Booking Iberia award tickets for fun and profit

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Before I get started today, it would be irresponsible of me not to state that your Avios are fine. You see, the last time I wrote about Iberia, the travel hacking blogosphere exploded with speculation about an upcoming British Airways Avios devaluation. While British Airways Avios have since been devalued, they weren't devalued in the specific, weird way that Iberia was pricing out oneworld partner awards.

So promise you won't freak out.

Iberia charges lower fuel surcharges on their own flights than British Airways does

Once you've initialized your Iberia account, you can freely transfer Avios between a British Airways, Avios.com, and Iberia Plus Avios account.

The obvious reason to do so is that on identical Iberia-operated flights, you'll be charged lower fuel surcharges using Avios in an Iberia Plus account than Avios in a British Airways account.

For example, here's an Iberia Plus Avios redemption between Chicago and Madrid in early January, pricing out at 20,000 Iberia Plus Avios and €74.20 ($85.54):

And here's the exact same itinerary pricing out at 20,000 British Airways Avios and $275:

Did you see my sleight of hand?

I'll give you a hint: one of the fuel surcharges I cited had to be converted to US dollars. One of them was converted for me.

British Airways has a funny approach to currency conversion

Here's a British Airways-operated flight between Chicago and Budapest in June, 2015. With Great Britain's passenger charges, as expected there are some substantial taxes and fees on such a ticket. It prices out at 19,500 Avios and $321:

Here's the same ticket priced out on Iberia's website, costing 19,500 Avios and €264.34 ($304.70):

I understand, you're not impressed with my saving you $16.30 in surcharges. Now watch this.

British Airways and Iberia both let you buy Avios at deep discounts

Instead of paying 19,500 Avios and $321, British Airways will let you book the same itinerary for just 6,700 Avios and $481, letting you buy 12,800 Avios for $160, or 1.25 cents each:

Meanwhile, Iberia will let you buy 9,750 Avios for €90 ($103), or 1.06 cents each:

At this point you might start to admit that this currency conversion business is at least worth being aware of. Now watch this.

British Airways and Iberia both let you buy lots of Avios for premium-cabin awards

I've been showing you economy cabin redemptions so far. But British Airways also operates premium cabins!

Here are the same Chicago-Budapest flights in business class, priced out at 62,750 British Airways Avios and $491, allowing you to buy 30,950 Avios for $805, or 2.6 cents each:

And here's the same flight priced out for 62,750 Iberia Plus Avios and €412.26 ($475.82), allowing you to buy 30,100 Iberia Plus Avios for €510 ($588.63), or 1.96 cents each:

Conclusion

I would never suggest earning, let alone buying, rewards currencies speculatively: if your account balances are high enough, you'll be better off simply transferring your Membership Rewards or Ultimate Rewards points to Avios and booking traditional award tickets.

On the other hand, if you're diligently keeping your flexible balances as low as possible, and especially if you're planning trips involving high-value Hyatt redemptions (or if you have a Southwest companion pass), you may well find that buying up the Avios you need to complete a redemption makes sense compared to transferring the points in from Chase Ultimate Rewards.

If you happen to find yourself in that situation, do yourself a favor and see if an Iberia Avios redemption will save you a couple hundred dollars.

Loyalty is an expensive, annoying trap

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I shared on Monday that over the weekend I was the proud recipient of $1,300 in Delta voluntary denied boarding compensation, and reflected on some of the possible consequences for the miles and points I'd budgeted for my upcoming travel.

Since I booked some speculative hotel rooms in Eastern Europe for next summer before the latest Club Carlson devaluation, but haven't booked our flights yet, I thought that would be a good place to see how far $1,300 in Delta transportation would get me.

The answer, it turns out, is pretty far! I was able to find this great itinerary flying into Prague and out of Frankfurt, for example, for $1,294, marketed and operated by Delta:

Since there are two of us going, I decided I'd use my Delta transportation voucher to fully pay for my ticket (since the voucher was issued in my name), then redeem FlexPoints or even SkyMiles for the other (if low-level award space opens up — fat chance!).

Silver Medallion status has (a few) privileges

Then I remembered: as a Silver Medallion, I get to choose Comfort+ seats within 24 hours of departure on Delta-operated flights for myself and companions flying on the same itinerary. If I book my partner and I on separate itineraries, I won't be able to select a Comfort+ seat for her without paying $129 for the outbound leg and $99 for the return.

Alternatively, I can book the two tickets on Delta's website, using the transportation voucher to cover the first $1,300 and paying cash for the balance. That would be way too expensive, even if I used my Arrival+ MasterCard to pay the the balance.

On domestic flights, you may or may not care about Comfort+ seating, but on two long-haul international flights, I don't think it's unreasonable to want some additional legroom in economy.

Loyalty makes easy decisions harder

I'll grant that this sounds like a corner case – a curiosity – and not a real problem. But in fact, I find myself in similar situations with some regularity.

Later this year we're flying to Portland to celebrate my partner's birthday. The flights I wanted cost $330, and were pricing out at 20,000 SkyMiles roundtrip. This is basically a wash: redeeming 20,000 FlexPoints would give me the equivalent of 3.33% cash back on $10,000 in spend, while redeeming SkyMiles would get me a 2.3% return on $14,285 in spend (since I earn 1.4 SkyMiles per dollar spent on my American Express Delta Platinum card).

