Delta companion ticket follies

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I've written before about my affection for the American Express Delta Platinum credit card. A big part of the value the card provides, even at its new, higher $195 annual fee, is in the annual companion ticket. Now that my companion ticket has posted to my account, and I've had a chance to experiment with it, I thought I'd share a datapoint or two.

New fare classes, old terms and conditions

When you take a look at the certificates and credits in your Delta "My Wallet," you'll see one set of fare restrictions on the Platinum companion certificate:

If you click on the certificate's "Terms & Conditions," however you'll see a different set of fare restrictions:

"Seats are limited in L, U, T class of service."

In fact, the expanded list is the applicable one: it is possible to use the companion certificate to book into X and V fare buckets.

Each direction must be booked entirely into the same fare bucket

This restriction is both counter-intuitive and can be a real nuisance. While searching for tickets back to my ancestral homeland for Thanksgiving, I found what seemed like the ideal companion ticket reservation:

A simple roundtrip with four legs in economy, each leg booked into an eligible L, U, or T fare bucket.

This reservation is not eligible for a companion ticket redemption.

While Delta and their apologists would love to explain this limitation with reference to the technical limitations of Delta's reservation software, like all of Delta's "IT problems" it coincidentally works exclusively to the detriment of their customers.

In order to successfully make a companion ticket reservation, all the legs in each direction must be booked into the same fare bucket. Each direction, on the other hand, can be booked into the same or different fare buckets, as long as they are eligible fare classes under the terms of the companion ticket.

The value of the companion ticket depends on your other options

Perhaps the most important thing to know about the companion ticket is that it has to be paid for using your American Express Delta credit card.

And that's unlikely to be your most lucrative card for travel reservations, when you could instead be booking paid airfare using a Barclaycard Arrival+ card.

Failing that, you might be paying for your revenue tickets by redeeming US Bank Flexpoints for up to 2 cents each, earned in a bonus category like gas stations or grocery stores.

Alternatively, you might consider redeeming Ultimate Rewards points at 1.25 cents each, earned at no net cost at office supply stores like Staples.

Finally, you might be earning Delta Skymiles for hundredths of a cent each using the Suntrust Delta check card, and redeeming them for 1 cent each on Pay With Miles redemptions, which you're also eligible for as a Delta American Express cardholder.

Conclusion

I will probably end up using my companion ticket not for an expensive Thanksgiving trip this year, but for a $300 – $400 weekend trip this fall. That's not because the companion ticket is a bad deal (it's not), it's because it's not a way to actually save money, compared to the other options I described above.

Any charge I make to my American Express Delta Platinum card will actually have to be paid back with real money — and the whole reason I started travel hacking is that I don't have enough money to pay for all the travel I want to do!

What do no-blackout-date policies really mean?

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During last weekend's trip to New York, I ran into a problem that I think is fairly common: a property won't show award availability, even though standard rooms are still available at cash rates.

In case readers run into similar situations, I thought this would make a useful resource: hotel chain policies on award blackout dates.

Club Carlson

According to Club Carlson's website:

"As a Club CarlsonSM member, you can redeem your Gold Points® for free Award Nights at more than 1,000 Carlson Rezidor hotels worldwide – with no blackout dates on standard rooms."

While attempting to make a reservation at the Radisson Martinique, I discovered that even though standard rooms were still available for sale, I was not able to redeem Gold Points for one. Indeed, you can see this is still true today:

Since I was getting down to the wire planning the trip, I decided to reach out to Club Carlson and see if they could make me an award reservation anyway. The phone agent I spoke to was singularly unhelpful, so I tried Twitter. The agent asked me to e-mail her, and over e-mail she told me:

"Rooms using points for reservations are based on availability and hotels only set aside a certain amount of rooms for redemption reservations, promotions, discounts, etc."

In other words, their "no blackout date" policy means nothing: while there aren't any systemwide blackout dates, hotels can make rooms unavailable for redemption any time.

