When did Hilton get so bad at processing award stays?

I'm no thought leader in travel, so I'm not going to paint this as a symbolic or meaningful decline in the quality of the Hilton Honors program, but I had a pair of experiences this weekend that together formed one hell of a coincidence. My mom was visiting from Oregon, and together we drove to the Maryland coast to get out of the city for the weekend.

Hilton Honors award reservations are easy for hotels to screw up

Being a travel hacker means never having to share a hotel room with your parents, so I booked us two all-points award stays at a Doubletree property in the Annapolis suburbs, one with my partner as the "additional guest" and one with my mom as the additional guest. The stay went smoothly, but when the folios were emailed to me on the morning we checked out, only one of the rooms had been zeroed out; the other showed a charge to my credit card for the two nights of $480 or so.

The next night, I had booked my mom a room at the Hilton Garden Inn near Washington National Airport, again with her as the additional guest on the reservation, and got a text from her asking whether the stay was a points stay or a points and cash stay. I thought this was a pretty strange question, but she said the front desk clerk had been confused. Sure enough, the next morning the e-mailed folio showed the full room rate had been charged to my credit card!

If it hadn't happened two nights in a row it probably wouldn't have even registered with me; there are all sorts of things you have to call a hotel about to follow up on after a stay, and it only took two 2-minute phone calls to get both sets of charges reversed. The fact that it happened under identical circumstances, however, makes me think there may really be a Hilton reservation issue when the "additional guest" checks in on an award stay without the primary guest. There's no rule against booking such stays (I do it all the time), and the charges are easy to reverse, but the pattern is certainly suggestive.

A more serious concern would be if you booked an award stay for someone and they provided their own credit card on check-in, and that credit card was charged the full price of the stay. If they were nervous talking about money, like many Americans, they might simply pay the charge thinking you'd stiffed them! And of course if the reservation were held with a debit card, you could experience serious cashflow issues or even overdrafts while the refund was being processed, which can take several days.

Conclusion

I don't have any grand unified theories about the source of this issue, and don't have any idea whether it originates on Hilton's side as a reservation software issue or on the properties' side as a training issue or even an attempt to grift unwitting guests. The solution is simply to be aware of it, check your Hilton folio as soon as they e-mail it to you, fix the issue before you check out if possible, and call as soon as you discover it if not!

Are your unredeemed points killing your game?

I haven't written about this lately, so hopefully my long-time readers will indulge me as I dive back into what I find is one of the most under-appreciated risks of travel hacking: the risk of unredeemed points.

Plenty of attention is paid to devaluation risk, which is what you encounter when it takes you too long to earn the points you need for the trip you want to take, and the amount you earn in anticipation of a redemption ends up not being sufficient. This risk does not concern me in the least. Earning more points is the natural condition of the travel hacker, so who cares if every few years you need to pack on a few tens of thousands of points in order to secure the redemption of your dreams?

No, the real risk faced by travel hackers every day isn't earning too few points — it's earning too many points, and finding them unredeemable or redeemable only at much lower value than the redemption they were earned in anticipation of.

It turns out flying to Munich is very cheap

The occasion for me thinking about this subject is my partner's planned intercontinental family reunion in Germany this year, which I figured was the perfect opportunity to prove the value of all those trips to Walmart: with all the transatlantic Star Alliance traffic, it should be a piece of cake to find some premium cabin award space so we can travel there in style and comfort. Since I've got way more Ultimate Rewards points than I'm comfortable with, a quick transfer to United would yield a high-value redemption and take a weight off my mind.

Unfortunately, flying to Munich is very cheap. We can fly there and back, nonstop, on the day of our choosing for $775. That's handily under the $800 US Bank Flexperks redemption threshold, so I can book a nonstop ticket for $400 in Flexpoints.

Meanwhile, two roundtrip award tickets in Lufthansa's business class would cost 280,000 Mileage Plus miles and $212 in taxes and fees, or $1,506 per ticket valuing Ultimate Rewards points at their cash value of 1 cent each.

$1,106 is a lot of money, and $2,212 is even more money, so I'm not going to pay that much to upgrade us to business class on a couple of 8-10 hour flights.

What do you do when this happens over and over again?

There are two potentially competing forces at work here: the drive to earn the most valuable points possible and the drive to redeem the right points for each individual redemption. I say "potentially" competing because in many — hopefully most — cases you'll find they are not: if you primarily travel to cities with Hyatt locations that meet your needs, you'll almost invariably find that cheaply-earned Ultimate Rewards points transferred to Hyatt are one of the best values available.

For example (just because I like examples), in Seattle a night at the Hyatt at Olive 8 costs 15,000 World of Hyatt points ($3,000 in office supply store spend with a Chase Ink Plus) while the Hilton Seattle may cost 70,000 Honors points ($11,667 in bonused spend on a Surpass American Express).

But what happens when "high-value" redemptions like the Lufthansa business award I described above are ruled out over and over again by far cheaper paid tickets booked using fixed-value currencies like Flexpoints?

I stay at a lot of Hyatt properties, and I book them for friends and family every chance I get, and I still have enough World of Hyatt and Ultimate Rewards points for 10 nights at a Category 7 property, or 64(!) nights at a Category 1 property. Having too many points to redeem doesn't feel as acutely painful as having too few points to redeem, but both situations send the same signal: that my system is out of of balance.

I think you should redeem your points for cash, but you won't (and neither will I)

The funniest thing I see on Twitter and in the miles and points blogosphere is people bragging about their points balances, as if having a high balance was a point of pride, rather than an admission of failure.

