Marriott Cash + Points redemptions could be great for you

Yesterday I saw on Travel Codex Scott Mackenzie sharing some details of Marriott's new Cash + Points redemptions, which will apparently become available early next year.

First, two important caveats. The new Marriott Cash + Points redemptions will not change or slow the relentless upward drift in Marriott property categories. Three or four years ago, the Courtyard Portland City Center was a Category 5 hotel. Today it's Category 7. Additionally, Marriott points are extremely expensive, costing one cent per point when Chase Ultimate Rewards points are transferred in, or 2-plus cents per point if you choose to manufacture spend on a Chase Marriott co-branded credit card instead of a cashback-earning credit card.

But sometimes you just can't help but earn Marriott Rewards points. And Cash + Points redemptions are going to make it much cheaper to drain those balances back down to zero, where they belong.

Always redeem for Cash + Points, where available (with 4 exceptions)

As Marriott Rewards makes clear, "members will be able to redeem their points for the NEW Cash + Points at participating Marriott brand hotels and The Ritz-Carlton hotels when available. Participation will vary by hotel."

In other words, just because a paid night is available, and just because an award night is available, a Cash + Points night won't necessarily be available. But when a Cash + Points night is available, it will usually be better than a straight points redemption.

Here's Scott's chart showing the new Cash + Points redemptions, and the implicit price paid per "saved" Marriott Rewards point:

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Only at Marriott Rewards Category 1, Category 2, Category 9, and Ritz Carlton Tier 5 properties do the "missing" points on a redemption cost more than 1 cent each. In other words, if you're considering transferring points in from Ultimate Rewards, you'll be better off at all other properties simply redeeming your Ultimate Rewards points for cash and buying the missing Marriott Rewards points!

Don't compare Marriott Cash + Points rates to cash; compare them to the competition

All I've said so far is that except in a few situations, if it makes sense to make a Marriott Rewards point redemption, it will make even more sense to make a Cash + Points redemption.

But don't let that lure you into thinking that it makes sense to make a Marriott Rewards point redemption!

For example, there are two Category 7 Marriott Rewards properties in Manhattan: the Fairfield Inn & Suites New York Manhattan/Downtown East and Residence Inn New York Manhattan/World Trade Center Area. Those properties cost 35,000 Marriott Rewards points or, under the new 2016 Cash + Points regime, 21,000 Marriott Rewards points and $90 in cash.

If you're paying for your hotel stays exclusively with Chase Ultimate Rewards points, however, there are seven Hyatt Gold Passport properties that cost less than that, and one (the Park Hyatt New York) that ties at exactly 30,000 Hyatt Gold Passport points!

Conclusion

After the new Cash + Points redemption rates go into effect, Marriott Rewards points will still be extremely expensive to acquire and Marriott Rewards properties will still require far more points than their competitors.

But if you are stuck earning Marriott Rewards points through corporate contracts, the imperative of location, or the simple compulsion to sign up for every 80,000-point credit card offer that comes along, you'll want to keep an eye open for Cash + Points availability starting early next year.

The single best award redemption, by transfer partner: Chase Ultimate Rewards

As my regular readers know, I don't chase "aspirational" redemptions; I earn the miles and points I need to pay for the trips I want to take as cheaply as possible.

But many of you do chase aspirational redemptions! That gets me into hot water whenever I point out that a Chase Ultimate Rewards point is worth 1 penny (its cash redemption value), or that American Express Membership Rewards points are hard to redeem for cash.

So in the spirit of reconciliation, I though it would be fun to put together a list of the absolute best redemption values for the transfer partners of each flexible rewards currency. Since I'm most familiar with Ultimate Rewards points, let's start there.

Airline Partners

As a reminder, here are the Chase Ultimate Rewards airline transfer partners:

• United MileagePlus
• British Airways Executive Club
• Korean Airlines SKYPASS
• Singapore Airlines KrisFlyer
• Southwest Airlines Rapid Rewards
• Virgin Atlantic Flying Club

United MileagePlus

Two of the best international first class products, Lufthansa and Singapore, belong to the Star Alliance, and United MileagePlus miles can be redeemed for first class on either airline at their partner award prices. But which is the better redemption?

One-way award seats in Lufthansa first class between New York and Frankfurt cost 110,000 MileagePlus miles, plus $5.60 in taxes and fees. Unless you're a MileagePlus elite, you'll also pay a $75 close-in ticketing fee, since Lufthansa first class seats are generally made available to United only a few days or weeks before departure.

At the time of writing, Lufthansa first class seats between New York and Frankfurt cost $11,049 on October 10, a date Lufthansa first class award seats are also available. Less the $80.60 in taxes and fees, that gives a redemption value of just about 10 cents per Ultimate Rewards point.

We can actually do a hair better than this by flying not to Frankfurt, but to Tokyo's Haneda airport via Frankfurt. This itinerary also costs 110,000 MileagePlus miles, but retails for $952 more, at $12,001, giving us 10.8 cents per MileagePlus mile:

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By comparison, Singapore's JFK-Frankfurt flight costs a mere $7,108. In any case, since Singapore Air is also a Chase Ultimate Rewards transfer partner, Lufthansa walks away with an easy victory here.