Both returns exceed the 2.22% I'd earn with my Barclaycard Arrival+ MasterCard, so there's no wrong choice. On the one hand, my preference is to redeem SkyMiles as aggressively as possible, because of their rapidly dropping value. On the other hand, I'd like to keep my Alaska Airlines MVP status next year, and to do so I'll need all the paid Delta flights I can get.

So I split the difference: I redeemed SkyMiles for my partner's ticket, and FlexPoints for mine, for an average return of 2.72% on $24,285 in manufactured spend.

Here again, only I'll have access to Comfort+ seating, but additionally I'll have a free checked bag thanks to my Medallion status, while my partner will have to pile her firearms, knives, and dry ice into my bag in order to avoid Delta's checked bag fees.

Conclusion

Checked bag fees and charges for preferred seating are huge revenue sources for the airlines, and can be huge expenses for passengers willing to pay them. The free checked bags and preferred seats offered to elites are therefore real, tangible benefits of elite status.

But elite status also makes it easier to be guided by motivated reasoning, allowing you to justify decisions you wouldn't otherwise consider.

In my first example, Delta is presenting me with a false choice: buy a second cash ticket in order to secure my partner Comfort+ seating, or redeem Flexpoints for the second ticket and pay to upgrade my partner. It's a false choice because absent elite status we would both be fine sitting in Main Cabin seats!

In my second example, I'm redeeming valuable Flexpoints for my ticket instead of taking the opportunity to empty my SkyMiles account even further, all in order to earn a few thousand more Alaska Airlines Mileage Plan elite-qualifying miles.

I still don't understand the appeal of revenue-based rewards programs

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Invariably when I write about Ultimate Rewards transfer partners, commenters chime in that I've left out Southwest. And this is invariably true: Southwest doesn't serve my local airport, I don't fly Southwest, and I don't like Southwest, so I don't write about Southwest.

But it's worse than that: I don't care about any revenue-based rewards programs.

Hotel revenue-based rewards programs are great — if you're a business traveler

If you're a business traveler who is reimbursed for their paid hotel stays, then it's essential to understand the concept of point "density:" how much you need to spend at each chain in order to earn enough points for award redemptions at that chain's properties.

If you pay for your own stays, on the other hand, then it's vanishingly unlikely that you're going to get a big enough rebate from a hotel's loyalty program to justify paying retail for hotel rooms booked through that chain, as is typically required in order to earn hotel points: after all, you can get a 17% rebate by simply booking paid stays through Hotels.com, after clicking through a cash back portal like TopCashBack.

Of course there are corner cases, like someone who otherwise pays for their stays through manufactured spend, but who is gunning for Hyatt Diamond elite status in anticipation of an upcoming trip where that status is going to pay for itself with suite upgrades, breakfast, or lounge access. But an extraordinary amount of digital ink is dedicated to those corner cases, which are simply not encountered by the typical traveler in any given year.

Airfare is too cheap to think about revenue-base airline rewards

Southwest has a "pure" revenue-based rewards program: you earn points based on the amount you spend on airfare, and then you redeem points based on the paid price of a ticket, after the appropriate conversion rate is applied.

So the ideal use case for Southwest points looks something like this: earn Ultimate Rewards points at 0.5 cents (gas stations) or 0.67 cents each (office supply stores), transfer them to Southwest, where you have a Companion Pass, and redeem them for between 2.5 cents and 3.4 cents each when booking award tickets for yourself and your designated companion, giving you a discount of 73% to 85% over retail.

And if you live in a city served by Southwest, and which serves many destinations with nonstop flights, that really might work out to a pretty good value. Baltimore and Dallas, I'm looking at you.

In exchange, of course, you have to fly Southwest. On the one hand, that means free checked bags. On the other hand, it means furiously checking in exactly 24 hours before departure, lining up for the alphabetical cattle call, and then crossing your fingers that you and your companion will actually get to sit together while the flight attendant raps his safety briefing at you.

Meanwhile, if you have access to grocery store or gas station manufactured spend, you can use a US Bank Flexperks Travel Rewards card to get up to 75% off paid airfare on a distance-based carrier like American, Alaska, or Delta (if credited to Alaska). And in addition to your air travel, you also earn miles that can be redeemed for additional airline award tickets.

That's the calculation that prevents me from having any interest in flying on Southwest, or crediting my paid flights to revenue-based carriers.

Crediting paid flights to revenue-based airlines is the least efficient method of earning miles

A general member crediting a paid United flight to United will earn 5 Mileage Plus miles per dollar spent on airfare. Pay $400 for a domestic roundtrip ticket, with $5.60 in taxes and fees, and you'll earn 2,000 Mileage Plus miles.

Pay the same $406 for gas station manufactured spend, and you can buy 82 OneVanilla prepaid debit cards, earning 82,811 Ultimate Rewards points. That's 3 domestic economy roundtrips at the "saver" level or 1.5 roundtrips at the "standard" level. It's $1035 in paid, mileage-earning airfare — on any airline, not just United.

The difference in scale here is geometric. Go ahead and bump your United earning up to 7, 8, 9 or 11 Mileage Plus miles per dollar spent, and you'll run into the exact same situation: the more you spend out-of-pocket on paid airfare, the more miles you're leaving on the table.

The same is true of Delta: as long as SkyMiles are a transfer partner of American Express Membership Rewards, you'll never get better value buying paid Delta-operated flights and crediting them to Delta than you will spending the same money manufacturing spend in bonus categories on your American Express cards.

Go ahead and credit to Delta and United — just don't do it for the miles

Of course I'm begging the question here: once you've manufactured the spend you need to redeem your miles for paid domestic travel, you still have to credit the flights somewhere.