To state what should be obvious, the best number of miles and points to have in all your accounts is zero: the perfect calibration of your earning and burning activity would leave all of your accounts empty virtually all the time, with all of your earning activity purposefully directed towards particular planned redemptions.

That's impossible, both because the world isn't so tidy and because humans are blessed with foresight: odd numbers of points accumulate here and there as various promotions are triggered, and points are earned in small amounts in anticipation of large future redemptions. Such is life.

But the necessity of living in the world as it actually confronts us is sometimes converted into the false belief that high balances are good in their own right, because they give you "flexibility" for future redemptions or "insurance" against a particular deal or earning opportunity dying.

Conclusion

I understand that one subset of travel hackers is wealthy people who use miles and points as a kind of stunt to save money on the kinds of luxury vacations they'd still take if the game didn't exist.

Above I compared a business class award flight on Lufthansa to a paid economy class flight on United. However, if your alternative to each redemption were payment in cash, the comparison would look very different: the $775 United flight gets you about two cents per point on a Flexperks redemption, while the $1,506 Lufthansa flight gets you over 4 cents per point (for a ticket that would otherwise cost $6,143). There you'd be comparing a "good," or even "great," Ultimate Rewards redemption against a "standard" Flexperks redemption, and you wouldn't be wasting $1,106, but rather saving $4,637 per ticket!

That is, needless to say, not my perspective.

IHG Rewards Club, reconsidered

[edit 8/7/17: updated charts to reflect 60,000-point top-tier IHG Rewards Club properties. Conclusions left unchanged.]

Easily the reaction I least expected to Tuesday's post on credit card auxiliary benefits was the passionate defense that emerged in the comments of IHG Rewards Club.

I have always dismissed IHG Rewards Club more or less mechanically: their credit card doesn't offer high enough unbonused or bonused earning rates to justify manufacturing spend on it, and IHG Rewards points have so little value that it's extremely expensive to combine them with the credit card's annual free night certificate for stays of more than one night.

IHG Rewards Club offers a good rebate on paid nights for co-branded credit card holders

But what about using IHG as your primary hotel loyalty program? How would a top-tier elite fare in each of the biggest hotel loyalty programs? Fortunately, this information was at my fingertips thanks to the calculations I'd already done for Chapter 6. Here are the results, showing the amount of hotel spend required to earn sufficient points for a free night award at low-, mid-, and top-tier properties with each program:

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Next, It's worth pointing out that this comparison, in which IHG Rewards Club has a strong showing compared to the other two programs, is in fact deeply unfair to IHG. That's because IHG Rewards Platinum elite status is trivially easy to earn: all you have to do is carry their Chase co-branded credit card.

To earn top-tier Hilton Honors Diamond status you need to spend $40,000 on one of their premium co-branded credit cards or complete 30 stays or 60 nights (award stays and nights count), and to earn Marriott Rewards Platinum status you need to spend an ungodly amount on their Premier co-branded credit card or stay 75 nights.

Comparing IHG Rewards Club Platinum status to the much more fair Hilton Gold or Marriott Silver status (which come with their co-branded credit cards), the comparison suddenly shifts sharply in IHG's favor:

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While low-level properties are still slightly easier to earn with the Hilton and Marriott co-branded credit cards on paid stays, earning stays at mid-level and high-level properties is easiest with IHG Rewards Platinum status and their co-branded credit card. That's true whether you use a co-branded credit card to actually pay for your stay or not.

IHG Rewards elite status isn't worth much

If your goal is to earn award nights as quickly as possible on reimbursed paid stays, IHG offers a very strong value proposition for co-branded cardholders. On the other hand, Hilton Honors Gold status and Marriott Rewards Gold status both come with free breakfast, while IHG Rewards Club Platinum status doesn't come with...anything.

Whether having breakfast included on your stays is worth a lot, a little, or nothing is entirely up to you — I've seen good arguments on all sides of the question. But if you're going to make IHG Rewards your primary program for paid stays, you should be aware of what you're getting.

IHG Rewards Club offers frequent, potentially lucrative promotions

While the other big hotel loyalty programs have fallen into a tired habit of offering double or triple points promotions every quarter, IHG Rewards Club has done a pretty good job of maintaining a steady tempo of promotions which, if you have enough paid stays during promotional periods, can spin off a phenomenal number of points.

While it's hard to quantify, by aggressively targeting paid stays during relevant promotions you can increase the rebate value of your participation even further.

Conclusion

So, this has been my reader-inspired reconsideration of the value of IHG Rewards Club. My revised conclusion is that it's an extremely strong program for co-branded credit card holders who have lots of paid or reimbursed stays, and who are not concerned with the limited benefits available to those with elite status.

While Hilton will remain my primary hotel loyalty program as long as it remains so easy to manufacture Honors points (and Diamond status) in bonused categories, I have a renewed appreciated for IHG Rewards Club, and I have only my readers to thank for it.

Rewards programs, ranked by reliability

One fun thing about writing a blog is that reader feedback gives you a chance to see how different ideas interact and collide. Last Friday when I wrote "While I'm willing to take unlimited risk in my investment portfolio, I'm willing to take virtually no risk in my travel hacking portfolio," reader Danny commented:

"This seems like an interesting sentiment. I'd be far more concerned with keeping my investments sound than my points balance."