I've since discovered that the Radisson Martinique makes rooms available for weekend redemptions sometime Wednesday afternoon. So if you are interested in making a reservation there, try the Club Carlson website then to see if they've opened up any award availability.

Hilton HHonors

Here's the Hilton policy on blackout dates:

"Use your HHonors Points to book a free standard room at any of our hotels and resorts worldwide, with no blackout dates."

And indeed, while I was looking at award availability at the Hilton Molino Stucky Venice, I discovered that while there were no award nights available for some nights:

there were also no paid rooms available for the same dates:

Marriott Rewards

In this FAQ, Marriott explains:

"Blackout dates traditionally refer to a limited number of dates on which a hotel could choose not to accept redemptions. With our “No Blackout Dates” policy, hotels will no longer have blackout dates for redemptions. Hotels may limit the number of standard rooms available for redemption on a limited number of days."

In case that sounds an awful lot like a blackout date, Marriott goes on to clarify that redemptions might not be allowed if:

"The date is an approved Inventory Control Date. On a limited number of nights, hotels may limit the number of rooms available for redemption. You may be trying to redeem on one of these nights and the hotel has already reached its maximum number of redemptions."

In other words, hotels can limit points redemptions if the date is one when people particularly want to stay at the hotel.

Hyatt Gold Passport

According to the Hyatt Gold Passport terms and conditions:

"Hyatt Gold Passport Free Night Awards apply when standard rooms are available at the Hyatt Daily Rate. Standard rooms are defined by each hotel and are not subject to blackout dates."

That seems pretty airtight, but there were enough reports of difficulty booking standard rooms that just this May a Hyatt representative explicitly stated on FlyerTalk:

"As long as the Hyatt Daily Rate and a standard room is available, you are able to redeem your Gold Passport free nights."

While seeing whether I could make an award reservation for December 31, 2014, in New York City, the two properties that still had (astronomically expensive) paid rates available seemed to show award availability:

Once I clicked through, however, I was told that:

"The special offer/rate you have selected is unavailable during the dates you have selected, or it is not offered at this property."

It appears that these properties have tricked out their inventory such that they're offering only "Advance Purchase" and "Bed and Breakfast" rates, presumably knowing that if they offered any "Hyatt Daily Rate" rooms they'd have to offer those rooms on points, as well. This may be within the letter of the no-blackout-date policy, but in my view still violates the spirit of the policy, not that anyone cares about my views on hotel management.

IHG Rewards

Like Marriott and Club Carlson, IHG Rewards "no blackout date" policy is so full of loopholes you could drive a truck through it. Here's the relevant passage from the terms and conditions:

"Rooms are limited, subject to prior sale and availability of allocated resources and may be unavailable during high demand periods."

In other words, there are no blackout dates, just dates when the allocated resources don't allow you to make an award reservation.

Starwood Preferred Guest

The SPG terms and conditions state in no uncertain terms:

"An SPG Member may redeem Starpoints for single or double occupancy rooms at SPG Participating Hotels including, without limitation, for Free Night Awards."

The New Year's Eve test

It's hard to get a sense of how these programs and policies work in a vacuum, so I figured it'd be fun to run a little experiment. Which programs would allow me to redeem points for free nights at their Manhattan properties on December 31, 2014 (and what kind of value could I get from such an award)?

  • Club Carlson: Radisson Martinique, no rooms available;
  • Hilton: Hilton Manhattan East, $690.91 or 70,000 HHonors points, 0.99 cents per point;
  • Marriott: Lexington New York City, $591.13 or 40,000 Marriott Rewards points, 1.48 cents per point;
  • Hyatt: No Hyatt Daily Rate rooms available, so no award availability (see above);
  • IHG: Manhattan Midtown West, standard rooms available but "Reward Nights rooms are sold out for one or more of the dates you selected at this hotel."
  • Starwood: Four Points by Sheraton Manhattan Chelsea, $1,150 or 12,000 Starpoints, 9.5 cents per point.