British Airways Executive Club

A safe choice for best British Airways redemption is a 4,500-Avios American Airlines short-haul flight like Norfolk, VA, to Charlotte, NC, which can get you about 9.9 cents per Ultimate Rewards points.

Knowing that Brazil forbids airlines from adding fuel and passenger surcharges to tickets, I was hopeful that a route like Sao Paulo — London would generate an astronomical value per Avios. But it turns out those flights don't get more expensive by distance in the way that Avios redemptions do! A first class seat from Sao Paulo to London costs just $5,783, which at 120,000 Avios gives a piddling 4.8 cents per point.

You're better off moving to Norfolk.

Korean Airlines SKYPASS

A popular use of SKYPASS is to book cheaper award tickets from the US mainland to Hawaii than those available on domestic US carriers. So, for example, while a Delta Skymiles award ticket to Hawaii from the continental 48 costs a minimum of 45,000 miles roundtrip, a SKYPASS award ticket costs just 35,000 miles.

Delta flies nonstop from Atlanta to Honolulu, so let's use that as our basis for comparison. A roundtrip departing March 8 and returning March 16, on which there's low-level award availability, costs $1,134. Less $11.20 in taxes and fees, that returns a SKYPASS redemption value of 3.24 cents each. That's not bad for SKYPASS miles, but it's not the best.

That's because Korean Airlines SKYPASS miles can also be redeemed for first class on Korean. On April 4, 2016, a first class flight from New York JFK to Seoul Incheon costs $10,032, but just 80,000 SKYPASS miles plus $104.20 in taxes and fees, giving 12.4 cents per SKYPASS mile, the highest transfer value for Ultimate Rewards we've seen yet!

It should be possible to kick that up another few cents per point by booking a single first class award from New York to Sydney for 120,000 SKYPASS miles, but I cannot for the life of me get the Korean Airlines website to price out such an award.

Singapore Airlines KrisFlyer

Remember the disappointing, $7,108 New York - Frankfurt flight operated by Singapore that I mentioned above? The good news is that it costs just 57,375 KrisFlyer miles (after their 15% online booking discount) and $203.30 in taxes and fees, or just over 12 cents per KrisFlyer mile.

There are more expensive Singapore Airlines routes, but they cost many more KrisFlyer miles such that you're unlikely to do better than the above. For example, it costs $984 to continue in first class to Singapore from Frankfurt, but 36,125 more KrisFlyer miles. At 2.7 cents per mile, that's a pretty good redemption in its own right, but it drags down the overall redemption value significantly.

Southwest Airlines Rapid Rewards

Since Southwest is a revenue-based program, you're not doing to do better than 1.6-1.7 cents per Rapid Rewards point unless you have the Companion Pass. If you do, congratulations, you can get up to 3.2-3.4 cents per Rapid Rewards point when booking Wanna Get Away fares.

For example, with the Companion Pass you could fly two passengers from Baltimore, Maryland to Aruba for 11,620 Rapid Rewards points and $31.20 in taxes and fees, a $407.60 value, giving you 3.24 cents per Rapid Rewards point.

Virgin Atlantic Flying Club

Virgin Atlantic has a number of partner airlines that could potentially offer some value, like South African Airways. Their website even contains this mysterious language:

"Economy Class Mileage* 40,000
Business Class Mileage* 50,000
Between Dakar and New York***"

Mysterious because South African Airways does not fly from Dakar to New York, although it's possible to book itineraries connecting in Washington Dulles. Maybe that's what they mean?

Virgin Atlantic does partner with Delta, which basically makes it a poor man's Skyteam partner. You can fly from the US to Europe for 100,000 Flying Club miles roundtrip, as long as you can find Delta low-level availability, compared to 125,000 Skymiles for the same awards. You can fly anywhere in Africa for 120,000 Flying Club miles roundtrip in business class, compared to 140,000 Skymiles to northern Africa and 160,000 Skymiles to South Africa (I think — no award charts, remember?).

I couldn't find any low-level availability on Delta metal to Johannesburg, but a roundtrip business class flight with award availability between New York and Dakar priced out at $3,375. Assuming Virgin Atlantic charges the same taxes and fees as Delta, $127.60, you could get about 2.7 cents per Flying Club mile on such an award.

Hotel Partners

Here are the Chase Ultimate Rewards hotel transfer partners:

• Hyatt Gold Passport
• Marriott Rewards/Ritz Carlton Rewards
• IHG Rewards Club

Hyatt Gold Passport

There are two places you can look for the highest redemption values in a program like Hyatt Gold Passport. You can look at properties in the highest categories during the property's high season (after all, they're there because they're expensive!), or you can look at properties in the lowest categories during major events. So, which approach yields the highest redemption value?

I looked at a range of top-tier properties, and the best I could do was at everyone's favorite aspirational beach resort, the Category 6 Park Hyatt Maldives Hadahaa, where rates go up to $2027 in early January, or 8.1 cents per point. Then Grant pointed to a May 29, 2016, stay at the Park Hyatt Milan, when the Hyatt Daily Rate is $4577 — and rooms are still available for 30,000 Gold Passport points, or 15.26 cents per point.