Then on Monday I wrote with respect to my findings on Hilton all-inclusive award pricing that:

"If points costs will fall to match low revenue rates, it is easier to justify earning large quantities of Hilton points knowing that you'll almost always get close to, or above, their imputed redemption value."

I've been thinking about these two ideas, risk and reliability, and how they interact in my travel hacking practice.

Devaluations are the big, unknown risk

For several years, the US Bank Club Carlson credit card offered the last night free on all award stays. Now, this benefit was never quite as good as it was cracked up to be since Club Carlson properties, even or perhaps especially high-end Club Carlson properties, are dumps (true story: months after the Radisson Blu Warwick Hotel Philadelphia finished their renovations to not be a dump any longer they left the program).

Many people, expecting that benefit to continue indefinitely, earned hundreds of thousands, or millions, of Club Carlson Gold Points (trust me — many of them are readers of this blog).

Then the last-night-free benefit ended, and those points could only be redeemed at still-crappy Club Carlson properties. The same spend that earned those millions of points could have been used to earn 2% cash back, unbonused Ultimate Rewards or Membership Rewards points, or another rewards currency.

That's the kind of risk that I do my best to avoid in my travel hacking practice, by earning the rewards I redeem and redeeming the rewards I earn.

Reliability is the certainty of being able to redeem rewards for the trips you want to take

Reliability is something slightly different than risk. A reliable program offers consistent redemption values, whether or not that value is high or low, attractive or repulsive.

For example, according to Hotel Hustle, the IHG Rewards Club offers quite remarkable consistency, with a median value of 0.58 cents per point, with 75% of award searches above 0.44 cents per point and 75% of awards below 0.68 cents per point. That doesn't make it attractive to manufacture IHG Rewards points, but it gives you a clear view of the value of any points you might earn in one of their periodic sweepstakes or promotions.

My top ten loyalty programs, by reliability

Whether a particular rewards currency is "worth earning" depends on both your cost of acquisition and your particular travel plans, so this is not a list of the top ten most valuable loyalty programs. It's only a list of the top ten rewards programs sorted by my view of their reliability.

1. Cash. Cash has the great benefit of maintaining its dollar redemption value no matter what happens. It is, in that way, the most reliable rewards currency. Into this category also falls the fixed-value redemption of currencies like Ultimate Rewards, Membership Rewards, BankAmericard Travel Rewards, and other rewards programs with fixed values, like Delta SkyMiles Pay with Points redemptions. Their reliability is unimpeachable.
2. IHG Rewards anniversary free night certificates. In the several years I've been travel hacking, I've never seen an IHG property that I would be willing to transfer points, buy points, or manufacture points in order to book. But they really do have a Chase IHG Rewards credit card that gives you an annual award night at any IHG Rewards property in the world! I've never seen a report of the certificate not being honored for any reason, except the chain's preposterously loose rules on award availability. As far as I can tell the thing is completely reliable. Compare that to Marriott's anniversary night certificates, which have become almost unredeemable as properties continually migrate up out of Category 4.
3. Flexible Ultimate Rewards. Chase Ultimate Rewards points held in a Sapphire Preferred, Sapphire Reserve, Ink Bold, or Ink Plus account are more valuable than cash but slightly less reliable, since their value depends in part on the value of transferred points. One component of the value of a flexible Ultimate Rewards point is the value of one United Mileage Plus mile, but the value of a United Mileage Plus mile is highly volatile, so that portion of the value of an Ultimate Rewards point is also volatile. Nonetheless, Chase strongly supports the 1:1 transfer ratio of Ultimate Rewards points to their partners, so the reliability of the program overall is raised by the relative constancy of programs like World of Hyatt and Southwest Rapid Rewards.
4. US Bank Flexpoints. Long-time readers know I love the US Bank Flexperks Travel Rewards Visa because of its generous bonused earning categories, but the process of redeeming Flexpoints introduces some unreliability into the system. Flights will sometimes be shown with odd fare differences which push them into a higher redemption band, for example. Nonetheless, the ability to redeem Flexpoints for between 1.33 and 2 cents per Flexpoint makes them one of the most reliable currencies around.
5. Flexible Membership Rewards. Here the problem of transfer partner volatility is magnified by the eclectic range of partners Membership Rewards has. For example, in 2015 the transfer ratio to British Airways Avios dropped 20%, from 1000:1000 to 1000:800. Then in 2016 British Airways created a special exception to their distance-based award chart in order to charge between 33% (off-peak) and 60% (peak) more for business class flights between Boston and Dublin on Aer Lingus. Today, you may need to transfer 75,000 Membership Rewards points to Avios to pay for a flight that would have cost 37,500 Membership Rewards points before the two devaluations. This doesn't mean that Membership Rewards points themselves have radically decreased in value (how often do you fly between Boston and Dublin?), but the example illustrates the way in which their reliance on transfer partners for value introduces a lot of volatility into the value of their rewards currency, since they don't control their partners' award redemption rates.
6. Southwest Rapid Rewards. Unlike a true fixed-value currency, Southwest Rapid Rewards points have fixed values only within each fare bucket: Wanna Get Away (between 1.4 and 1.6 cents), Anytime (about 1.1 cents), and Business Select (about 0.9 cents). That means that while you know you'll get one of those three values, which one you get depends on availability, reducing in my view the overall reliability of the program. Southwest enthusiasts avoid this problem by carefully watching the schedule and snapping up Wanna Get Away fares as soon as they become available, increasing the overall reliability of the program for them, at least for flights booked far enough in advance.
7. World of Hyatt. According to the Hotel Hustle database of search results, the lowest value redemption at Hyatt properties is 0.91 cents per point (the median is 1.78 cents). If my Chase accounts were abruptly closed and I had to speculative transfer my entire Ultimate Rewards balance, I would choose World of Hyatt in a heartbeat. Hyatt doesn't have properties everywhere in the world, which makes it hard to rely on as a first-string hotel rewards program, but if there's a Hyatt in your destination you're exceedingly likely to get a good redemption value.
8. Starwood Preferred Guest. Starwood has three different sources of value: their points can be redeemed for hotel stays at Starwood and Marriott, they can be transferred to airlines partners (either directly or through a Marriott Hotel + Air package), or they can be redeemed for revenue flights. That makes it almost impossible to get a bad value for your Starpoints, although it also causes the much more serious and common problem of hoarding Starpoints and being unwilling to redeem them for anything but the perfect redemption!
9. Hilton Honors. As I've been discussing lately, the biggest effect of the recent changes to Hilton Honors is that they've apparently deliberately increased the reliability of the program. While there will always be sub-par redemptions in any non-fixed-value loyalty program, Hilton appears to have increased the number of properties where points redemptions make sense compared to paying cash rates.
10. Legacy airline programs. I got into travel hacking at the very tail end of the period when, with flexibility and planning, it was still possible to fairly reliably book low-level domestic award tickets. Those days are over. Virtually all of my domestic travel today, in both economy and first class, are revenue tickets, not because revenue tickets have become cheaper but because award tickets have become completely unreliable as a means of booking domestic travel. International travel, especially on partners, hasn't seen quite as bad a gutting, and flexibility and planning still go a long way to booking flights overseas. Having access to legacy airline currencies through Ultimate Rewards, Membership Rewards, and Starpoints is still a reasonable tactic in case you happen to find award availability, but I don't think it can be the cornerstone of a strategy any longer.