In other words, Starwood and Hilton seem to vigorously apply the letter and spirit of their no-blackout-date policies.

Whatever policy IHG has barely qualifies as "no blackout dates."

Hyatt seems to allow their properties to play games with inventory, which is unfortunate, but all things considered, they do seem to have a relatively strict policy, and one supported by management.

The only real surprise here is Marriott, and it's a pleasant one: although their terms and conditions allow them to designate New Year's Eve as an Inventory Control Date, they haven't done so, and kudos to them for it.

Booking premium domestic products (on the cheap)

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Back in March I observed that Delta's premium transcontinental BusinessElite service was bookable using Alaska Airlines' Mileage Plan miles at the standard domestic First Class rate. That fluke has since been fixed, but it got me thinking about the best ways to book those premium transcontinental seats using partner miles. Here's what I found:

American Airlines

American Airlines operates a 3-cabin First Class product on transcontinental flights between JFK and LAX and between JFK and SFO. Booking these 3-cabin First Class seats through AAdvantage costs 32,500 miles each way at the SAAver level.

The popular workaround of using British Airways Avios on oneworld awards is actually counter-productive in this case, since for premium cabin redemptions British Airways charges 2 (Business) or 3 (First) times the cost of an economy award. Since LAX and SFO are in the 2000–3000 mile band, a First Class redemption will cost 37,500 Avios from JFK each way.

Instead, book your First Class ticket using US Airways Dividend Miles. You'll pay just 50,000 Dividend Miles, since US Airways doesn't have a spot on its domestic award chart for 3-cabin Business Class.

While researching this I naturally started wondering what would happen if you tried to price out a First Class award on a date when seats were available in Business but not First, since they don't have a separate price point for domestic Business. This is what I found:

Clever girl!

Delta Airlines

Delta operates their premium BusinessElite product between JFK and LAX, SEA, and SFO, and prices those seats out at 65,000 Skymiles roundtrip.

Many people would prefer to burn Skymiles instead of other, more valuable mileage currencies, but you can still book BusinessElite tickets with 65,000 Alaska Airlines Mileage Plan miles roundtrip, which you might consider doing in order to put together an itinerary that mixes and matches American's First Class and Delta's BusinessElite products, perhaps if you're some kind of travel blogger intent on reviewing these products (or if you just happen to be Mileage Plan rich).

If you're booking an award ticket for yourself or a (very) immediate family member, and are willing to persevere through their Byzantine booking procedure, you can transfer Ultimate Rewards points to Korean Airlines and book a roundtrip BusinessElite flight for 45,000 SkyPass miles.

United Airlines

United operates their "Premium Service" BusinessFirst product between JFK and LAX and JFK and SFO. Unfortunately my cursory glance showed essentially no award availability on the product. If you are able to find award space at the Saver level, it costs just 25,000 United miles each way, since it is a two-cabin product.

Star Alliance has a number of member airlines with interesting mileage programs, so you may find lucrative redemption options in your own favorite non-US program. Here are some that occurred off the top of my head:

  • Aegean Airlines. If you happened to have run up a balance of Aegean miles while qualifying for Star Alliance Gold status, you can redeem 21,000 of them for a one-way Business Class ticket within North America;
  • Lifemiles. As you may have noticed, Lifemiles are currently having a moment. If you've accumulated a stash of them, you can redeem 60,000 for a roundtrip Business Class flight within North America. Those miles may be cheaper than you think;
  • Lufthansa Miles & More. As is pointed out ad nauseam whenever a new affiliate link is released, Lufthansa allows you to redeem 35,000 miles for roundtrip domestic First Class (or in this case, BusinessFirst) awards within the US.

Do take a look at United BusinessFirst award availability, in case you think I'm exaggerating. You should probably not plan on redeeming any reasonable number of miles for that product, unless they open up vastly more award space in the future.