Other top-tier properties offer fine redemptions, but nothing like that: the Category 7 Park Hyatt Sydney charges about $814 on January 25 (the day before Australia Day), or 30,000 Gold Passport points, for about 2.7 cents per point.

What about on the low end? During CES in Las Vegas, you can book the Hyatt Place Las Vegas for 8,000 Gold Passport points or $338, about 4.2 cents per point. My main problem searching for these low-end redemptions is that enough people have obviously had the same idea that room rates are extremely difficult to find during the Super Bowl, Kentucky Derby, Indianapolis 500, and other high-profile events! So if you want to secure an outsized value during those events, book as early as possible!

Marriott Rewards

Obviously the best Marriott Rewards redemption will involve a Hotel + Air Package, which allows you to buy much more valuable airline miles at a deep discount. Since we've already established that 110,000 MileagePlus miles are worth 10.8 cents each ($11,880), let's use that as our baseline and figure out where to redeem our 7, Category 5 nights.

The most expensive Category 5 Marriott Rewards property I found is the Courtyard Paris Saint Denis, where you can redeem your 7 nights for a stay that costs $3,027, bringing your total return on 250,000 Marriott Rewards points to $14,907, or 5.96 cents per point. That's true, however, If and only if you begin your 7-night stay on July 4, 2016.

Award rooms are not available for those dates. Marriott Rewards is a terrible program.

IHG Rewards Club

IHG Rewards properties get so exorbitantly expensive in points, so fast, that the best awards will invariably be on their PointsBreaks list. I've spent a couple lovely summers in Brno, Czech Republic, so I was pleased to see that I could get 3.6 cents per IHG Rewards point at the Holiday Inn Brno on October 13, which would otherwise go for $180.12.

The best rates found on Hotel Hustle's Hot Rates page top out at 1.94 cents per point (exclusive of taxes), so if you're looking for outsized value from your Ultimate Rewards points, stick to the PointsBreaks list (or look elsewhere).

Conclusion

When I started writing this post I thought this would be an easy and fun exercise. It turned out to be difficult, time-consuming, and boring, which I hope speaks to my basic point: seeking the "best" value from your miles and points is a thankless chore.

You'll always be better off redeeming your miles and points for the trips you actually want to take, rather than the ones some blogger tells you are the best.

One-time opportunity to buy 450,000 Choice Privileges points for $1,600

Via Drew at Travel is Free, until December 8, 2015, there's a one-time opportunity to buy 450,000 Choice Privileges points for $1,600. That's not exactly how Drew framed it, so I'll walk through the essential elements of the deal.

Chase Ultimate Rewards transfers to Amtrak end December 8, 2015

Through December 7, 2015, it is possible to buy Amtrak Guest Rewards points for 1 cent each by transferring Chase Ultimate Rewards points (worth 1 cent each when redeemed for cash) to Amtrak Guest Rewards.

Amtrak Guest Rewards Select and Select Plus elites can transfer up to 50,000 points to Choice Privileges per calendar year

One Amtrak Guest Rewards point can be exchanged for 3 Choice Privileges points, but only if you have elite status with Amtrak Guest Rewards, which starts at 5,000 Tier Qualifying Points.

The Bank of America Amtrak Guest Rewards MasterCard earns both Amtrak Guest Rewards points and Tier Qualifying Points

The $79-annual-fee Amtrak Guest Rewards MasterCard earns 20,000 Amtrak Guest Rewards points after spending $1,000 within 90 days of account opening.

It also earns 1,000 Tier Qualifying Points each time you spend $5,000 with the card, up to 4,000 Tier Qualifying Points per calendar year.

Finally, it earns 1 Amtrak Guest Rewards point per dollar spent.

Buy 450,000 Choice Privileges points for $1,600

Here's how this one-time opportunity works:

1. Transfer 110,000 Ultimate Rewards points to Amtrak Guest Rewards ($1,100 cash value);
2. Sign up for the Bank of America Amtrak Guest Rewards MasterCard ($79 annual fee);
3. Spend $20,000 with the MasterCard ($421 opportunity cost compared to 2.105% cash back on unbonused spend);
4. Earn an additional 1,000 Tier Qualifying Points;
5. Transfer 50,000 Amtrak Guest Rewards points to Choice Privileges in each of 2015, 2016, and 2017 (before your elite status expires on February 28, 2017).

You'll end up with 450,000 Choice Privileges points (well, hopefully you'll be redeeming them as you go, since Choice Privileges points do expire) after having paid $1,600 in fees and foregone cash back.

Should you do this?

I went on something of a Choice Privileges tear back in July, and had a lot of fun researching and writing about the program. The key thing I learned was that there are a lot of Choice Privileges properties in the world.

The second thing I learned was that properties start at 6,000 Choice Privileges points per night.

In other words, for your $1,600 you could buy 75 nights at a 6,000-point property ($21 per night) or 56 nights at an 8,000-point property ($29 per night).

Alternatively, you could buy 7 nights at a 60,000-point Preferred Hotels & Resorts property, paying $228 per night for a property like the Hotel Monaco & Grand Canal in Venice, which retails for over 350 Euros per night in June.

Just keep in mind you won't have the final 150,000 Choice Privileges points until January, 2017, which makes this what we call a "long con."