Conclusion

There you have it, my completely subjective top ten ranking of rewards programs by reliability. This is certainly not the only ranking possible: those whose travel regularly brings them to expensive cities with Starwood properties will find they're able to get consistent value from Starwood Preferred Guest, and those who live in cities with many international partner airlines will likely get more consistent value from legacy airline programs than I do. But today, a combination of cash back, Ultimate Rewards or Membership Rewards, and one or two strong hotel programs seems most likely to help you pay as little as possible for the trips you want to take.

Quick hit: new Hilton all-inclusive award pricing is great

I earn a lot of Hilton HHonors points, and I'm going to be earning even more than usual this week, so I decided to take a look at some of Hilton's all-inclusive resorts to see if I could lock in some award space for next Presidents Day, since I had such a good time in Jamaica this year, and I remembered having a terrible time finding award space at Hilton's Rose Hall all-inclusive resort. While checking out the current award space availability, I discovered some pretty odd pricing anomalies — or features, if you prefer.

Searching for flexible dates doesn't work great (and never has)

When you search for flexible dates on the Hilton website, you'll be given something that looks vaguely like a flexible date search. For example, here's a search for flexible dates in July of this year:

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This looks like you've got some expensive premium availability at the beginning of the search period, some not-unreasonable premium availability for a few days, some less-expensive award space for a couple days, one date of low-level availability, 3 sold-out dates, and then some more premium availability. That's not what's happening.

Here are the actual lowest-priced rooms I could find on the dates during this search period:

• June 24: 70,000
• June 25: 70,000
• June 26: 65,000
• June 27: 65,000
• June 28: 65,000
• June 29: 65,000
• June 30: 70,000
• July 1: No availability
• July 2: No availability
• July 3: No availability
• July 4: 115,000
• July 5: 65,000
• July 6: 65,000
• July 7: 70,000
• July 8: 70,000

The award space on June 30 seems to flicker in and out of existence depending on whether I'm logged in, whether I'm doing a flexible search or a date specific search, etc. The search results shown on the website seem to be very path-dependent.

If this continues, it's a huge improvement over the old Hilton HHonors

Once I noticed these pricing anomalies, I decided to see whether I could find any more extreme prices. Here are a few weird prices I found checking the next few months

• April 9: 70,000 (0.76 cents/point)
• May 31: 45,000 (0.58 cents/point)
• June 1: 50,000 (0.58 cents/point)
• July 23: 41,000 (0.49 cents/point)

My original plan was to check each of the next 12 months and find the cheapest date with points. That ended up not being feasible because the Hilton website is terrible. It errors out after every 2-4 searches, periodically signs you out, and inflicts all sorts of other madness on you.

The key takeaway here isn't that there are atmospheric points redemptions (although they're squarely above Hilton imputed redemption values): the value you get from points depends on both the number of points charged and the comparable revenue rate, and the lowest points costs are on nights when revenue rates are in $200-400 range. Really brag-worthy redemptions are on nights when revenue rates are in the thousands or tens of thousands of dollars, and you're able to redeem a "mere" 95,000 points.

The real takeaway here is that by being willing to reduce point costs so dramatically on nights with low revenue rates, Hilton has increased the reliability of their points' value. Prior to the revaluation, the Hilton Rose Hall was 95,000 points per night regardless of the revenue rates available. In fact Hilton had a wide range of nice properties where on cheap nights it was difficult to justify redeeming points. If points costs will fall to match low revenue rates, it is easier to justify earning large quantities of Hilton points knowing that you'll almost always get close to, or above, their imputed redemption value.

