of Starpoints allowed per person.

Using this strategy, he can accomplish his goals of having more Starpoints for a tiny fraction of the cost of reaching 4 Star Elite.

His only cost, besides buying the SP's, will be a $50 per year service charge for the AMEX Cards.

If he wants to go clear to 5 Star Elite, that's a different strategy, but he said his goal is to reach 4 Star Elite.

 

[RoshiGuy]

If he wants to go clear to 5 Star Elite, that's a different strategy, but he said his goal is to reach 4 Star Elite.

Somehow there's a 5-Star "myth" that has been created on TUG. Namely, there is something unique about 5-Star that "might" make going for it worthwhile whereas going for 4-Star does not make sense.

The only material difference in benefits between the two is SPG Plat status. Yet, 5-Star requires almost twice the number of SOs versus 4-Star. So you have additional upfront expense plus significantly higher annual MF.

If 4-Star does not make sense, neither does 5-Star. But either of these might work very well for people (like me) who need the flexibility of converting into SPs.

 

[Fredm]

Somehow there's a 5-Star "myth" that has been created on TUG. Namely, there is something unique about 5-Star that "might" make going for it worthwhile whereas going for 4-Star does not make sense.

The only material difference in benefits between the two is SPG Plat status. Yet, 5-Star requires almost twice the number of SOs versus 4-Star. So you have additional upfront expense plus significantly higher annual MF.

If 4-Star does not make sense, neither does 5-Star. But either of these might work very well for people (like me) who need the flexibility of converting into SPs.

None of it makes sense (4* or 5*) if the owner cannot effectively use the underlying timeshares. If they can, then it is simply a matter of how to most cost effectively get to the desired level.

 

[Ken555]

None of it makes sense (4* or 5*) if the owner cannot effectively use the underlying timeshares. If they can, then it is simply a matter of how to most cost effectively get to the desired level.

It's nice to see a dose of reality in these threads now and then. Thanks, Fred.

 

[jarta]

DeniseM, ... "That's my point exactly - the OP owns two 2 bdms. in Hawaii. Converting to Starpoints is never going to be a good deal for him."

He didn't ask about converting Hawaii Staroptions to Starpoints. He asked how he could cheaply get to 4 Star Elite.

You responded that there is very little reason to do so and gave, as an example, that you can buy Starpoints for the cost of converting.

I responded with examples of places I own where the conversion costs much less than buying Starpoints. They, Lagunamar and WKV, are prime examples where Sunset100 could make a purchase to get to 4 Star Elite. (There are others, like a ski week at Mountain Vista, which have an even better ratio of Starpoints for SVN StarOptions and very low MF.)

Why not buy a 148,100 Mountain Vista or a WKV or a true Plat. SDO on ebay and retro it with a Lagunamar EOY purchase for $21,500? Then go to Hawaii and convert the other two.

Nevertheless, your premise (can buy Starpoints for less than you can convert) is just, plain wrong.

As Fredm points out, use matters. II produces some terrific bargains in trades. But, not everyone is solely interested in using purchases to trade in II all the time. ... eom

 

[RoshiGuy]

Nevertheless, your premise (can buy Starpoints for less than you can convert) is just, plain wrong.

It's not quite clear to me how the premise is plain wrong? I think your math is fuzzy - you're simply using MF and completely ignoring the loss in value of upfront $$ as well as potential long-term interest/appreciation if the same $$ were invested. Take your Lagunamar example and run the numbers again for a 10 year period ... cost will be two or three times what you've estimated.

I happen to like SPs because they provide flexibility in how to use my TS. But I recognize that I'm paying for this flexibility; there's no free lunch here.

 

[RoshiGuy]

My Platinum Lagunamar 2-br 2011 MF is $1,244.05. Cost per Starpoint = $1,244.05/79,200 = $0.0157. (I have 3 of them.)

The above conclusion is just plain wrong. Classic example of fuzzy math.