Conclusion

I'm normally pretty blasé about deals like this which require large up-front cash investments and only speculative returns later on.

But this is a deal I'm actually tempted to jump on! Keep in mind that the only truly time-sensitive part of the deal is the transfer to Amtrak Guest Rewards by December 7, 2015. You can transfer any number of points speculatively now, and then follow steps 2-5 of the technique next year, allowing you to make transfers in 2016, 2017, and early 2018.

Of course, if you naturally earn Amtrak Guest Rewards points and elite status through your travel, the deal is even sweeter, allowing you to transfer just enough Ultimate Rewards points to allow you to maximize the next three years' Choice Privileges transfer limits.

Finally, remember to redeem the points you earn! If you commit to this technique and end up with hundreds of thousands of Choice Privileges points, don't let yourself be stingy with them while you wait for the perfect redemption to come along — stay at Choice Hotels properties!

Topping up accounts, or, throwing good points after bad

Marriott Rewards is the worst hotel loyalty program: it has all the low earning rates and high property costs of IHG Rewards, with none of the potential upside offered by IHG's PointsBreak list and occasional lucrative promotions.

Nonetheless, I have a small balance of Marriott Rewards points that I'd love to redeem if an opportunity ever presented itself. The problem is that the kind of downtown Marriott properties I wouldn't mind staying at are so expensive that I only have enough points for a single night. In that way, my balance is like a free night certificate: great if you only want to stay one night, but worthless if you're trying to plan an actual vacation.

When topping up an account can make sense

Of course, Marriott Rewards is a transfer partner of Chase Ultimate Rewards, which means I can top up my account at any time and suddenly have enough Marriott Rewards points for a longer stay.

Under most circumstances that would be crazy: Ultimate Rewards points are worth 1 cent each when redeemed for cash, which is virtually never true of Marriott Rewards point redemptions.

Here's where the worthlessness of unredeemed points is such a useful framework. Since I have no plan to redeem my existing Marriott Rewards points, they're worth nothing to me as long as they're just sitting in my account.

That means that even if it doesn't make any sense to transfer all 35,000 Ultimate Rewards points required to stay at a Category 7 Marriott like the Courtyard Portland City Center, it can make sense to transfer 5,000 points to top up your account from 30,000 to 35,000:

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For an upcoming trip to Portland, I have 2 nights booked at the Hilton Portland & Executive Tower for 80,000 HHonors points, with an imputed redemption value of approximately $280 ($13,333 in bonused spend with an American Express Surpass co-branded card). Since I have a Marriott Rewards balance of just over 58,000 points, I'd have to transfer 12,000 Ultimate Rewards point to replace those two nights with two nights at the Courtyard Portland City Center.

Since my current, unredeemed 58,000 Marriott Rewards balance is worthless, that means I have the opportunity to pay $120 and recoup at least $280 in value from HHonors points. That's a no-brainer.

Conclusion

Remember, besides saving money, redeeming your existing points balances whenever possible has a unique upside: it gives you an instant snapshot of what your points are actually worth, which lets you decide critically whether to continue earning them, or to shift your earning to other, more valuable loyalty currencies.

Is the 100k British Airways Avios offer the worst major signup bonus?

[Editor's note: I'm currently traveling so responses to comments and e-mails may be slightly slower than usual. —FQF]

Regular readers know I don't chase signup bonuses any more, for two simple reasons:

• if I need some particular loyalty currency for my strategy, then I can't wait until an elevated signup bonus comes along to start earning it;
• and if I don't need that loyalty currency for my strategy, then I don't need a lot of points any more than I need a few of them!

Think of signup bonuses as temporary bonus earning rates

The appeal of large signup bonuses to travel hackers is that they offer much larger earning rates than even the bonused earning rates of cards you'd otherwise use to manufacture spend.

For example, signing up for a Chase Sapphire Preferred card with a 40,000 Ultimate Rewards point signup bonus after spending $4,000 in the first three months produces a net earning rate of 11 Ultimate Rewards points per dollar spent for the first $4,000.

Since the next-highest earning rate is 5 Ultimate Rewards points per dollar spent at office supply stores with the Chase Ink cards, if you value Ultimate Rewards points highly enough you might rationalize applying for the Chase Sapphire Preferred card (but please product change to Freedom as soon as possible!).

Comparing bonus earning rates

Before we can say whether a particular signup bonus is good or bad, we have to establish a frame of reference. So here are 11 popular signup bonuses and their associated earning rates (data from Frequent Miler's Best Offers page). These aren't the absolute best offers out there, just what I hope is a representative sample; in other words, the cards I'd apply for if I were building a strategy from scratch.

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The mean signup bonus from these cards is an earning rate of 21 miles or points per dollar spent meeting the minimum spending requirement.

The British Airways bonus is tiered — but only the first tier makes any sense

The 100,000 Avios signup bonus for the Chase British Airways Visa is earned in three stages:

• 50,000 Avios after spending $2,000 within 3 months;
• 25,000 additional Avios after spending a total of $10,000 within 12 months;
• 25,000 additional Avios after spending a total of $20,000 within 12 months.