The app works great

Last night after I scheduled this post I suddenly wanted to check over a few more things and opened up the Hilton app on my phone. After a few moments, I realized, "this isn't generating any of the errors the website was giving me."

If you think about there being a fixed "real world" of Hilton award space out there in the universe, it appears to me that the app is designed to tap into that world directly, while the website presents only a distorted image of it and requires you to rotate and adjust the lens in order to see different bits and pieces of the real world of award space.

Unfortunately the app doesn't have a flexible date search function, but since the one on the website is so terrible I hesitate to even say this is a disadvantage of the app over the website. In any event, if you know the dates you're interested in I highly recommend going straight to the app and skipping the website completely.

How do you want to think about budgeting for your hotel stays?

I've written a series of posts about my preferred metric for evaluating hotel loyalty programs, which I call imputed redemption values. This is a straightforward metric that tells you if redeeming hotel rewards points gives you a better or worse deal than paying cash that you've manufactured on your most lucrative cashback-earning credit card.

For example, a 95,000-point Hilton Honors redemption would require $15,833 in bonused spend on a Surpass American Express card. If your most lucrative cashback card earns 2%, that gives you a breakeven point of $316 (since for prices above that, a points redemption will require less manufactured spend), if it's 2.105% cashback you have an imputed redemption value of $333, and if it's 2.625% your IRV is $415. 

This metric doesn't tell you what you should do with points you've already earned — I always prefer to redeem points before spending cash. But if your points redemptions come in consistently above your imputed redemption values (95,000 points for a $2,000 night), then you are well-advised to continue earning those points, while if you fall consistently short (95,000 points for a $95 night), you might consider moving away from those loyalty currencies and towards additional cashback, instead.

Yesterday Frequent Miler posted an interesting analysis of some data (with a followup here) from the Hilton Honors program showing, as I'd hypothesized last month, that the new program would see redemptions bunched more tightly around the 0.4 cent per point redemption level. He provides some important insight on different factors that might affect the ultimate value you receive; read the whole thing.

Such analyses are very useful, but it's also helpful to pull back occasionally and give some thought to more basic questions: what's the best way to save money on your hotel stays?

What programs allow you to earn the stays you want as cheaply as possible?

Bottom-tier stays

There are phenomenal values at the very bottom of several hotel loyalty charts:

• If you have a US Bank Club Carlson credit card earning 5 points per dollar on all spend, you can earn a free night at any Category 1 property every time you spend $1,800. Even if your backup card earns 2.625% on unbonused spend, you're exceedingly unlikely to find a room for less than $47.25 per night — taxes alone are likely to be that much!
• With an American Express Hilton Honors Surpass card you can earn 5,000 Honors points, which is, I believe, still technically the fewest points required for a Hilton award stay, after spending $833 at a bonused merchant. That's not a value that any other hotel loyalty program currently offers.

Mid-tier stays

If you're staying in a more expensive market, for example mid-sized or larger cities, there are a few options for getting reliably outsized value:

• If you signed up for a Barclaycard Wyndham Rewards credit card back when the card still earned 2 Wyndham Rewards points for each dollar you spend, you can earn a free night at any of Wyndham's properties for every $7,500 you spend on the card — and Wyndham has a LOT of properties!
• In my experience Hyatt offers consistently reasonable pricing for mid-tier stays. For example, while the Chase Marriott credit card's Category 1-5 annual award certificate has become worthless as desirable properties migrate up and out of Category 5, most of Hyatt's centrally located city properties still top out at Category 3 or 4, costing 12,000 to 15,000 points per night, and are eligible for the Chase Hyatt credit card's annual free night certificate. If you have a Chase Freedom Unlimited credit card earning 1.5 Ultimate Rewards point per dollar, and a premium Ultimate Rewards card that lets you transfer those points to World of Hyatt, these mid-tier properties have an imputed redemption value between $160 and $200, while nightly rates can be substantially higher.

Top-tier stays

At the most expensive properties, a travel hacker has a few options:

• Hilton Honors currently tops out at 95,000 points per night (when standard room awards are available), allowing you to earn a free standard room award night for $15,833 in spend, or $12,667 on stays of exactly 5 nights, since the fifth night is still free on award stays;
• World of Hyatt standard room redemptions top out at 30,000 points per night. If you choose to manufacture unbonused spend on a Chase Freedom Unlimited in order to transfer Ultimate Rewards points to World of Hyatt, such a top-tier redemption would require $20,000 in spend, with an imputed redemption value of between $400 and $525 per night, depending on your best cash back alternative.
• Starwood Preferred Guest, and their new owner Marriott Rewards, seem like they should potentially offer some value, and indeed if you're committed to visiting one of their top-tier properties you should certainly redeem points instead of paying cash. If you're committed to visiting a top-tier, 45,000-point Marriott Rewards property, then manufacturing $15,000 in spend on a Starwood Preferred Guest American Express card and transferring the points to Marriott Rewards at a 1-to-3 ratio is clearly the cheapest way to pay for such a stay. However, for stay categories below top-tier Marriott Rewards stays I believe most travel hackers are likely to find more value elsewhere.

Conclusion

I have always thought it was a curious fact about travel that, when you do enough of it, transportation itself consumes a smaller and smaller portion of your travel budget. Of course you can make it more expensive by traveling in more expensive cabins, but the fact is a single night in a hotel can easily cost as much as a plane ticket!

I've never had any trouble finding miles, points, or cash to pay for flights; I spend much more time calibrating the points I earn for hotel stays than I do for my air travel.