Personally, I privilege flying American, Delta, and Alaska in order to credit flights from all three to Alaska'a Mileage Plan, but you may well find that United best serves your needs, and decide to credit your paid United flights to Mileage Plus.

Likewise, you might find that Delta Medallion elite benefits make it worth crediting your paid Delta flights there, whether for complimentary upgrades, preferred seating, or refundable and changeable award tickets.

But if you do, don't use the rebate value of your redeemable miles as justification. It's not there.

Exploring the Virgin Australia award chart

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Yesterday MileValue wrote about the partnership between Virgin Australia and Singapore Airlines, which allows points to be transferred between the two programs at a 1.35:1 ratio (points can apparently be transferred either direction at the same ratio, although I haven’t tried it yet).

Virgin Australia doesn’t belong to any of the big three alliances but, like Hawaiian Airlines and Alaska Airlines, has a lot of partners around the world. It also has a distance-based award chart. Since Singapore Airlines is a transfer partner of all three major flexible rewards currencies, that got me wondering: are there awards that are booked more cheaply using Virgin Australia’s distance-based rewards chart than other transfer partners?

The transfer ratio isn’t great

Since 1.35 Singapore Airlines KrisFlyer miles become 1 Virgin Australia Velocity mile, you lose about 26% of your points right off the top. That means you’d need to spend 26% fewer Velocity miles than other rewards currencies before you'd start seeing a profit with this shell game.

airberlin is a bust

My first thought when seeing MileValue’s post was airberlin: it’s already a great airline to use distance-based Avios on because of the 3,749-mile distance between New York City and Dusseldorf, costing 20,000 Avios in economy with no fuel surcharges.

So I meticulously lined up the distance bands of Virgin Australia’s and British Airways award charts, adjusting for the transfer ratio between KrisFlyer and Velocity and looked for sweet spots.

Since I already made the chart, I’ll share it, but there’s nothing to see here.

For any given distance, an airberlin flight booked with British Airways Avios will be cheaper than the same flight booked with Velocity miles transferred from KrisFlyer.

Between Australia and the United States

Virgin Australia operates flights between Los Angeles and both Sydney and Brisbane, which cover 7,488 and 7,161 miles, respectively. Both routes will cost 47,000 Velocity miles in economy, 94,000 in business, or 141,000 in First. Converting from Singapore Airlines, those values come to 63,450, 126,900, or 190,350 flexible points.

Since you could book the same Virgin Australia flights for 50,000 Delta SkyMiles in economy or 80,000 SkyMiles in business, transferring points through Singapore Airlines is unlikely to be your cheapest route to Australia, unless you have no Membership Rewards points or SkyMiles banked.

Virgin America

Next I turned to Virgin Australia’s more advantageous award chart for flights on "Virgin Australia, Virgin Atlantic, Virgin America, Virgin Samoa, Etihad, Delta, and trans-Tasman Air New Zealand flights." Here I got a little bit of traction:

For extremely short flights along the West Coast of the United States, and between Austin and Dallas's Love Field, paying 6,900 Velocity miles (9,315 flexible points) may well be the cheapest option, depending of course on award availability and paid ticket prices.

Additionally, since award flights to Hawaii on domestic carriers will typically cost more miles than flights within the mainland, if you can find Virgin America award availability between San Francisco and Honolulu or Maui, you can come out a little bit ahead. Even if it’s not a windfall, it’s at least worth keeping in mind while searching for award seats, as an additional option in the face of dwindling award availability.

Transfer Starpoints directly to Virgin Australia

So far I’ve been talking about transferring Ultimate Rewards, Membership Rewards, or Citi ThankYou points to Singapore Airlines KrisFlyer in order to transfer them to Virgin Australia.

But Virgin Australia is also a transfer partner of Starwood Preferred Guest, at a 1:1 ratio, with a 25% bonus when you transfer in increments of 20,000 Starpoints.

If you’re Starpoint-rich, you don’t need to take the initial 26% hit by transferring your points to KrisFlyer; you can transfer them directly to Virgin Australia Velocity.

Conclusion

I've never given much thought to Virgin Australia, either as a transfer partner of Starwood Preferred Guest or of Singapore Airlines, so these are just my very preliminary thoughts on using their miles for fun and profit.

What else should I and my readers know?

The 20-cents-per-mile breakeven point for Delta and United mileage earning is still wrong

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Regular readers know the sacred cows that get repeated daily by affiliate bloggers, which drive me bonkers whenever I accidentally glance at one:

But there's one seemingly minor one which makes my skin crawl in a way the outright lies don't: the claim that Delta and United travelers need to pay 20 cents per mile to break even under the new, revenue-based SkyMiles and Mileage Plus programs. It's not just incorrect, it's so blatantly innumerate it makes my head spin. Here's a thought leader in travel last week:

"Both United and Delta require spending at least 12.5 cents per mile flown to earn elite status as part of their revenue-based elite rules. But they both require an average of 20 cents per mile flown just to break even with the miles that had been earned under the old distance-based system."

That's still wrong, as I helpfully pointed out in September of last year. Since it apparently still hasn't sunk in, let's go over it again.