Lagunamar Plat costs approx. $43K. Let's assume a 20 year holding period. At the end of 20 years the TS may generously be worth $10K. So you've lost $33K over 20 years; approx. $1650/year. Also, a conservative estimate of 20-year appreciation for investing this money is 4%/year; approx. $1700.

So the true cost of Lagunamar SPs is closer to 1250+1650+1700 or almost 6c/SP, several times what you estimated.

 

[jarta]

RoshiGuy, ... I calculated the actual cost of StarOption to Starpoint conversions now from facts I know are true now. My post contains the facts now. Which ones are wrong? What's fuzzy?

The statement that you can buy Starpoints now for less than it costs by Staroption conversion didn't say anything about that being the case 10 years from now. DeniseM was talking about the here and now.

I can't calculate assumptions for the actual costs, existence of programs and their ratios, economy 10 years from now (inflation, stagflation, depression), price of gas, tax policy of Hawaii, mergers or even whether any of the airlines or the SVN will still exist. Too many assumptions that far out for me to get my little brain around.

In 10 years the entire Maldives may be under water from global warming. lol! Most weather forecasts don't go beyond 10 days!

But, likewise, I can't say that anyone's assumptions about what will be happening 10 years from now are wrong. I just don't see them being very relevant to today's statement that purchasing costs less than converting for a 4 Star Elite. ... eom

 

[RoshiGuy]

Jarta, I am talking about here and now costs. Not about 10 year or 20 year costs.

If you want to continue to assume that only MF matters and both depreciation and opportunity cost should be ignored, so be it.

If a person leases a new BMW for $300/month (after putting $10,000 down payment) and tells all his friends about the great deal ... "I'm only paying $300/month" ... what would we say?

 

[DeniseM]

This is what the OP said:

My goal is to achieve 4 star or maybe platinum status and maximize my starpoints connversions.

Sure sounds like he plans to convert to Starpoints to me, since there is little other reason to desire to be 4 Star Elite.

 

[jarta]

RoshiGuy, ... "I am talking about here and now costs. Not about 10 year or 20 year costs."

You are talking about prorated unrealized profits or losses from a real estate transaction as being costs of a particular transaction (conversion) years separate from and unrelated to the actual acquisition or disposition of the real estate.

If you bought a property for $500K ten years ago and, over the 10 years it inflated to a market value of $1M, and your mortgage and taxes ran $50K per year did you live cost free for those 10 years? Should the yearly increase in market value offset your mortgage or property tax deductions? What happens to your cost if in 2011 the unrealized gain or loss disappears? Is the change in unrealized gain or loss 100% cost during the year it happens? If it isn't don't all the financials for the preceding 10 years have to be restated?

Lots of people who work with numbers for a living would say you are wrong to count costs that way. Ordinary people can't prorate unrealized capital gains or losses that way against revenue or expenses.

I just used the costs attributable to the actual conversion transaction as the costs of converting. I think I am right to do so. You can think otherwise. ... eom

 

[LisaRex]

Buying SPs off the website for 3.5 cents per point (less if you buy during their year-end discount) doesn't cost you any $$ upfront, nor are you committed to buying them year after year.

You cannot just pretend that the upfront money doesn't enter the equation for comparison purposes because you're no longer comparing apples to apples.

The only real downside to buying SPs from SPG vs. converting a WKORV timeshare (assuming you can get something worth more than the 3.5 cents you paid) is that there is a limit as to how many you can buy per year on SPG.com. If you have a spouse, you can each double that, but it's still less than the 72M you're going to get for converting.

 

[RoshiGuy]

Lots of people who work with numbers for a living would say you are wrong to count costs that way. Ordinary people can't prorate unrealized capital gains or losses that way against revenue or expenses.

I just used the costs attributable to the actual conversion transaction as the costs of converting. I think I am right to do so. You can think otherwise. ... eom

Ask anyone who works with numbers for a living about how to estimate true costs. I have absolutely no doubt that they will say it needs to include MF plus depreciation plus opportunity costs. Are the depreciation/opportunity costs "uncertain"? Of course they are. However ignoring them is like closing one's eyes; feeling the tail of a donkey and concluding that one has caught a snake.