Since the card earns 1 Avios on every dollar spent, that means this card has three bonus earning rates:

• 26 Avios per dollar on the first $2,000;
• 4.13 Avios per dollar on the next $8,000;
• 3.5 Avios per dollar on the next $10,000.

In other words, the signup bonus is slightly above average for the first $2,000 you spend (although there's an identical offer with the annual fee waived the first year), but radically below average for the next $18,000 in spend.

Even if you relentlessly chase signup bonuses, you should use the $18,000 in spend this bonus requires meeting the minimum spending requirement for the signup bonuses of other, better cards.

The second and third bonus tiers are better than manufactured spend for earning Avios and only Avios

Spending $18,000 on the Chase British Airways Visa, above and beyond the $2,000 bonus tier, will earn a total of 68,000 British Airways Avios.

Spending $18,000 on the Chase Ink Plus at office supply stores will earn 90,000 Ultimate Rewards points, which can be transferred to Avios at a 1-to-1 ratio.

That leaves you with a 22,000 Ultimate Rewards point surplus. If your cheapest method of manufacturing non-bonused spend costs $7.90 per $1,000 in spend, and office supply store manufactured spend costs $34.75 per $1,000 in spend, you'll spend $483.30 manufacturing spend at office supply stores instead of putting your cheapest manufactured spend on the British Airways Visa.

Since 22,000 Ultimate Rewards points are worth $220 when redeemed for cash, you'll end up with a $263.30 surplus using the British Airways Visa instead.

Is that worth doing? You already know my answer: it's worth doing if you have a specific, high-value use in mind for those Avios.

Conclusion

Avios are a valuable, but not versatile, rewards currency. If you can find domestic low-level American or Alaska award space, Avios will almost always be the best way to book it.

Many bloggers will tell you that Avios are best for nonstop flights, and they're right: they're best for nonstop flights, but you'll often end up paying the same or fewer Avios even on itineraries with connections.

Likewise, if you can fly on Iberia metal to Spain and then connect to your final destination (or just visit Spain!), Avios provide a cheap way to get across the pond.

But since Avios are only rarely the best way to book long-haul awards, unless you have a plan for such a large balance, you're better off not earning them.

Is the American Express Rocketmiles deal a dud?

If you followed the instructions in this post, all your American Express cards, including authorized user cards issued by American Express, should now be enrolled in an offer for $50 off Rocketmiles reservations of $200 or more, valid for purchases processed by Rocketmiles by October 30, 2015.

What is Rocketmiles?

Like Pointshound, a service I've written about in the past, Rocketmiles allows you to pay rates which can be comparable to those offered directly by hotels, while earning airline miles instead of the hotel loyalty points you'd earn by booking directly.

Is Rocketmiles a good deal at chain hotels?

If you're booking at chain hotels, which don't participate in the near-constant promotions being run by the big online travel agencies like Expedia and Hotels.com, then you have a straightforward choice. Will you get the most value:

• earning airline miles using a portal like Rocketmiles or Pointshound;
• earning an OTA's proprietary currency, like Orbucks through Orbitz or free hotel nights through Hotels.com;
• or earning a hotel's proprietary currency by booking directly through the hotel's website?

Keep in mind that in the latter two cases, you also have the option of earning cash back by clicking through a portal like TopCashBack.

For all the dates and properties I searched, among these choices Rocketmiles is strictly inferior to the others.

At the Hilton Portland & Executive Tower, for October 22, 2015, here are my search results:

• Pointshound. $214.06 rate, $31.04 taxes and fees, $245.10 total. 1,700 Alaska Airlines Mileage Plan miles (2,300 if you're Level 3 with Pointshound). Net rate (valuing Mileage Plan miles at 1 cent each): $228.10 (Level 1) or $222.10 (Level 3).
• Hotels.com. $229 rate, $33.21 taxes and fees, $262.21 total. 17% back clicking through TopCashBack and earning a Hotels.com Rewards night. Net rate: $223.28.
• Hilton.com. $218 AAA rate, $31.61 taxes and fees, $249.61 total. 4% cash back clicking through TopCashBack, 2,180 base HHonors points, plus any elite, "Points & Points," and promotional bonus points (up to 2,180 additional HHonors points). Net rate (valuing HHonors points at 0.35 cents each): $229.44 (general member) or $225.63 (Diamond elite member).
• Rocketmiles. $229 rate, $54.96 taxes and fees, $283.96 total. 2,000 Alaska Airlines Mileage Plan miles. Net rate: $263.96.

Note in this case that Pointshound is both cheaper and earns more Mileage Plan miles (for Level 3 members).

Is Rocketmiles a good deal at non-chain hotels?

Once you've decided to stay in a non-chain hotel, you're suddenly eligible for the fantastic discounts the online travel agencies are always offering, and Rocketmiles will simply never be able to compete with those massive, upfront savings.

Here's the hotel we stayed at in Florence, the C-Hotels Club Florence, for the same October 22 date as above:

• Pointshound. Net rate: $153.90 (net 700 Mileage Plan miles).
• Hotels.com. Net rate: $109.54.
• hotelclubflorence.com. Net rate: $139.79.
• Rocketmiles. Net rate: $175.34 (net 1,000 Mileage Plan miles).