Elite mileage earning changed out of proportion to non-elite mileage earning

Since January 1, 2015, Delta and United have had the same mileage earning structure for passengers crediting flights to their frequent flyer programs:

  • General members: 5 miles per dollar
  • 25,000-mile elites: 7 miles per dollar (40% bonus)
  • 50,000-mile elites: 8 miles per dollar (60% bonus)
  • 75,000-mile elites: 9 miles per dollar (80% bonus)
  • 100,000-mile (United) and 125,000-mile (Delta) elites: 11 miles per dollar (120% bonus)

Before January 1, 2015, redeemable miles were earned at the following rates:

  • General members: distance flown
  • 25,000-mile elites: 25% bonus
  • 50,000-mile elites: 50% bonus (United) and 100% bonus (Delta)
  • 75,000-mile elites: 75% bonus (United) and 100% bonus (Delta)
  • 100,000-mile (United) and 125,000-mile elites (Delta): 100% bonus (United) and 125% bonus (Delta)

The mistake innumerate bloggers make is looking only at the first bullet points: if general members now earn 5 miles per dollar, then to earn as many miles as under the distance-based regime they'd need to spend 20 cents per mile flown. If they spend more than that, they'll earn more miles under the new regime; if they spend less, fewer.

Your actual breakeven point depends on your elite status

Since elite status with both airlines is still based on distance flown with them, the typical traveler's elite status will depend on their actual travel needs. With that in mind, here are the breakeven points for average cost per mile flown, depending on your elite status:

  • General members: 20 cents per mile flown
  • 25,000-mile elites: 17.9 cents per mile flown
  • 50,000-mile elites: 18.8 cents per mile flown (United) and 25 cents per mile flown (Delta)
  • 75,000-mile elites: 19.4 cents per mile flown (United) and 22.2 cents per mile flown (Delta)
  • 100,000-mile and 125,000 mile elites: 18.2 cents per mile flown (United) and 20.5 cents per mile flown

To calculate these values on your own, take a sample trip of exactly 1000 miles. A Diamond Medallion would have previously earned 2,250 SkyMiles. To earn 2,250 SkyMiles at 11 SkyMiles per dollar, the same Diamond Medallion would now have to spend $204.55, or 20.5 cents per mile.

Conclusion

For mid-tier Delta elites, the situation is even worse than the 20-cent-per-mile conventional wisdom would have it, since their flights need to be, on average, 11-25% more expensive than that to earn the same number of miles as they did last year. Only Delta Diamond Medallions approach the same bonused earning rates under the new regime as they did under the old, distance-based system.

United elites, meanwhile, have it relatively easy since their redeemable-mile earning was never as heavily bonused as that of Delta Medallions.

Retiring to hotels: good idea, or great idea?

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After a prominent miles-and-points blogger cast off the chains of the rental housing market I wrote a light-hearted piece about manufacturing enough spend to, with the help of the Club Carlson last-night-free benefit, spend 30 days in one of their Category 1 properties.

Since that benefit can no longer be used on new reservations, I thought I'd revisit the topic, but cast a wider net this time: how many points would be needed to live in each chain's cheapest properties year-round? In other words, should you retire to hotels?

Starwood Preferred Guest

As a rule I don't find Starwood Preferred Guest's co-branded American Express card to be a great way to manufacture points for hotel stays (it's great for manufacturing Alaska Mileage Plan and American AAdvantage miles). The exception is Category 1 and 2 hotels, where weekday nights cost 3,000 and 4,000 Starpoints and weekend nights cost 2,000 and 3,000 Starpoints, respectively.

That puts the weekly cost of a Category 1 stay at 19,000 Starpoints. Manufacturing those Starpoints has an opportunity cost of $380 — that's how much you'd earn using a 2% cash back card, instead. So what can we get for a little over $1,520 in monthly rent?

Well, there are a lot of Category 1 properties in China and India. Since we're retiring, beaches should be considered, like the Four Points by Sheraton Puntacana Village in the Dominican Republic, where $1,520 is little over a 50% discount for the dates I checked in September. The Sheraton Ambassador Hotel in Monterrey is "within walking distance of the city center." But the winner for me is the Sheraton Catania Hotel & Conference Center in Sicily, which actually looks extremely comfortable. It's a bit of a hike to the city center, but it's important to stay active in retirement.

Retirement savings: 912,000 Starpoints annually ($18,240 in imputed redemption value).

Hilton HHonors

Unlike Starwood Preferred Guest, Hilton HHonors their elites the fifth night free on all award stays — including Category 1 stays. That makes five-night stays at Category 1 properties cost just 20,000 HHonors points, or $3,333 in manufactured spend at gas stations or grocery stores.

With 5-night Category 1 redemptions having an imputed redemption value of $66, our monthly rent will be 120,000 HHonors points or $400 in foregone cash back. But what does that get us?

Hilton's Category 1 properties actually include a few Hiltons, like the Hilton Alexandria King's Ranch and Hilton Hurghada Resort, so if you're really committed to Peter Thomas Roth bath products those are options. In Poland you have your choice of the Hampton by Hilton Krakow and Hilton Garden Inn Rzeszow, while over the border in Russia you can stay at the Hilton Garden Inn Ufa Riverside or Hampton by Hilton Samara. Personally, I'm leaning towards the Hampton by Hilton Panama, which seems to have a pretty good location in downtown Panama City. $400 per month is a roughly 85% discount off retail for the dates I checked, and in fact on the dates I checked HHonors redemptions gave an astonishing 2.17 cents per HHonors point.

Retirement savings: 1,440,000 HHonors points annually ($4,800 in imputed redemption value).

Marriott Rewards

Marriott offers the fifth night free on all redemptions, even for non-elites, so five-night Category 1 stays cost 30,000 Marriott Rewards points.