Observations on the banks and their quirks

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Despite the fact that here in America we have a more or less centralized banking system, each bank still interfaces with that backbone (the Automated Clearing House, Visa and MasterCard payment networks, etc.) using its own proprietary software. That leads to the various banks processing identical transactions on different timetables. Nothing in this post is scripture, but I thought it might be interesting to share my observations on the quirks of each bank, as I've observed them, and invite readers to share their own experiences in the comments.

These observations are based on obsessively logging into all my bank accounts multiple times each day, both on PC and smartphone. If you don't obsessively watch your accounts, you probably won't notice any of these differences, since they don't have any impact on the important stuff like statement balances or due dates.

American Express

American Express clears transactions the fastest among any of the banks whose cards I carry: they'll typically post the second business day after a purchase.

When making a payment, my "available credit" will typically increase on the day the payment is scheduled to be received, while my "outstanding balance" will decrease only the following day.

Rewards typically post to third party accounts about a day after statement closing, while my Blue Cash seems to take up to 2 days (based on a very small number of statements to date).

Barclaycard

Barclaycard clears transactions typically within 3-4 business days, I haven't observed them to be particularly fast or slow.

Payments post in the opposite manner of American Express: my outstanding balance will go down in the evening of the day a payment is scheduled to post, but my available credit won't go up until the following business day.

One of the many reasons I love the Barclaycard Arrival (now Arrival+) is that rewards post mid-cycle. Interestingly, in my experience they tend to post the evening before a charge actually clears on my online account. This can lead to some confusion about whether miles are the results of a charge posting or RewardsBoost shopping portal miles posting, because the pending charge disappears completely overnight, before reappearing as cleared the following day.

US Bank

US Bank is the opposite of American Express: charges take the absolute longest to post of any of my credit cards, at least 4 business days and sometimes up to 5.

However, I've been able to use this to my advantage, because of the other quirk of US Bank compared to my other credit card issuers: US Bank reports my balances to credit bureaux on the last day of the month, not on statement closing, while rewards are naturally based on all the charges during my statement cycle. That means I can drive down my balances before the end of the month with charges that will post before my statement closing date. I'm unable to truly maximize this quirk because my statement closing date happens to fall at the beginning of the month. If you have a mid-month closing date, however, you could easily avoid having any of your spend ever show up on your credit reports.

All of my US Bank credit cards are without a preset spending limit, so I'm not sure when credit becomes available again after a payment. However, payments usually show up online the day after a payment is scheduled to arrive, with the correct posting date.

Chase

Chase is absolutely vanilla compared to these other card issuers. Charges clear within 3-4 days, and payments post on schedule (although they don't show up in online banking until the following day). Ultimate Rewards points post towards the evening of the day my statements become available, while third-party rewards (Avios) can take 2-3 days to post.

I also use my Chase cards least aggressively of all my rewards-earning credit cards, so my experience may simply be a consequence of basing my conclusions on fewer datapoints.

Conclusion

Do these quirks jibe with your own experiences?

Have you observed similar quirks with other card issuers, like Comenity, GE Capital, or FIA Card Services?

Frequent Miler's wrongheaded approach to redemption values

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Frequent Miler's a smart dude, whom I respect for his dedication to the craft. Sometimes, though, I have the sense that he gets a little up in his head. In today's edition of "Frequent Miler overthinking things:" redemption values.

Background

In three recent posts, Frequent Miler has sought to find a rubric for understanding the "reasonable redemption value" of various loyalty currencies:

The underlying principle behind the series is that the value you should feel comfortable redeeming your points at is based on the typical price of the product you're redeeming them for.

But that's not right, and here's why.

Forget 5%

If you have a 5% cash back-earning credit card, then presumably you already know you need to be putting as much spend on it as you're comfortable with. You're going to get more value from each dollar spent at 5% cash back than you will with virtually any other credit card (unless you're going for a heroic signup bonus or high-spend threshold on your alternate card).

