Starwood RevPAR Explained, Part 1.

Ever wonder how Starwood decides which hotels fall into which categories? There are some incredible hotels that I have stayed in that are considered Category 1 properties, costing 2,000-3,000 starpoints, while I have been to dumps that are Category 3 properties costing 7,000 points/night (although those do have the 5th reward night free, nights and flights options, and are only 2,800+$45 with Starwood Cash and Points…)

The answer is RevPAR, which is a hotel’s average daily rate multiplied by the hotel’s average occupancy rate=Revenue Per Available Room, aka RevPAR.

Each of the 7 Starwood hotel categories are divided up into RevPAR brackets.
This formula is what causes there to be true bargains and incredible rip-offs in the Starwood program.

I have seen $400 hotel rooms placed in Category 2 (3,000-4,000 starponts). Presumably this hotel has a low occupancy rate, which drops their RevPAR down to Category 2 levels. On the other hand a hotel charging just $100 per night may find itself ranked at a Category 3 if they have consistently high occupancy.

So why does Starwood use RevPAR to categorize hotels?

Because the Starwood program has no blackout dates for hotel rewards (if a Starwood hotel has a room available for sale, you can get it with points. Don’t you wish airlines did that as well!) RevPAR is a decent indicator of what your free stay will cost Starwood.

You see, Starwood doesn’t own most of the Starwood branded hotels, individual owners simply license the Starwood brand name, and pick an appropriate Starwood brand (Sheraton, Westin, W, Four Points, S. Regis, Le Meridien, Aloft, The Luxury Collection, etc.) When you use Starpoints at a hotel the Starwood Preferred Guest program compensates the hotel based on its ranked category and the occupancy rate for the night of your stay. If the occupancy rate is over 90% then the program winds up paying top dollar to the hotel, if it is under that rate it pays a much lower rate.

Coming soon: Part 2; The Annual RevPAR adjustment.

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10 Responses to “Starwood RevPAR Explained, Part 1.”

  1. me Says:
    1

    Great post!!

    Maybe we can make a list of the real bargain hotels.. The hotels in category 2 that are $400 a night…

    Dan??

    Thanks for a great website!

    ReplyReply
  2. as Says:
    2

    Dan:
    I am a loyal reader a couple of years.maybe u can help me.I had good credit thru out the years -never had a problem getting a credit card or anything and a while back I was out of states and was late in paying some CC’c and one 200 verizon bill from the summer fell thru the cracks and now my credit went down etc..I cant even get a CC if I want to.Can You tell me or us what can I do to get my credit back up.
    With much appreciation,
    as

    ReplyReply
  3. yh Says:
    3

    whats the nicest hotel in the new york area for the least points ?

    ReplyReply
  4. Dan/Ctownbochur Says:
    4

    What do you consider to be “new york area”?

    ReplyReply
  5. yh Says:
    5

    in a 45 min drive radius of manhattan.thanx

    ReplyReply
  6. danFAN2 Says:
    6

    is it bad to check our own credit score?

    ReplyReply
  7. jay Says:
    7

    was wondering the same best hotel in ny area? thanks dan!

    ReplyReply
  8. Dan/Ctownbochur Says:
    8

    I’ll tackle the Starwood NYC questions in a future post.

    as:
    Your only hope is to make good and beg for mercy from the companies that you owe money to!

    danFAN2:
    There’s no problems with checking your own score.

    ReplyReply
  9. as Says:
    9

    Please explain yourself Im sorry I dont understand what you mean.Im not stupid I just dont know what you mean “make good” and “beg mercy from who?”
    Thanks for your time

    ReplyReply
  10. yaacov Says:
    10

    please can you make a list of hotels in israel that are good but catogorized as a 2 or 3

    ReplyReply

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