Rebook your Hilton award reservations, but carefully

Some friends recently told me that since the latest changes to Hilton Honors went into effect they'd seen prices go down at some properties where they had existing reservations. I hopped online and saw that, indeed, the pricing on one of my upcoming reservations had dropped from 50,000 points to 46,000 points per night, and another had dropped from 60,000 to 57,000 per night.

Since both reservations were for 3 nights, that's 21,000 in found points, or $3,500 in American Express Hilton Honors Surpass grocery store spend. In other words, not that much, but not nothing either, and worth a few clicks in order to rebook at the lower rate.

Hilton is not good at stuff

First I attempted to change a 150,000-point redemption into a 138,000-point redemption. After completely the change, I was expecting to see my available Honors point balance increase by 12,000 points. Instead, it went down by 138,000.

In other words, instead of either calculating the difference in points required or redepositing the entire award amount and then deducting the new cost, the Hilton website simply deducted the new total points required.

That's not great. Today I called in and got a Diamond agent who, after I carefully explained what had happened 3 times, was able to figure it out and told me, "you should have cancelled the reservation and rebooked, or called in." She then proceeded to cancel my second, correct reservation and make me another, correct reservation, "explaining" that "the old reservation still has your certificate attached."

Also surprisingly rude!

Since I had her on the line, I also asked her to change my second reservation to reclaim another 9,000 miles. I was booked into an accessible room that had dropped in price, and the agent started interrogating me about whether I really needed an accessible room, and scolding me that they had a very limited number of accessible rooms, "like handicapped parking spaces."

This was so obviously inappropriate I don't have much to say about it, except to pass along what the Hilton booking engine itself says about the issue:

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If Hilton thinks there is a problem with people booking accessible rooms in order to save points they can address the problem by not charging more for non-accessible rooms. Instead they chose to go the opposite direction, fine-tuning to an ever-increasing degree the number of points they charge for different room types, dates, and properties.

I'm reminded of the study made famous by Freakonomics, in which charging parents fines for picking up their children from daycare late increased parental tardiness, since it swapped a monetary incentive for an ethical incentive. The price mechanism is marvelously effective, but one of the things it's effective at is swapping financial calculations for moral calculations.

Conclusion

Naturally the reason I was trying to change my reservations was to ensure that space wouldn't disappear between cancelling a reservation and trying to rebook. That turned out to be a mistake! If you're worried about award space disappearing, your best bet is to call in.

Otherwise, just cancel your reservation and use the redeposited points to make your new reservation — that's what they'll do over the phone anyway.

How I think about the Hilton Honors reforms

People are talking about Hilton's recent announcement that they'll be eliminating the concept of hotel award categories and charging whatever they think is fair for a free night at their properties. They're also rebranding their loyalty program to "Hilton Honors," although I assume I'll keep spelling it "HHonors" for at least 8-12 months.

Hilton HHonors then

While some bloggers made a big deal about Hilton HHonors variable pricing, there was nothing mysterious about it. Every property had a fixed price for standard room awards, and that price varied by calendar month. You could find each property's standard room award rate, by month, by going to the Hilton HHonors Standard Room Rewards Pricing Points Search Tool.

That URL now redirects to the Hilton homepage.

Hilton Honors now

Now, properties will still have standard award rates, those award rates will vary by day, month, or season, and there will be no way of knowing how much a room costs until you check the award availability for the specific dates you're interested in.

That's bad if you are in the business of slowly saving up Hilton Honors points for specific stays at specific properties on specific dates, since by the time you save up enough points, the number required might slip away from you.

Obviously no travel hacker does anything like that.

What it means for a travel hacker

The starting point for a travel hacker looking at this situation is the Wandering Aramean Hotel Hustle "Visualize" page, where you learn that across thousands of Hotel Hustle searches, the average value of a Hilton Honors point is 0.450 cents and the median value is 0.425 cents.

Like Doctor of Credit, I'm under no illusion that this change is being implemented to help Hilton Honors members get more value from their points.

But there are three ways the changes to Hilton Honors could be implemented, all of which would be in the spirit of "saving Hilton money," but that would have very different implications for travel hackers.

• The average value of a Hilton Honors point could go down. Since grocery store manufactured spend on an American Express Hilton HHonors Surpass requires that you get 0.35 cents per Honors point to break even compared to a 2.105% cash back card, reducing the average value of a Honors point below that level would reduce the value of manufacturing Hilton Honors points compared to cash back.
• The standard deviation could go down. Currently, even with Hilton Honors points worth 0.45 cents on average, it's not difficult to find more valuable redemptions that get you up closer to the 1 cent-per-point range. A more aggressive pricing scheme might tighten the band around 0.45 cents so that it's still worthwhile to manufacture Hilton Honors points, but the potential upside of saving up Honors points is much lower than what a travel hacker might expect today.
• The upside value might be capped. This is the real risk to travel hackers, and to the Hilton Honors program itself: if the program keeps low-value redemptions, and keeps the average redemption value at 0.45 cents per point, but at high-end properties, or during peak seasons, instead of simply charging more points switches to a revenue-based system anchored at 0.4 or 0.5 cents per point, then the "upside risk" of accumulating Hilton Honors points will be eliminated. Currently, you can accumulate Hilton Honors points with relatively little downside risk and the potential for significant upside if you stay at a particularly expensive property during particularly expensive dates. Putting a firm cap on that upside would mean there was little point in wasting credit card spend on any of their Citi or American Express co-branded credit cards.