Forget "unlimited"

I have a commenter here on the blog who regularly chastises me whenever I write about opportunity costs, because of the possibility of "unlimited MS at negative cost." But even if you did have access to unlimited manufactured spend, you'd still want to spend your time (which, last time I checked, is not unlimited) manufacturing that spend on the most lucrative cards possible.

What do you actually redeem your miles and points for?

Here's where Frequent Miler goes so far afield. He argues,

"I think it is important to supplement Fair Trading Values with estimates of the redemption values of points and miles.  Such numbers could be used to help decide whether buying points or miles is a good idea.  And, they can be used as a target when booking awards to ensure that you get good value from those awards."

But he doesn't explain why. And that's because no sane person starts with redemption values, then decides whether a redemption is worth making. Sane people start with a trip they want to take, and then figure out how to pay for it.

How about an example?

In the latest edition, Frequent Miler suggests that a reasonable redemption value for Delta Skymiles might be 1.02 cents for domestic economy redemptions, on the following grounds:

  • the average domestic flight costs $381;
  • it's typically possible to fly for somewhat (10%) less than average;
  • Delta charges up to $10 in fees on domestic award redemptions;
  • and you'll typically end up paying 32,500 for a domestic award redemption.

The problem

All of this begs the question: if you're getting just 1.02 cents per Skymile for your redemptions, why do you have any Skymiles at all?

I ask because every dollar you put on an American Express Delta Platinum (earning 1.4 Skymiles per dollar at $50,000) or Delta Reserve (1.5 Skymiles per dollar at $60,000) card could be put on a 2% or 2.22% cash back card. 

Furthermore, all your paid flights on Delta could be credited to Alaska Airlines' much more lucrative Mileage Plan.

The answer, of course, is that you have Skymiles because you get more than 1.59 cents (Platinum) or 1.48 cents (Reserve) per Skymile on your redemptions.

In other words, if you're getting just 1.02 cents per Skymile on your redemptions, you need to redeem all your Skymiles and stop earning more as soon as possible.

So what's my alternative?

The alternative approach, which I've advocated in my own posts (Club Carlson, Hilton) is to instead start with the cost of acquisition and ask a far simpler question: "how much do I need to value this redemption to justify putting the needed spend on a co-branded credit card instead of a 2% or 2.22% cash back credit card?"

The best part is that this exercise allows an instant validation of whether a trip should be paid for with cash or points, based on actually existing prices for the product you're interested in.

A real person starts by saying, "I'd like to fly roundtrip on Delta between Madison and a New York airport (but not Newark) for a weekend in June."

Then they pull up an ITA Matrix search and find the lowest fares available:

As you can see, our little weekend romp will cost between $460 and $541.

Then a real person hops on delta.com (or, more likely, alaskaair.com) and checks award availability, immediately seeing whether they are getting more or less value than their points' acquisition cost:

Using this technique (again, the thing that people actually do when evaluating redemptions), we can calculate our redemption value for each weekend:

  • June 5/6 — 8: $540/25,000 Skymiles. 2.16 cents per Skymile;
  • June 12/13 — 15: $460/25,000 Skymiles. 1.84 cents per Skymile;
  • June 19/20 — 22: $460-$520/32,500 Skymiles. 1.41-1.6 cents per Skymile;
  • June 26/27 — 29: $475-$540/32,500 Skymiles. 1.46-1.66 cents per Skymile.

Here's the thing: these are all great redemptions, not because of the high value you're getting for each Skymile but because you already have 25,000-32,500 Skymiles, and if you don't redeem them they're just going to keep collecting dust.

After redeeming, decide whether to keep earning

Once you have a load of Skymiles it's too late to start considering redemption values. The time to make that calculation is before you earn them.

If in your market, for your travel needs, you're redeeming your Skymiles for less than the implicit cost of acquisition (putting the spend on a 2% or 2.22% cash back card), you shouldn't be putting spend on that card to begin with (unless you're doing so for other reasons, like Medallion Qualifying Miles or the Medallion Qualifying Dollars waiver).