Since Marriott Rewards points cost one cent each when purchased with flexible Ultimate Rewards points, but 2 cents each in foregone cash back when manufactured using a Marriott Rewards co-branded credit card, we're realistically looking at 180,000 Ultimate Rewards points per month, or $1,800 in monthly rent. Are there any properties that would make that redemption worthwhile?

The Courtyard Kazan Kremlin has a nice location right on Karl Marx Street, but $1,800 will rent you a lot of house in Kazan, and I suspect that's true of most of Marriott's Category 1 properties.

Retirement savings: 2,160,000 Marriott Rewards points annually ($21,600 in Ultimate Rewards points).

Hyatt Gold Passport

While Hyatt redemptions start at 5,000 Hyatt Gold Passport points, they don't offer a fifth night free, so it'll cost us 150,000 Ultimate Rewards points per month to live in a Category 1 property — a $1,500 value.

The Hyatt Regency Kuantan Resort in Malaysia looks superb, as does the Hyatt Regency Kathmandu, and neither is so isolated that you'd be stuck buying food in the hotel, plus Hyatt Diamond elites would receive free breakfast at either property. The Hyatt Regency Bali is currently being renovated, but when it reopens it should be beautiful — if it's still a Category 1 property!

Retirement savings: 1,800,000 Hyatt Gold Passport points annually ($18,000 in Ultimate Rewards points).

IHG Rewards

Here the situation is even bleaker, since Category 1 properties cost 10,000 IHG Rewards points per night, and there's no fifth night free benefit. Instead you can chase the 5,000-point PointsBreaks list around the world, in which case the math is the same as above, since IHG Rewards is also a transfer partner of Chase Ultimate Rewards.

The current PointsBreaks list includes gems like the Holiday Inn Andorra and Holiday Inn Trnava, in Slovakia.

Retirement savings: 3,600,000/1,800,000 IHG Rewards points annually ($36,000/$18,000 in Ultimate Rewards points).

Club Carlson

Category 1 Club Carlson nights cost 9,000 Gold Points, or $1,800 in manufactured spend per night. At a $36 nightly imputed redemption value, our monthly rent will be a little over $1,000. Not as bad as Marriott, Hyatt, or IHG, but also not great.

The Park Inn by Radisson Budapest (where I have a reservation next June) has a great location, and I've enjoyed all the Park Inns I've stayed at so far. There are two Radisson Blu properties, the Radisson Blu Resort, El Quseir in Egypt and Radisson Blu Hotel, Mersin in Turkey. Both are great deals at $36 per night. I like the Country Inn & Suites By Carlson, San Jose, Costa Rica, since it includes breakfast, but it's not terribly close to downtown San Jose.

Retirement savings: 3,240,000 Gold Points annually ($12,960 in imputed redemption value).

Choice Privileges

Choice Privileges hotels start at 6,000 points, which can theoretically be earned for as little as 2,000 Ultimate Rewards points if you're able to transfer Amtrak Guest Rewards points to Choice Privileges. At $20 per night we can figure $600 in monthly rent, the second-lowest value so far, after Hilton HHonors. To get that value month after month, however, you'd need to first rail run your Amtrak elite status up to Select Executive status, which allows you to transfer an unlimited number of Amtrak Guest Rewards points to their hotel partners.

Choice Privileges doesn't share a consolidated list of their properties by point cost, so it takes a little bit of work on AwardMapper to find 6000-point properties.

In Sweden, the Quality Inn Hotel Prince Philip offers a free buffet breakfast, and $600 is a steal in famously-expensive Scandinavia. The Clarion Suites Roatan at Pineapple Villas seems like a lovely resort in Honduras, although close-in availability was spotty for the dates I checked. Personally, I'd probably splurge the extra $200 monthly and move into the Clarion Congress Hotel Prague, an 8,000-point property.

Retirement savings: 2,160,000 Choice Privileges points ($7,200 in Ultimate Rewards points, with Amtrak Select Executive status).

Conclusion

This was a fun exercise, but there are a few problems which make it impractical to permanently retire to hotels, as opposed to moving into one for a month or two. First, you face the problem of award availability: at chains that don't guarantee standard room availability, you might be stuck paying cash for a hotel room if award availability suddenly dries up. Second, over the longer term you face the risk of devaluations: properties themselves can move up or down in award categories and new categories can be introduced, but rewards programs also sometimes go through wholesale devaluations, for example shifting to a revenue-based redemption model that would leave you stuck with much less valuable points.

Still, if I ever need to spend a month in Krakow, I know where I'll be spending it!

How does the Club Carlson annual free night benefit work?

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Introduction

On June 1, the US Bank Club Carlson co-branded credit cards underwent a serious devaluation: the last-night-free benefit was eliminated, and replaced with a single, domestic award night each year cardholders spend $10,000 on the credit cards.

I wrote in April that I would keep the card, spending exactly $10,000 on the card in order to earn 50,000 Gold Points from spend, 40,000 anniversary Gold Points, and an annual free night, all of which I'd redeem at the Radisson Blu Aqua Hotel Chicago for a long weekend.

Then Club Carlson devalued again, lifting many of their 50,000-point properties into the 70,000-point tier, including the Radisson Blu Aqua Hotel, Chicago and Radisson Blu Warwick Hotel, Philadelphia. That meant my 90,000 annual Gold Points would barely cover a second night at those properties, let alone a third.

Since I never actually received any new terms and conditions for the annual free night benefit, yesterday I decided to call US Bank and find out how the annual free night benefit actually works.