Conclusion

I think it's an interesting question, although not one to spend too much time thinking about, whether Hilton HHonors points were worth too much in the past.

While it was and for now continues to be trivial to earn hundreds of thousands of points while redeeming them for outsized value at Hilton's prestige properties, that could only have ever represented a tiny percentage of overall Hilton redemptions, most of which were done safely in their comfort zone of 0.4 cents or below.

So, will Hilton reduce the average value of their points by causing mid-tier properties to cost slightly more points, or will they make top-tier properties cost vastly more points? We shall see.

3 ways I would use the Ritz-Carlton credit card

There's a simple reason why I am so skeptical of signup bonuses and recurring annual benefits. I receive e-mails and comments every day from readers who say the same thing: "I signed up for this credit card before I found your site, and now I have no way to use these points/certificates/companion tickets." If you don't get those e-mails and comments, there's no reason for you to realize just how widespread the problem of orphaned and expiring loyalty benefits is. You may even think you're the only one who has trouble redeeming Membership Rewards points (you're not).

I don't have anything against signup bonuses. But if you chase signup bonuses, rather than focus on how to pay as little as possible for the trips you want to take, you're unlikely to get the most value from your travel hacking budget, whether that budget is in the form of time or money.

Last week I applied that skepticism to the new Chase Ritz-Carlton Rewards credit card. But just because I don't chase signup bonuses doesn't mean signup bonuses are worthless or bad! On the contrary, the right signup bonus at the right time can help you achieve your travel goals at the right price.

With that in mind, here are 3 ways I would use the new Ritz-Carlton credit card signup bonus of 3 free nights at a Tier 1-4 Ritz-Carlton property after spending $5,000 within 3 months.

A 3-night vacation

Sometimes you just want to go away for a long weekend. Nothing wrong with that! Without flying halfway around the world, you could spend 3 nights at Lake Tahoe, in downtown Boston (where hotels, even on points, are shockingly expensive), or in Puerto Rico. Slightly farther afield, there's a Tier 2 Ritz-Carlton in Santiago, Chile.

Those aren't all properties where you'll get outsize value from your redemption, simply because there are other, cheaper properties nearby. But you'll still save the money or points you'd otherwise pay, and you'll get to stay in a class of property you might not otherwise be able to afford.

A leg or side trip during a vacation

If you're planning on a multi-week trip like the one I took to Europe this summer, it would be easy to book one of your stops at a Ritz-Carlton property. The Ritz-Carltons in Budapest and Geneva both look lovely and are centrally located.

Likewise, if you are planning a long stay in a single location, you might want to make a side trip to see more of an area. While planning a trip to Kauai, you might decide to take a side trip to stay at the Ritz-Carlton in Kapalua, or while visiting Tokyo you might plan a few nights in Okinawa or Osaka as well.

Extending a stay

There are a few ways you could use the Ritz-Carlton signup bonus to extend a stay.

First, if you are relentlessly focused on maximizing the value of your points, there are certain inevitable obstacles to doing so. For example, Hilton HHonors points are most valuable when redeemed for 5-night stays, since the fifth night is free. If you want to stay more than 5 nights, but less than 10, that benefit is correspondingly less valuable.

But if you are staying in an area with both Hilton and Ritz-Carlton properties, you can use Ritz-Carlton free night certificates to extend your stay. For example, you might redeem 320,000 HHonors points for 5 nights at Hilton's Grand Wailea, then head around Maui for another 3 nights at the The Ritz-Carlton, Kapalua, maximizing the value of your HHonors points and enjoying an 8-night Hawaiian vacation.

Second, you could extend a stay at a Ritz-Carlton property. For example, for 350,000 Marriott Rewards points you could book 7 nights at the Tier 3 Ritz-Carlton Vienna (plus 55,000 United MileagePlus miles or 50,000 miles in other loyalty programs), then redeem your Ritz-Carlton free night certificates to extend your stay to 10 nights. Note that if you're transferring Ultimate Rewards points to Marriott Rewards, this is only a marginal play since the Park Hyatt Vienna costs just 25,000 Gold Passport points per night.

Third, you might try to achieve something similar to my experience with Hyatt Gold Passport suite upgrade awards. Since the Ritz-Carlton credit card comes with 3 "Club Level" upgrades annually on paid stays, you could book one paid night, apply a Club Level upgrade, and see if you're allowed to keep the same Club Level room on subsequent nights paid for with your free night certificates. There's no guarantee that would work every time, but it's virtually certain to work at some properties, some of the time.

Conclusion

The right time to sign up for a new credit card is when you already have a redemption in mind, and your research indicates that a new card's signup bonus or earning and redemption structure make it the cheapest, easiest, or fastest way to achieve that redemption.

The wrong time to sign up for a new credit card is when bloggers are salivating over temporarily raised payouts on their affiliate links.

Some bonus categories I never think about

I belong to the noisy-but-unpopular school that believes everyday spending should properly be a rounding error in the typical travel hacker's overall miles and points strategy. That's because more miles can be earned in an afternoon of light manufactured spending than will be earned in a month or year of trying to earn as many points as possible on actual purchases.

The flip side of that is a blind spot when it comes to the bonused categories of spend on cards that I already carry, either for purposes of manufactured spend or recurring annual bonuses. In the interests of keeping my blind spots few and far between, I decided to take a closer look at a few of those categories.