That doesn't mean you shouldn't plan ahead

Over at Milenomics they're doing the Lord's work advocating for a rational approach to earning and burning miles, and one of the centerpieces of that effort is so-called "demand schedules," explicit plans for upcoming trips and the miles, points, and cash currencies the traveler plans to redeem for them.

Demand schedules can't anticipate everything, however. If you have an upcoming trip to Milan planned with American AAdvantage miles and you suddenly discover a $200 one-way flight, you shouldn't blindly book the ticket with your AAdvantage miles anyway. You should, however, be ready to spend those miles as soon as possible, even on a less expensive trip you might have been planning to pay for with cash.

Because once you've passed up the opportunity to earn cash back, and instead earned miles or points, it's too late to start calculating [edit: ideal] redemption values.

Rant: if you care about the American devaluation, you're doing it wrong

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Fact: I currently have no more than 100,000 of any airline or hotel rewards currency.

Does that sound like a horrifically low number?

Good. That means I'm doing it right.

Your miles and points are not safe

In case you've forgotten your loyalty program terms and conditions, allow me to refresh your memory.

Delta Skymiles:

"Always remember, the rules below are subject to change at any time. Unless otherwise stated, the current rules in effect at the time of your travel, request for a benefit or other transaction will govern that transaction."

United MileagePlus:

"MileagePlus membership and benefits, including the Premier Program, are offered at the discretion of United Airlines and its affiliates, and United has the right to terminate the Program and/or the Premier Program or to change the Program Rules, regulations, benefits, conditions of participation or mileage levels, in whole or in part, at any time, with or without notice, even though changes may affect the value of the mileage or certificates already accumulated."

American AAdvantage:

"American Airlines may, in its discretion, change the AAdvantage program rules, regulations, travel awards and special offers at any time with or without notice. This means that the accumulation of mileage credit does not entitle members to any vested rights with respect to such mileage credits, awards or program benefits. In accumulating mileage or awards, members may not rely upon the continued availability of any award or award level, and members may not be able to obtain all offered awards for all destinations or on all flights."

What would it mean to "trust" a loyalty program?

There's an absurd conversation taking place between Gary at View from the Wing and Lucky at One Mile at a Time about whether American is a "trustworthy" loyalty program:

These are smart dudes, who have each forgotten more than I've ever known about earning and redeeming miles and points for free travel.

And yet here they are talking about "trusting" faceless, bankrupt multinational corporations.

Since those guys don't seem to get it, I thought I would share a few simple tips for never caring about an airline devaluation.

Tip #1: Earn points as cheaply as possible

The periodic US Airways "share miles" promotion allow you to buy US Airways miles for 1.14 cents each. Don't do it.

The only number that matters in this game is the spread between what you pay for your miles and points and what they're worth when you redeem them.

Unfortunately, you don't have any control over that second number.

Fortunately, you have complete control over the first number, and the lower that number is, the more pain you can absorb in the form of devaluations.

Tip #2: Redeem your damn miles!

There's only one mile that no loyalty program can devalue: the one you redeemed last year.

I only have 91,000 Alaska Airlines Mileage Plan miles. And look: I agree, that's a pretty low balance. Maybe you feel better having a cushion of 200,000 miles. Maybe you need 300,000 miles in your account to really feel comfortable.

But no matter how many miles you decide you need in your account for a rainy day, you need to be actively redeeming every single mile in excess of that number.

Why? Because the least value mile is the one you don't redeem. It's less valuable than a 1 cent per mile Pay With Miles redemption on Delta; it's less valuable than a 50,000 mile AAnytime award. It's less valuable than a $63 food processor.

It's worth nothing.

Tip #3: Earn cash back. Please.

There is one rewards currency that's totally out of the control of the airlines and hotels: the US dollar. You can redeem it for 100 cents per dollar online as well as at brick and mortar merchants. And it devalues at an extremely consistent and gradual rate of 1 – 2.5% per year.