The annual free night benefit was implemented in an obvious, but disastrous, way

The annual free night eCertificate is awarded on your first, post-devaluation anniversary, if you spent $10,000 in the preceding 12 months. That means that if, like me, you paid your annual fee in April, you won't receive your first annual domestic free night certificate until April, 2016.

This is a terrible way to reward high-spending customers, since it detaches the reward (a free night) from the spend, which could have occurred as many as 12 months earlier.

I cancelled my Club Carlson Business Rewards card

Even after the dual devaluation, I fully expected to keep my US Bank Club Carlson credit card. It still earned 5 Gold Points per dollar spent, it still offered 40,000 anniversary Gold Points, and spending $10,000 on the card would get me an additional free domestic award night each year.

But I haven't spent a dime on the card since May, and once I found out that I won't see my annual free night certificate until next April, I lost what was left of my interest in the card.

Foregoing $200 in cash back on $10,000 in manufactured spend, plus paying a $60 annual fee, for 2 nights in Chicago or Philadelphia doesn't make any sense in a world where Hilton and Hyatt points are so easy to come by; I would have to start planning my Club Carlson redemptions years in advance, even while my Hilton and Ultimate Rewards accounts are being continually replenished.

I'm getting some kind of annual fee refund

It's been over 3 months since I paid my annual fee, so I don't expect a refund of the full $60 annual fee, but I asked my phone agent and he said that I'd receive some kind of refund check as soon as the annual fee refund hits my account.

I couldn't product change to the much better Business Edge Cash Rewards card

Likewise in April, I wrote that a phone representative had told me I could product change my Club Carlson card to a Business Edge Cash Rewards card. Once I decided to cancel my Club Carlson card, I asked whether that was possible, and my agent yesterday told me it was not — I'd have to apply for a new card. Needless to say, I passed.

Conclusion

The best case scenario for the dual devaluation was folks who had account anniversaries after June 1 and who could fit $10,000 in manufactured spend in before that anniversary. They got to maximize the last-night-free benefit, run up spend one last time, then get another 40,000 Gold Points and a free domestic night certificate.

As for me, I don't trust Club Carlson enough to keep the card, let alone put any spend on it, knowing that anything could happen between now and April, 2016.

Can current cardholders get one more TripIt Pro subscription from Barclaycard Arrival+?

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[For reasons I cannot begin to understand, I am camping far from civilization this week. I have a couple posts scheduled, but won't be participating as actively as usual in the comments or on Twitter.]

A few months back the free TripIt Pro subscription I received through my Barclaycard Arrival+ MasterCard expired. I reached out to Barclaycard on Twitter to ask how to renew my subscription, and they told me to "log into the website and from the ‘Account Summary’ page click on the ‘Tripit Pro’ link to activate," then gave me a unique code to use instead of entering my credit card information.

Being lazy and not getting any particular value from TripIt Pro, I didn't act on this information until last week, when the Arrival+ devaluation was made official and free TripIt Pro subscriptions were explicitly discontinued.

Never being one to pay for a benefit I don't use, I logged into my TripIt account and entered the unique code I'd been given, which instantly upgraded my account to TripIt Pro.

The TripIt Pro benefit has been removed from my online account

As indicated by Barclaycard's Twitter team, before the devaluation, "TripIt Pro" was a benefit on the "account summary" page of my Barclaycard Arrival+ card account. Now it's gone.

Current cardholders should still be eligible for free TripIt Pro subscriptions

Since the devaluation goes into effect on November 17 for existing cardholders, if you signed up for the card before the card was rebooted earlier this month, you should still be able to sign up for a free TripIt Pro subscription.

The easiest way is probably to do what I did, and contact @AskBCUS on Twitter to ask for your upgrade code. If you're not a Twitter user, you should be able to call in and ask for an upgrade code.

TripIt Pro is like TripIt, but with lots of text messages

TripIt allows you to organize all your upcoming trips, which I find mildly useful when assembling trips with multiple components, especially multiple airline ticket confirmation numbers. It's genuinely convenient to have them all in one place.

TripIt Pro is like that, but also with lots of text messages throughout each travel day about your inbound and outbound gate assignments and any flight delays. Honestly, it's usually more stressful than it is helpful, knowing ahead of time just how many terminals you need to dash in order to make your connections.

The potentially useful service that TripIt and TripIt Pro don't provide is allow you to easily search for alternative flights on your ticketing carrier. Instead their "alternate flight" search is essentially a Kayak search of all flights between point A and point B.

But TripIt Pro is included in your (hopefully waived) annual fee

As I mentioned yesterday, the worst thing you can do is pay for a benefit and not take advantage of it. So if you signed up for the Arrival+ card on the understanding you'd receive a free TripIt Pro subscription, go ahead and sign up!

You might like it.

Travel benefits versus travel hacking benefits

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[For reasons I cannot begin to understand, I am camping far from civilization this week. I have a couple posts scheduled, but won't be participating as actively as usual in the comments or on Twitter.]

With the announced elimination, as of January 1, 2016, of the "First Friday" dining benefit of the overrated Chase Sapphire Preferred, we've seen the predictable surge of posts extolling all the non-points benefits of the card. This makes a certain amount of sense since the card is so useless on the earning side that writing about actually using the card for purchases requires heroic level of delusion, even from our affiliate blogger friends.

If you're feeling self-loathing, you can read:

  • Mommy Points drooling over trip delay and cancellation coverage;
  • a Thought Leader in Travel giddy over primary car rental insurance;

If you have some self respect left you can instead read Miles to Memories reminding you to product change to Freedom or Doctor of Credit gaming out bonused restaurant spend on other, better cards.