Does the American Express Rocketmiles promotion make Rocketmiles a good deal?

Obviously in the above two scenarios I haven't taken into account the $50 American Express offer this post is supposed to be about!

The best use case for this Rocketmiles offer seems to me to be the following:

• individual nightly room rates very slightly above $200, and
• Rocketmiles room rates that are the same or only slightly more expensive than the cheapest option otherwise available.

In this precise situation, your $50 American Express offer will bring the net price below the otherwise-cheapest option, and you'll be rewarded with a handful of airline miles for your trouble.

Price compression strikes again

Unfortunately, all of the above analysis ignores the single most important thing about travel hacking: price compression.

Price compression is a term I coined to describe two related benefits of generating miles and points through manufactured spend (and to a lesser extent, through credit card signup bonuses):

• More expensive trips don't cost more miles and points;
• Even when more expensive trips cost more than less expensive trips, the difference is smaller in absolute terms — the prices of the two trips are compressed.

You can see this at chain hotels, like the Hilton Portland & Executive Tower, where rooms cost 30,000 or 40,000 HHonors points per night, depending on season. Buying HHonors points at 0.35 cents each at grocery stores buys you a night for far less than any of the OTA's are asking.

But you can also see it at non-chain hotels, like the C-Hotels Club Florence. Even if Rocketmiles did have the best rate for the nights in question, the $50 discount off a $200 room rate requires you to pay with an American Express card, and therefore forfeit the ability to redeem Arrival+ miles against the reservation. In other words, it requires you to pay with cash (albeit at a steep discount).

Conclusion

This post isn't meant as a promotion or indictment of Rocketmiles in general, but rather to show how I think about these periodic promotions that come along (like the generous resale opportunity Marriott offered late last year).

This specific Rocketmiles offer may pose an opportunity: if you pay for rooms with cash; and you don't have an Arrival+ card; and Rocketmiles rates are competitive with other OTA's; and nightly rates are above, but only slightly above, $200.

In that situation, it would be well worth considering making Rocketmiles reservations with all your American Express cards (one per card!).

Optimizing Hilton points and nights earning across cards

In general, I prefer the American Express Hilton HHonors Surpass to the Citi Hilton HHonors Reserve. To review, the American Express card's three big advantages are:

• issuance by American Express, so the primary user's card and all authorized users are eligible for American Express Offers for You;
• Better bonus categories (gas and grocery versus airline and car rental) and higher earning in bonus categories (6 HHonors points instead of 5);
• Lower annual fee ($75 instead of $95).

Both cards grant Diamond elite status after $40,000 in purchases each calendar year.

The comparison isn't completely one-sided, however. In addition to the fact that some people have success making payments against Citi credit card accounts over the phone using debit cards, the Citi Hilton HHonors Reserve card also grants an annual weekend night certificate each cardmember year you spend $10,000 or more with the card.

What's the imputed redemption value of a free weekend night?

Since the card earns 3 HHonors points on purchases outside of bonus categories, we can find the imputed redemption value of the annual free night certificate by comparing it to earning 6 HHonors points per dollar at grocery stores or gas stations with the Surpass card. Assuming you value HHonors points earned with the Surpass card at precisely their imputed redemption value (0.35 cents each), you have to get at least $105.25 in value from the free night certificate in order to justify earning it instead of 30,000 additional HHonors points or $210.50 in Arrival+ miles.

That is relatively easy. There are only 3 Hilton HHonors price points (5,000, 10,000, and 20,000) lower than 30,000 and 7 HHonors price points at 30,000 or above. That would imply that under most circumstances, if you value HHonors point enough to earn them in the first place, it's worth carrying the Citi Hilton HHonors Reserve card.

Keep in mind how imputed redemption values work: they show the breakeven point that justifies earning hotel points instead of cash back, not the actual value of the points when redeemed. The more value you typically get from your HHonors points above and beyond their imputed redemption value, the higher the value you need to place on the free night certificate to justify earning it instead.

And then there's the annual fee

If the Citi HHonors Reserve card didn't have an annual fee, the analysis would end there — the free night certificates would be so valuable it would be worth carrying multiple copies of the card and earning as many free nights as possible.

But there is an annual fee, and not a cheap one. Adding back in the $95 annual fee raises the breakeven imputed redemption value from $105 to $200, the equivalent not of a 30,000-HHonors-point hotel redemption, but a 60,000-point one!

That leaves the free weekend night certificates competitive with HHonors point redemptions at many high-end properties, but it makes them much less competitive with the typical mid-tier urban properties I stay at.

And of course weekend night certificates can only be redeemed over the weekend. That doesn't radically reduce the value for me (since I like taking trips over the weekend), but it's something to keep in mind.

Conclusion

The Citi Hilton HHonors Reserve card can provide a value competitive with the American Express Hilton HHonors Surpass card under two conditions:

• during the first year, thanks to its signup bonus of 2 free weekend night certificates and a $100 statement credit;
• and during subsequent years, if the cardholder has a plan to work the free weekend night certificate into a redemption at Hilton properties costing 60,000 or more HHonors points per night.

Of course, if you can talk Citi into waiving the annual fee in subsequent years, the value proposition reverts to the first one I outlined above.