Best of all, thanks to the techniques discussed here and elsewhere, you can purchase this rewards currency for a small fraction of its redemption value.

Sure, it takes a whole hell of a lot of US dollars to pay for a business class or first class international redemption. But that's what your huge stockpiles of (rapidly depreciating) airline miles are for...right?

Reminder: Using Alaska miles for Delta BusinessElite

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I love my complimentary Medallion upgrades as much as the next Delta flyer, but back in August of last year I threw together a quick explanation for why you and everyone you know should be crediting your paid Delta flights to Alaska's Mileage Plan, rather than to Delta Skymiles. Namely, the same Delta flights, on the same Delta aircraft, on the same Delta days, in many cases cost fewer Mileage Plan miles than Skymiles.

Of course, the changes to Skymiles earning rates coming in 2015 make the point even more convincingly than I ever could.

Still, I want to point out one additional wrinkle that I came across the other day: Alaska doesn't know or care that BusinessElite exists.

In case you, like Alaska, have never heard of BusinessElite, it's Delta's long-haul preimum international and transcontinental product. It features a curated wine list, lie-flat seats, and some other features you're more than capable of reading about on Delta's website.

Most importantly, redeeming Skymiles for BusinessElite seats on transcontinental routes costs more than redeeming them for domestic First Class.

A non-stop round-trip itinerary from New York's JFK airport to Los Angeles in BusinessElite costs 65,000 Skymiles:

The same trip in domestic First (without the fancy wine or lay-flat seats) with a layover in Detroit or Salt Lake City costs just 50,000 Skymiles. But both trips cost 50,000 Alaska Mileage Plan miles:

Conclusion

I don't consider redeeming miles for domestic first class a great deal under most circumstances.

But if it's ever a great deal, it's a great deal for premium transcontinental service.

More thoughts on buying Marriott elite status

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Way back in July of last year I wrote a kind of silly thought experiment about buying United Premier Silver status by status matching to Marriott Platinum elite status and then taking advantage of the RewardsPlus partnership between the two programs. That post has no comments so I have no idea whether anyone liked the idea or not, but I do remember reading some reports of success with the technique on Flyertalk.

This year I've had cause to start thinking about a slightly different thought experiment. I carry a Chase Marriott Rewards Premier card, which comes with 15 "bonus nights," which count towards elite status each year. Additionally, the card awards 1 "bonus night" for every $3,000 spend on the card. That means that in order to achieve mid-tier Gold status you would need to spend $105,000 on the Premier card, and to achieve top-tier Platinum status (and United Premier Silver) you would need to spend $180,000 on the card.

That's patently insane.

On the other hand, if you had already earned 49 elite-qualifying nights, you would have to almost-equally crazy to not spend $12 (for example) to put an additional $3,000 in spend on the card and earn Gold elite status through the end of the next program year.

Which got me to thinking: wouldn't it be nice to know the break-even point, where the amount you would need to spend on the Premier card in order to achieve the next level of elite status is justified by the additional benefits of that status?

The Model

For the sake of modeling, I'm forced to make a few assumptions, the most important of which is that the number of paid nights you stay this year is a good predictor of the number of paid nights you'll stay next year. After all, if you won't make any paid stays next year, then it wouldn't matter if elite status were free; it still wouldn't be worth anything.

Next, remember that on paid Marriott stays, you'll earn 10 Marriott Rewards points per dollar, plus 20% bonus points as a Silver elite, 25% bonus points as a Gold elite, and 50% bonus points as a Platinum elite. Since the Premier card comes with Silver elite status, spending up to Gold earns a bonus of 4.17% over Silver, and spending up to Platinum earns a bonus of 20% over Gold status.

Here are the two most extreme examples of buying up to Gold status:

  • 15 "bonus nights," 0 paid nights: $105,000, no bonus points;
  • 15 "bonus nights," 34 paid nights: $3,000, 4.17% bonus on 34 paid nights.