Hotels

With increasingly limited access to gas station manufactured spend, you may find that you're not able to manufacture $50,000 in spend in a Chase Ink Plus's double point category of "gas stations and hotel accommodations when purchased directly with the hotel."

Since Ultimate Rewards points are worth 1.25 cents each when redeemed for paid airfare, or more when transferred to Hyatt Gold Passport, Southwest Rapid Rewards, and (usually) United MileagePlus, you're strictly better off paying for your hotel stays with a Chase Ink Plus than with the 2% cash back card you use for your other everyday purchases. One possible exception is if you are having trouble finding eligible expenses to redeem your Barclaycard Arrival Plus, Capital One Venture, or BankAmericard Travel Rewards miles against, although you can always consider refundable reservations in that case.

I'm fond of paying the revenue component of my Hyatt stays with Hyatt gift cards purchased at a discount using cashback rewards, but if you pay for Hyatt stays directly, the 3 Hyatt Gold Passport points earned per dollar with the Chase Hyatt credit card are superior to the 2 Ultimate Rewards points earned by both the Chase Ink Plus and Chase Sapphire Preferred — assuming you plan to transfer your Ultimate Rewards points to Hyatt Gold Passport at any point in the future.

The math is somewhat less favorable when paying for Hilton stays with the American Express Hilton HHonors Surpass card, which earns 12 HHonors points per dollar spent at Hilton properties. According to the Wandering Aramean visualization tool, 12 HHonors points are worth a median 5.376 cents, while 2 Ultimate Rewards points, transferred to Hyatt Gold Passport, are worth a median 3.724 cents. That's an edge, but it's an edge that's highly dependent on your actual redemption pattern.

Finally, the Chase Marriott Rewards Premier credit card is by and large not worth holding for either its recurring benefit (one free category 1-5 night each account anniversary) nor for manufactured spending (one elite night credit for each $3,000 spent). But if you do have it for one reason, the other, or both, you are still unlikely to get more value from the 5 Marriott Rewards points earned per dollar spent at Marriott properties than you would from 2 Ultimate Rewards points earned on the same spend — unless, of course, you are already planning to transfer Ultimate Rewards points to Marriott for some reason, like booking a 7-night Hotel + Air package.

Restaurants

As I've written before, most of the time one or more rotating cashback bonus card is offering 5% cash back at restaurants, so the idea of needing a particular card "dedicated" to restaurant spend is misleading: you should use your most lucrative card, which will, at least 6 months of this year, be a Discover it or Chase Freedom card. But that leaves the other half of the year, which makes it a legitimate question whether there are better cards than a straight 2% cashback card for use at restaurants.

Using the same median Hilton HHonors point value as above, the 6 HHonors points earned per dollar with the Hilton HHonors Surpass American Express at restaurants slightly edges out a 2% cash back card, earning the equivalent 2.688 cents per dollar spent, while the Chase Hyatt credit card earns 2 Hyatt Gold Passport points per dollar spent, or a median 3.724 cents per dollar.

This matters because the Chase Sapphire Preferred, often promoted by affiliate bloggers for its high affiliate payout and earning rate on travel and dining, earns 2 Ultimate Rewards points per dollar. In other words, for just $75, rather than $95, you can earn 2 Hyatt Gold Passport points at restaurants with a card that also offers a free night at Category 1-4 Hyatt properties worldwide. That's a fact that's helpful to keep in mind the next time someone tells you the Chase Sapphire Preferred is the best card to carry for restaurant spend.

Airline tickets

Finally, I very rarely find myself booking air travel directly through an airline (preferring to use miles, Ultimate Rewards points, or Flexpoints earned with a US Bank Flexperks Travel Rewards card), but if you do book air travel directly, or need to pay the taxes and fees attached to award tickets, you can do better than a 2% cashback card with cards you may already carry.

If you periodically sign up for a "spare" US Bank Flexperks Travel Rewards card, for example during the current Olympics promotion, you can use that extra card to pay for airfare, earning 2 Flexpoints per dollar spent, and transfer the resulting bonus Flexpoints to your primary account for future redemptions.

If you use an American Express Premier Rewards Gold card to manufacture grocery store spend on an ongoing basis, you may as well use it to pay for airfare, earning 3 Membership Rewards points for your airline tickets as well, which can be transferred to potentially lucrative travel partners like Delta SkyMiles. The same goes for a Citi Prestige card you may carry to raise the value of your existing Citi ThankYou points.

And the Chase Hyatt credit card earns 2 Hyatt Gold Passport points per dollar spent on airfare, giving it an edge over a straight 2% cashback card, depending as always on your actual planned redemptions.

Conclusion

I don't think it's useful, let alone necessary, for a travel hacker to stress over every possible bonus point at every possible merchant. But for the kind of purchases that you know you make frequently, it's at least worth considering finding additional value by keeping in mind the bonus categories offered by cards that you already use to manufacture spend, or hold for their recurring annual benefits.

As I indicated above, I don't usually pay for airline tickets or hotel stays with credit cards. But digging into my existing cards' bonus categories, I realized I could replicate the majority of the Chase Sapphire Preferred's "travel and dining" bonus categories with cards I already had: the Chase Ink Plus and Chase Hyatt credit cards. Between the two, they cover hotels, airlines, restaurants, and rental cars.

Obviously that leaves out things like cruises, travel agency bookings, local transportation, and so on. But they do include the bulk of reimbursable business travel, so if you do spend a large amount in those categories each year, you may find yourself coming out ahead by examining the bonus categories on your existing card card portfolio.