Glancing at my Feedly did get me thinking about an interesting distinction: the one between travel benefits and travel hacking benefits.

Travel benefits are nice and not worth paying for

It's trivial to game out situations which would make credit card travel benefits pay for themselves many times over:

  • Trip delay and baggage delay insurance. Chase will reimburse up to $500 per ticket for unreimbursed meals and hotel expenses if a delay forces you to stay overnight. With a $95 annual fee, using this benefit once could conceivably pay for 5 years of annual fees;
  • Trip cancellation insurance. In covered situations, Chase will reimburse up to $10,000 in non-refundable reservations. That is a large multiple of $95.
  • Primary car rental insurance. If you rent a car with your Chase Sapphire Preferred, the rental car is insured by Chase, so you don't need to make a report to your own insurance company.

If you have a Chase Sapphire Preferred, you should take advantage of those benefits. The last thing you want to do is pay for benefits and not use them.

But you also shouldn't pay for them. Here's why:

  • You may already have cards that offer baggage delay and trip delay insurance. The Barclaycard Arrival+ covers up to $100 per day for up to 3 days when your baggage is delayed by 12 hours or more. The Citi Executive / AAdvantage offers up to $500 for baggage delays of 3 hours and $500 for trip delays of 3 hours or more, as does the Citi Prestige.
  • You may already have cards that offer trip cancellation and interruption insurance — see above.
  • Primary car rental insurance is not worth paying for, and virtually all your cards offer secondary car rental insurance. There are three kinds of insurance that matter when you're renting a car: a collision damage waiver, medical insurance, and personal liability. Your personal car insurance policy will usually include a collision damage waiver and personal liability policy. "Secondary" collision damage waiver policies, like those offered by most credit cards, will cover your deductible when filing a claim with your insurance company. When bloggers promote the advantages of primary rental car policies, they're gesturing at the fact that your insurance premium may go up when filing a claim with your insurance company. But you'll have to file a claim anyway if another vehicle is involved in your accident. Now, to be fair, that won't always be the case. My dad once backed a rental car into a tree and totaled it — that's the ideal use case of collision damage waivers. But it radically narrows the range of cases where you won't have to file a claim with your own insurance company, which is supposedly the evil avoided by primary rental car insurance.

You should know the benefits of your cards, and have a rough idea of what card to use for what kind of purchase. Personally, I use my Arrival+ MasterCard for pretty much everything, but you should certainly find the right combination of cards that works for you. The point is that you don't need to pay an extra $95 per year for those benefits; you likely already have them.

Travel hacking benefits can be worth paying for

For me, the difference between a travel hacking benefit and a travel benefit is that travel hacking benefits are available to be consciously exploited by the cardholder. No one would say they "hacked" their trip by paying for it with a Sapphire Preferred card, even if the trip was delayed enough to trigger the card's trip delay benefit. But someone who's going to pay for Global Entry can affirmatively sign up for a card that reimburses that expense and effectively spend the same $100 twice: once for Global Entry and once for a potentially-lucrative super-premium credit card.

As an exercise, here's a roundup of some travel hacking benefits that may be worth paying for, under the right circumstances:

  • $100 Global Entry fee reimbursement. American Express Platinum and Business Platinum cards are supposed to reimburse this fee once every five years (the term of Global Entry enrollment), although I've heard reports that the reimbursement actually resets annually. Citi Prestige cards also provide this benefit once every five years, although the card is too new to know whether that limit is enforced in practice.
  • Airline reimbursements. While statement credits are worth (much) less than cash, these are still benefits that can be actively gamed. The American Express Platinum and Business Platinum cards give $200 airline fee credits, which can be used as intended (for airline fees) or used to purchase gift cards with some airlines (for example, American Airlines). The Citi Prestige gives an even more generous $250 credit which can explicitly be used for airfares — no gift cards required.
  • Lounge access. If you're going to pay for a lounge membership, it often costs the same amount to sign up for a credit card that gives lounge access, but may have auxiliary benefits as well. The American Express Delta Reserve card gives lounge access (but not the ability to bring in guests) when you fly on Delta-coded or Delta-operated flights and earns 1.5 SkyMiles per dollar when you spend exactly $30,000 or $60,000 in a calendar year. Its $450 annual fee is the same as an "Individual" Sky Club membership. The Citi Prestige and Executive / AAdvantage give Admiral's Club access for the cardholder and up to two guests, and at $450 each cost the same or less than an Admiral's Club membership for non-elites with AAdvantage. The Chase United Club card earns 1.5 United Mileage Plus miles per dollar spent, and has a $450 annual fee — $100 less than the annual membership fee for non-elites.
  • Golf. The Citi Prestige offers a phenomenally complicated "free golf" benefit, which gives you up to 3 free rounds of golf per calendar year at select courses. The key thing to know is that it gives you, the cardholder, 3 free rounds of golf per calendar year. In other words, if you typically play golf in foursomes, it's a 25% discount — the benefit can't be applied to any other golfers in your group, or indeed to anyone else at all. But if you like to golf alone at premium courses, this is a straightforward way to do so for free.
  • Fourth night free. The Citi Prestige offers an also-complicated-but-less-so fourth night free benefit when making reservations through their "Citi Concierge" (call 1-561-922-0158 to reach them). If you are in the habit of paying for 4-night hotel stays with cash, this benefit offers an almost unlimited upside to making such reservations through Citi Concierge. My suspicion is that the benefit isn't long for this world, but it might justify paying the card's annual fee if you have near-term plans to take advantage of it.