And here are two extreme examples of buying up to Platinum status:

  • 15 "bonus nights," 35 paid nights: $75,000, 20% bonus on 35 paid nights;
  • 15 "bonus nights," 59 paid nights, $3,000, 20% bonus on 59 paid nights.

An Example

This year based on my current reservations I'll have 24 elite qualifying nights, meaning I'd have to spend $78,000 to earn Gold elite status, and $153,000 to earn Platinum elite status.

Based on the 7 paid nights I've already earning this year, at an average of $76.04 per night:

  • Gold status would earn an additional 342 Marriott Rewards points, a rounding error;
  • Platinum status would earn an additional 1711 Marriott Rewards points, or roughly 1.01 Marriott Rewards points per dollar spend on the Premier card.

The Data

I hate to admit it, but I can't give you the "break-even" point I promised above. Your break-even point will depend entirely on the value you put on Marriott Rewards points (and the other benefits of elite status).

What I can do is give you a simple tool that allows you to determine your own break-even point. You can use the following chart, and your own valuation of Marriott Rewards points, elite benefits like free continental breakfast, upgrades, access to club lounges, and United Premier Silver status to decide whether buying up is right for you:

marriott rewards buy up.png

This chart translates the bonus points you earn from your newly acquired elite status into "points per dollar" earned with your Marriott Rewards Premier credit card. The intuition is that while you're only technically earning 1 Marriott Rewards point per dollar spent on the card, the elite bonus points you earn as a Gold or Platinum elite are also in some sense "earned" by your credit card spend.

Club Carlson: Best. Devaluation. Ever.

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By now you've probably heard about Club Carlson's March 15, 2014, devaluation. The short version:

  • Introduction of a 7th category, which will cost 70,000 Gold Points per award night;
  • Changes to the Silver and Gold elite earning bonuses;
  • Premium room award nights (suites and such, I gather);
  • Elimination of the online-booking bonus, except on a promotional basis;
  • and finally, award nights will count towards elite status.

In the travel hacking community we're accustomed to thinking about loyalty programs as a chess match between hotels, who try to squeeze us as much as possible while not scaring off the business travelers who make up the bulk of their revenue, and those of us who seek to stay as many nights as possible while paying as little as possible.

And indeed, that's the approach most bloggers have taken to this devaluation:

  • View From the Wing says "On net these changes are not good. You’ll earn fewer points, and it will take more points to redeem for many hotels.. especially their most expensive properties."
  • The Points Guy says "All in all, though these changes are mostly disappointing, but not entirely surprising."
  • One Mile at a Time says "These changes are no doubt negative on the whole."

I disagree completely. Of course I'm not thrilled that Club Carlson has changed elite earning and made me rework my beloved point density charts.

But allowing award nights to count towards elite status is the single most consumer-friendly thing any chain can do.

And it's good business.

Award stays are so lucrative at Club Carlson that, while everyone with one of their co-branded credit cards has Gold elite status, it has been unthinkable to achieve Concierge status since that has — to date — required 75 paid nights or 30 paid stays.

Now that award nights and stays count towards elite status, it changes the calculus for where to direct paid stays, as well. If you're a business traveler and travel hacker, before this change you might have redeemed Gold Points you earn with a Club Carlson credit card for award stays, but directed your paid stays towards Hyatt or Starwood in order to secure elite status with one of those chains. Now, one or two award stays per month gets you almost all the way to Concierge status, where you earn 75% more Gold Points on your paid stays and free breakfast on all stays. That might convince you to direct additional, paid, stays to Club Carlson properties as well.

That's why I'm inclined to not think of these changes as a devaluation, but as part of a realignment. Club Carlson is eagerly trying to position itself as an appealing brand for business travelers, especially in Europe where their properties are frequently in great downtown locations. Allowing award nights and stays to count towards elite status is going to drive a lot more business towards those properties since it puts Concierge status within reach for more casual travelers. And it's a brilliant move by Club Carlson.