DeniseM was right when she said that it is cheaper to simply buy SPs from Starwood rather than purchase a TS for the purpose of converting. Your math suggesting otherwise is fuzzy because it ignores important facts pertinent to the situation.

As LisaRex points out the limitation to purchasing SPs is that this is restricted to 20K per person which does not go very far either for hotel stays or airline tickets.

 

[DanCali]

The above conclusion is just plain wrong. Classic example of fuzzy math.

Lagunamar Plat costs approx. $43K. Let's assume a 20 year holding period. At the end of 20 years the TS may generously be worth $10K. So you've lost $33K over 20 years; approx. $1650/year. Also, a conservative estimate of 20-year appreciation for investing this money is 4%/year; approx. $1700.

So the true cost of Lagunamar SPs is closer to 1250+1650+1700 or almost 6c/SP, several times what you estimated.

Lots of people who work with numbers for a living would say you are wrong to count costs that way. Ordinary people can't prorate unrealized capital gains or losses that way against revenue or expenses.

I just used the costs attributable to the actual conversion transaction as the costs of converting. I think I am right to do so. You can think otherwise. ... eom

Ask anyone who works with numbers for a living about how to estimate true costs. I have absolutely no doubt that they will say it needs to include MF plus depreciation plus opportunity costs. Are the depreciation/opportunity costs "uncertain"? Of course they are. However ignoring them is like closing one's eyes; feeling the tail of a donkey and concluding that one has caught a snake.

Jarta - I agree with RoshiGuy here on this issue. It is a fact that those $43K Lagunamar weeks are worth less than $10K now (you don't need to project out for 20 years...). It'd take decades of Starpoint conversions to recover this $30K+ cost based on the estimated savings of 1.2 cents per Starpoint converted (your estimated cost of 1.6 cents versus the cost to buy them from Starwood for 2.8 cents during the bi-annual "sale"). And this is stll ignoring that those $43 could have actually earned some interest over time too...

 

[tomandrobin]

Honestly, there is very little reason to spend the money to reach 4 Star Elite. You can usually buy Starpoints from Starwood for less then the cost of converting your timeshare to Starpoints. If you have the time and money to reach 5 Star Elite, reaching Starwood Plat has some value for people who regularly stay in Starwood hotels, and travel abroad, but it's not for everyone. The financial commitment to reach 5 Star Elite is in the range of $100,000 up front, and $10,000 per year. That will buy a lot of hotel stays.

We are 5* and our MFs for 2011 is $7575.14 for our five units.

Total Available StarOptions:
2012: 694,300

 

[Fredm]

Ask anyone who works with numbers for a living about how to estimate true costs. I have absolutely no doubt that they will say it needs to include MF plus depreciation plus opportunity costs. Are the depreciation/opportunity costs "uncertain"? Of course they are. However ignoring them is like closing one's eyes; feeling the tail of a donkey and concluding that one has caught a snake.

DeniseM was right when she said that it is cheaper to simply buy SPs from Starwood rather than purchase a TS for the purpose of converting. Your math suggesting otherwise is fuzzy because it ignores important facts pertinent to the situation.

As LisaRex points out the limitation to purchasing SPs is that this is restricted to 20K per person which does not go very far either for hotel stays or airline tickets.

I usually stay out of these "cost" discussions because they are not as straightforward as some portray.
Nonetheless, a few additional variables to consider when evaluating the ultimate cost and value of a timeshare:

Residual Value. Some assume zero, some less than zero. Others make an assumption based on current "market" value.
Roshiguy and DanCali call the cost "depreciation".
At some point in the future the actual cost must be reckoned with. How it is reconciled remains unknown, and is based on the circumstances at the time.
For example, owners A, B, and C buy timeshares at a cost of $75,000. Each use them for 5 years, then sell.
Owner A sells for $25,000. Has no offsets and experiences a real 10k/year devaluation.
Owner B sells for $25,000. Needs a 50k loss to offset gains elsewhere, in the year sold.
Owner C waits outside the sale center until he sees a couple walking out with a new owners package. Approaches the new owner and offers to sell them the same timeshare for $50,000. The new owner accepts the offer, and recinds the purchase.