Conclusion

I don't pay $450 annual fees and I don't recommend my readers do, either. When you pay an annual fee, you're forced to pay it in cash. That's why the value you get from a card needs to be measured in cash, as well. The distinction I've tried to draw in this post is between benefits that have cash value and those that require you to assign speculative, emotional value to them.

When you read a blogger telling you how priceless peace of mind is, you know to keep at least one hand on your wallet.

That's not to say that the Chase Sapphire Preferred doesn't have generous flight delay benefits. Indeed, if you regularly fly United Airlines in and out of Chicago or Denver, you could face overnight flight delays on a weekly basis, and let Chase pick up the tab for your points-earning hotel stays.

But that's an extreme case. Virtually everyone will be better off looking to the travel benefits already offered by their credit cards, and if they have cash left in their budget for credit card annual fees they should spend it on cards that offer concrete, recurring, lucrative benefits.

Let's go rail running!

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Earlier this year, Frequent Miler wrote about the possibility of achieving Amtrak elite status through "rail running:" boarding trains for the sole purpose of earning enough Tier Qualifying Points with Amtrak Guest Rewards to achieve "Select" status, which allows the transfer of up to 50,000 Amtrak Guest Rewards points to their hotel partners, Choice Privileges and Hilton HHonors.

Being based in Ann Arbor, Frequent Miler couldn't make the numbers work out for himself, but after writing about Choice Hotels a few times recently, I wondered under what circumstances rail running could make sense.

Making rail running work

Here are the basics of rail running for Amtrak elite status:

  • 5,000 Tier Qualifying Points are required to earn Amtrak Guest Rewards Select status;
  • 2 Tier Qualifying Points are earned per dollar spent on Amtrak fares, except;
  • each one-way trip earns a minimum of 100 Tier Qualifying Points, but;
  • a maximum of 4 one-way trips per calendar day are eligible for the 100-Tier-Qualifying-Point minimum.

The ideal rail run, then, is two one-way tickets in one direction, followed immediately by two one-way tickets back to your starting location. That means you need to find three stations which are close to each other in one direction and a train schedule that keeps you from having to wait very long at the second station you arrive at.

Do such stations and such a schedule, along with cheap enough prices to justify rail running, exist?

A few promising station constellations

There are a number of promising station constellations (three stations closely packed together) on the Pacific Surfliner route in California. Here's one:

  • Oceanside, CA (OSD) — Carlsbad, CA - Village (CBV) — Carlsbad, CA - Poinsettia (POI)

Tickets for each leg cost $8.10 for AAA members on the random December day I checked, for a total cost of Select status of $405. Unfortunately the schedule doesn't allow for an immediate turn in either direction (although if you go northbound POI-CBV-OSD and then turn around you may be able to rely on the southbound train being delayed as it nears the end of its route — it only has to be delayed 6 minutes for you to make the connection).

Another candidate on the same Pacific Surfliner route is SNA-ANA-FUL, at the same price.

Down South, the City of New Orleans has a slightly longer, but cheaper option:

  • Hazlehurst, MS (HAZ) — Brookhaven, MS (BRH) — McComb, MS (MCB)

AAA tickets on the same random December day cost $4.95 and $7.20, for a roundtrip cost of $24.30, or $303.75 for Amtrak Select status. Same-day turns only work starting Southbound, which would give you a leisurely 3 hour lunch in McComb, Mississippi.

Here's an easy one for our brothers in Philadelphia on the Keystone Service:

  • Philadelphia, PA (PHL) — Ardmore, PA (ARD) — Paoli, PA (PAO)

Each leg costs $5.85 for AAA members, for a roundtrip cost of $23.40 and $292.50 for Amtrak Guest Rewards Select elite status. Best of all, the train operates frequently enough that you should be able to put together an easy same-day turn, for example departing Philadelphia at 4:45 PM and returning to Philadelphia at 6:25 PM.

Amtrak Guest Rewards points are valuable!

So far I haven't mentioned the fact that during the course of all this rail running, you'll also be earning redeemable Amtrak Guest Rewards points! At least 5,000 of them, in fact.

And since the point of this operation is to transfer your Amtrak Guest Rewards points to Choice Privileges, you have to assign those redeemable points at least $50 in value, since that's the cash value of the Ultimate Rewards points you'll save. In other words, to max out your annual 50,000 in Amtrak Guest Rewards points transfers to Choice Privileges, you only have to transfer 45,000 Ultimate Rewards points to Amtrak.

If you are thinking about rail running, wait until Amtrak runs a promotion

Amtrak periodically offers double points on paid travel, their so-called "Double Days" promotions. The last Double Days promotion ran from March 16 to May 16, 2015. If you wait until the next one, you'll be able to score even more redeemable points, saving yourself the corresponding number of Ultimate Rewards points when the time comes to transfer them into your Amtrak Guest Rewards account.

Conclusion

Researching this post was a lot of fun, but I fully understand most of my readers are not actually going to go rail running in order to achieve Amtrak elite status. Nonetheless, I think it's an idea that's more defensible than it appears at first blush, especially if you have your heart set on one of Choice Privileges' Preferred Hotels & Resorts.

If you decide to go rail running, remember: you need to book two one-ways in each direction to earn the maximum of 400 Tier Qualifying Points each day, and the goal of the game is finding the cheapest trips and shortest turnaround times possible!