Otherwise, the Surpass card's increased earning rate in lucrative categories makes it my go-to card for manufacturing HHonors points.

Breaking: Hotel IT is not very good

One reason I love meeting travel hackers is that every one has a unique "origin story" for how they became interested in the game in the first place. For example, I accidentally earned elite status with Delta one year, and in the course of searching out the benefits of my Silver Medallion status began to learn about and get involved in the community, as well.

Often an initiation into travel hacking comes with the discovery of a new trick. A friend discovered that his United global upgrade certificates weren't actually disappearing from his account when he redeemed them. He was sure no one else on Earth could possibly know about this bug (I believe it was actually quite widely known among travel hackers who fly United).

Hotel loyalty programs have pretty bad IT

In many ways this is understandable: Hilton HHonors has to design systems that allow both the Hilton Garden Inn DFW Airport South and Conrad Maldives Rangali Island to interact with Hilton's sprawling reservation system — and Hilton doesn't even own most of the properties using their software!

Sometimes bad IT just makes interacting with the chain more of a nuisance — IHG Rewards turns something as simple as signing up for a promotion into a Herculean achievement, and Hyatt doesn't allow award stays to be changed or canceled online.

But at other times, bad hotel loyalty software design can be turned to your advantage. Here are a few questions you might ask as you make your way through the world of hotel loyalty programs. 

How do hotels batch nights into stays?

Every hotel loyalty program I'm aware of "batches" consecutive nights at the same property into a single stay for the purposes of earning elite status and qualifying for promotions. For example, pre-devaluation a single Club Carlson credit cardholder couldn't book multiple pairs of award nights and receive every other night free. For stays longer than 2 nights, people developed workarounds like having a spouse book every other pair of nights, or booking the first two and last two nights before booking a fifth night connecting them to receive 5 nights for the price of 3.

Another workaround was to simply pay cash for a third night, which gave you the added flexibility to make your cash reservation for either the first or last night — whichever was cheaper. In one of my very first subscribers-only newsletters, I shared my experience doing so during a promotion that gave 38,000 bonus Gold Points after 3 paid stays. Even though only one of my 3 nights was paid, my theory was that since my first night was paid, when the two reservations were batched together all three nights were treated as paid nights and I earned the bonus Gold Points — enough points to cover the entire 2-night award reservation!

I don't know how other loyalty programs batch nights into stays — but I'd like to find out.

How do hotels determine if a stay is eligible or not?

Marriott has recently run a series of promotions where bonus points are earned starting on your second eligible stay with Marriott. Besides being another example of how poorly Marriott Rewards treats its members, it also raises the question of how Marriott determines if a stay is eligible or not. After all, even if you stay with Marriott frequently, you want to start earning those double points as soon as possible. It may be that Marriott requires you to stay on a paid rate. It may be that Marriott will treat stays as eligible if you simply charge a movie or a beer to your room on an award stay.

I don't know how Marriott determines if stays are eligible — but I'd like to find out.

Peak under the hood whenever possible

I hope you're already logging into your hotel loyalty accounts after your stays are completed in order to make sure you received your earned points. Instead of just making sure stays appear, you should also do your best to understand why you earned the exact number of points you did. One of the reasons I developed my points density charts is precisely how difficult the chains make it to determine how they award points.

For example, Hilton awards 10 "base points" per dollar spent. If you select the "Points & Points" earning style, you earn a 50% bonus on those base points. If you're a Diamond elite, you earn another 50% bonus, but only on those base points, not the Points & Points bonus points. In other words, Diamond elites earn 20 HHonors points per dollar spent at Hilton properties — plus 1,000 extra bonus points at many Hilton brands!

Conclusion

In many ways these are the same kinds of questions we ask about airline loyalty programs (if I'm rebooked on an award ticket into a paid fare class, will I earn miles? Can I apply upgrades?) and manufactured spend (are these debit cards PIN-able?).

On the other hand, hotel loyalty programs are different in that consolidation has been much more gradual than what we've seen in the airline industry and that hotels are, by and large, not owned by the chains that administer their loyalty programs. Meanwhile, hotels constitute a large part of my travel budget; as I sometimes point out, I only need one or two plane tickets, but I might need 5 or 10 nights in a hotel.

That increases my incentive to be more aggressive with hotel loyalty programs than I am with airlines — I often simply pay whatever the airlines are asking for, but almost never stay at hotels on paid rates.

Do this now: register for IHG fall promotion

Between September 1 and December 31, 2015, IHG is awarding a range of points for completing a targeted set of offers. Here are the offers I was targeted for:

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Without applying for the IHG Rewards Club Select Credit Card, I could complete the rest of my offers with two, 3-night stays at Holiday Inn hotels (including at least one weekend) and earn a total of 48,000 bonus IHG Rewards points.

If you like the IHG Rewards Club program and have two 3-night stays planned during the promotional period, this promotion might make it worth directing those stays towards Holiday Inn properties.

Personally, I consider IHG Rewards Club to be tied with Marriott in the category of "worst hotel loyalty program," so I won't be participating.

Either way, you should still register now, before you forget.

Is cash really king for domestic economy travel?