Although price and ownership term was different, each of the above examples are actual events we observed in the past 90 days.
Bottom line is that one should not assume unrealized capital cost until it is sold.

Opportunity Cost. This is perhaps the most misused term in timeshare cost "analysis". It is theoretical, and almost always has no basis in reality. It presumes that in the absence of the discretionary timeshare purchase, there would not be an alternative cost of accommodations and travel.
If this is the case, there would no financial justification
for the timeshare purchase in the first place.
Almost always, the alternative costs will exceed any return on retained capital.

Which brings me to Subjective Value.
This is a highly individual perception of value (not cost).
Interestingly (to me anyway) those that can truly claim a real opportunity cost vs a timeshare purchase, are those most likely to place a high subjective value to issues like "VIP Status", and other preferential conveniences. It is hard to quantify in purely dollar terms.
The more cost conscious among us watch our dollars more closely.
I am reminded of a very talented, energetic, highly successful surgeon I am acquainted with. Vacation cost is not an issue he concerns himself with. He pays for the pampering which he believes he needs to escape the pressures of his profession.
Others handle the mundane details of arranging it.
His reality is different than mine, or most I know. But, it is his reality.
While this is a more extreme example of subjective value, it tends to make the point. There is a subjective value to Elite Status that cannot always be debated on purely financial terms. The value is in the eyes of the beholder.

I am not debating the validity of the analytical approach taken by some. It is their reality, and it how they choose to view the matter.
I do, however, take exception to the notion that theirs is the only "right" cost analysis.

 

[jarta]

DanCali, ... Since you are a Kellogg person, I hope you understand this.

A transaction cost is a transaction cost. There are many, many transactions which can occur over the time period a timeshare is owned. Each transaction has its own cost. My point is that it is inappropriate to add all opportunity costs to each single transaction in determining the cost of the transaction.

I have often posted that investing in a timeshare is an overall awful economic investment. On an overall basis that's unarguable!

The same is true of purchasing a car. You can ride public transportation for less money. You can purchase a BMW, SUV, hybrid, small car or large car. When you fill it up at the gas station, your overall cost can be calculated as the gas, cost of the car and the opportunity cost. But, the cost of the gas is the cost of the gas for the transactioon taking place.

You could calculate the cost of eating out while owning a timeshare as much larger by allocating the purchase price against the meal. You could allocate the cost of swim fins as much greater than they are by allocating the cost of the purchase against the cost of the swim fins. You could even allocate the purchase price against the cost of gas to get to the resort - thus upping the transportation cost.

Every single transaction related to timeshare ownership and use can have the purchase price allocated against it to up the cost of the individual transaction. The cost of every single aspect of timesharing can be inflated (and thus easily misstated) by allocating all other costs into it.

My point is that it's not the way real estate cost is figured in the world of accounting. And, it's as much fuzzy math as the timeshare salesperson deducting the cost of heart attacks not suffered due to relaxing timeshare vacations to justify purchase price.

So, you do it your way, but understand that once allocated against one timeshare transaction, it is improper to allocate the same cost against another transaction. I don't need to do all that bookkeeping to know that overall a timeshare in a poor economic decision.

But, so is taking numerous vacations by buying a vacation house. I was faced with the decision of which to do. I chose the timeshare route (for many reasons you would probably not consider valid). I'm happy with what I did despite the fact that I will absolutely suffer an economic loss if or when I sell.

But, the cost of the transaction of converting Staroptions to Starpoints is, in many instances, less than the cost of the transaction of buying Starpoints. ... eom