I love cash back. I earn a lot of cash back. Cash back can be used for all sorts of purposes that other currencies are ill-suited for. Things like food and shelter, paying taxes, and saving for retirement. But precisely because my personal preference is to earn as much cash as possible, I like to check in from time to time on exactly how cash back stacks up against other rewards currencies.

For example, that was the inspiration for my imputed redemption value tables, which I use whenever I have to decide whether to book hotel stays with cash or with points.

What's the best credit card?

It doesn't take long after you first get interested in travel hacking for someone to ask, "what's the best credit card?" As your game evolves, the answer naturally changes. If you just got started reading affiliate bloggers, you might confidently state the Chase Sapphire Preferred is the first card anyone should apply for. If you just started manufacturing spend, you might explain the (new) "old" Blue Cash is an easy money maker. And if you just spent an evening chasing phantom award space, you might just answer that it's best to run as fast as possible away from travel hacking.

I've been at this for a few years now, and my approach to advising curious acquaintances is to make sure they have a 2% cash back credit card. It doesn't really matter which one. Neither the Fidelity Investment Rewards American Express or Citi Double Cash has an annual fee. Fidelity's card gives you access to Amex Sync offers over Twitter, and the Citi card has slightly wider acceptance. Get either, or get both (I have both, although so far I've only used my Double Cash for the 15-month negative-interest-rate loan).

This isn't because a 2% cash back card is the best way to earn travel. It's because as long as 2% cash back cards exist, that's the standard you should judge all other travel rewards cards against. But if you don't have a 2% cash back card, the exercise is academic!

Is cash back the best way to earn economy travel?

The cliche that cash back is the best way to earn economy travel has two logical bases:

• co-branded credit cards earn 1 mile per dollar spent;
• and it's hard to get more than 2 cents per mile on economy redemptions.

The argument is then strengthened with reference to the fact that paying with cash gives you access to the airlines and flights of your choosing and that revenue fares are mileage-earning. It follows that while airline miles may give deep discounts on (capacity-controlled) premium-cabin redemptions, you're better off earning cash back if you're content to fly economy (as I, in fact, am).

It's an elegant argument. But is it true?

Do co-branded credit cards earn 1 mile per dollar?

It's true that most airline co-branded credit cards earn 1 mile per dollar.

But the American Express Starwood Preferred Guest card earns 1 Starpoint per dollar, which, when transferred in 20,000 increments, is worth 1.25 American AAdvantage or Alaska Mileage Plan mile.

Meanwhile, the Chase United Club card earns 1.5 Mileage Plus miles per dollar spent everywhere.

Suddenly we don't need to get 2 cents per mile, but just 1.6 (American and Alaska) or 1.3 (United) cents per dollar in order to break even compared to a 2% cash back card — although both the Starwood Preferred Guest and United Club cards have annual fees to beware of.

Is it hard to get 2 cents per mile on economy redemptions?

Because of capacity controls, the hoary wisdom states, award space is typically available only on dates when airlines expect to have unsold inventory, which are also the dates when airlines are supposed to price their seats most competitively.

But in addition to the "low"-level award inventory travel hackers love so dearly, American, United, and Alaska Airlines also offer more expensive awards that escape most capacity controls. While they're much-maligned by those who will pay any price to avoid using their miles on anything but low-level awards, this is in fact precisely the supposed benefit of booking with cash: access to any flight on any day!

Paying with cash, therefore, has to be compared not just to capacity-controlled low-level seats, but also to more expensive last-seat-availability awards. So, how do they compare?

Where do your domestic economy flights fall?

One could imagine four constellations of datapoints when looking at airfares and award availability:

• Expensive fares with low-level availability. @turnbullben on Twitter suggested American's flight from Richmond to New York City as an example of an expensive fare, and he's right: American wants $405 for a one-way flight on November 2, 2015. But they'll take 12,500 AAdvantage miles, instead! These are the redemptions that are the airlines' worst enemy: when someone who would otherwise spend a lot of cash spends just a handful of miles.
• Cheap fares without low-level availability. These are the opposite of the above: fares where you'd be crazy to redeem miles, getting well less than 1 cent per mile.
• Cheap fares with low-level availability. If 12,500-mile seats are available, you need to be saving at least $200 to justify transferring Starpoints in for a low-level redemption. But there are plenty of airfares cheaper than that, and those are the ones cash was made for.
• Expensive fares without low-level availability. These are the edge cases: do you spend more money than you'd like to spend or redeem more miles than you'd like to redeem? In January, American wants $1,122 for their nonstop flights between Chicago's O'Hare airport and San Jose, California. But they'll take 20,000 AAdvantage miles, instead. That's more AAdvantage miles than you'd prefer to spend on a domestic economy ticket, but it's also a 5.61-cent-per-mile return.

Conclusion

I don't get paid enough to give advice, so don't take this post as an invitation to apply for a $450-annual-fee United Club card. But the cliche that domestic economy flights should be paid for with cash, rather than miles, is treated as such gospel that I wanted to take a step back and interrogate it a little further today.

If your local airport is served by multiple competing airlines, you'll likely find fares too cheap to bother redeeming miles for. If you're a hub captive, you may find yourself buying fares so expensive that even high-level awards give you a better return on your credit card spend.