Thinking about buying HHonors points for 0.56 cents each? Read this first.

I couldn't help but notice as I recently skimmed my RSS subscriptions that Hilton HHonors is running a promotion offering an 80% bonus on purchased HHonors points until 11:59 pm, Eastern time, on February 8, 2016.

That means you can buy 80,000 HHonors points for the normal $800 purchase fee, while receiving an additional 64,000 bonus points (there doesn't seem to be an excise fee charged on these transactions, unlike airline mile purchases). That brings your total cost per point to 0.56 cents each.

There are two ways of looking at a purchase opportunity like this.

How much are HHonors points worth?

The first, and most conventional, way of judging a purchase opportunity like this is to judge the out-of-pocket cost of the points against their potential or actual redemption value. A randomly selected June night at the Conrad Maldives Rangali Island costs 95,000 HHonors points or $883.80 after taxes and fees. Purchasing the same 95,000 HHonors points for $528.20 during this promotion is, strictly speaking, a 40% discount off the retail price of the property.

Taking advantage of the fifth-night-free benefit for HHonors elites amplifies the discount further: 5 random nights at the Conrad Maldives Rangali Island in June cost 380,000 HHonors points, while the same 5 nights would cost $4,419 in cash. Getting 1.16 cents per point in value makes this purchase opportunity a full 52.2% discount off the retail cost of the same nights.

How much do HHonors points cost?

The problem with the elegant picture I've painted above is that it uses the price Hilton is willing to sell HHonors points at as a fixed input.

But in fact, HHonors points have a range of prices, and that range doesn't depend on Hilton at all — it depends on your own circumstances and the best alternatives you have to purchasing HHonors points outright.

That's because when you manufacture spend on a Hilton HHonors co-branded credit card, you're passing up the opportunity to manufacture the same spend on a cashback-earning credit card. If you pay more in foregone cash back than you would to Points.com directly, then you're overpaying for your stay. If Points.com is charging less than you would pay in foregone cash back, they're offering a true discount.

Unbonused spend

We have brothers and sisters out there who only have access to unbonused categories of manufactured spend. For those who don't have access to gas station or grocery store manufactured spend, a single HHonors point costs 0.66 or 0.7 cents each.

The logic here is simple: the best cash back credit cards for unbonused spend earn 2.105% or 2% in cash back, and Hilton HHonors co-branded credit cards earn just 3 HHonors points per dollar spent in unbonused spend categories. If the same dollar in manufactured spend can produce either 2.105 cents in cash or 3 HHonors points, you're paying 0.7 in foregone cents per HHonors point you manufacture.

If you have a high-value HHonors redemption in the works, and manufacturing spend on a HHonors co-branded credit card will cost you more than 0.56 cents per HHonors point, you'll be better off purchasing the points from Hilton during this promotion.

Bonused spend

Of course there's scant reason anyone would manufacture HHonors points in unbonused spend categories, which means the true tradeoff is between earning 6 HHonors points per dollar spent at gas stations and grocery stores and earning another bonused rewards currency.

What we really want to know is whether we're better off earning cash back or cash equivalents – and simply buying the points we need – or earning the HHonors points we need for a redemption directly through a co-branded Hilton HHonors credit card. 

Here's a rundown of 3 possible scenarios to illustrate the idea. Is it cheaper to manufacture cash and buy points, or manufacture points directly?

• 5% cash back (American Express "old" Blue Cash, capped at $50,000 in spend per cardmember year, or other time-limited promotional offers). Opportunity cost: 0.83 cents per HHonors point. Result: manufacture cash back and buy HHonors points.
• 4% cash back (US Bank Flexperks Travel Rewards card, points worth "up to" 2 cents each when redeemed for paid airfare). Opportunity cost: 0.67 cents per HHonors point. Result: manufacture spend for airfare, use cash savings to buy HHonors points.
• 3% cash back (US Bank Flexperks Travel Rewards card, points worth "up to" 1.5 cents each when redeemed for hotel stays). Opportunity cost: 0.5 cents per HHonors point. Result: manufacture HHonors points on co-branded credit card instead.

The inflection point between 3% and 4% cash back is the result of the fixed 0.56 cent per point price established by Hilton during the current promotion. Whenever manufacturing spend on a co-branded credit card costs you more than 0.56 cents per HHonors point, you should simply manufacture cash and buy the discounted points.

On the other hand, when the same dollar in manufactured spend could earn either 6 HHonors points or 3% cash back, you are buying HHonors points for just 0.5 cents each — even cheaper than Hilton is currently selling them.

Conclusion

The thrust of this post is simple: the price you should be willing to pay airline and hotel loyalty programs for their miles and points should not depend on their value. Instead, every purchase decision should depend on whether the total number of miles or points received is more cheaply earned through manufacturing cash back (used to purchase cheap miles or points) or through manufacturing those points directly.

The more lucrative your bonused gas station and grocery store manufactured spend is in cash back terms, the more willing you should be to simply buy miles and points where necessary, rather than forego lucrative cash back opportunities in favor of airline and hotel loyalty currencies.

FoundersCard: the single most expensive way to buy Hilton HHonors Gold status

There are smart, thoughtful guys who think loyalty programs are a scam and the best way to made clear-headed decisions is to opt out of the loyalty economy completely.

Then there are Thought Leaders From Behind who respond that while it's possible for loyalty arrangements to lead to bad decision-making, if you're flying or staying or renting and not participating in those schemes you're still paying for benefits you don't get to enjoy.

My attitude is simple: the house can be beat. But it can't be beat with wishful thinking and hand-waving — you can only beat the house with math.

What is FoundersCard?

FoundersCard is not a credit card. It's a bundle of benefits negotiated on an annual and quarterly basis for members of the program. It's targeted at entrepreneurs and startups, hence the "Founders" in the name of the product.

FoundersCard is a very expensive gimmick

The first gimmicky thing to know about FoundersCard is the price. In principle they charge $795 per membership year, plus a one-time $95 enrollment fee.

But no one pays that price, because new members who are referred by existing members pay just $395 annually, plus the $95 enrollment fee. Bankrate currently dominates the Google search rankings for FoundersCard, but we don't want to shovel any more money in that direction, so if you do decide to apply for FoundersCard, you can use my buddy's referral code instead (feel free to leave yours in the comments): "FCTREVOR531".

FoundersCard travel benefits are a joke compared to actual travel hacking

If you click around enough you can view the FoundersCard travel benefits without logging in, and they're pretty milquetoast. Here's a sampling of the ones that jumped out at me:

• American Airlines Business Extra bonus points;
• British Airways 10% discount on roundtrips originating in the US, Canada, and the UK;
• Virgin Atlantic "up to 20%" discount on US- and Vancouver-originating flights;
• Virgin America "5-10%" discount on "most" fares;
• Qantas "up to 15%" discount on flights between the US and Australia and New Zealand;
• Cathay Pacific "5-25%" discount.

These discounts are just unacceptably small to justify paying $395 per year. The only reason you should be paying cash — rather than a fixed-value currency or redeeming miles — for these flights is if the airlines are offering an unusually low or mistake fare. But the lower the underlying fare, the less valuable a percentage discount will be!

Hilton HHonors Gold status can be quite valuable

It's hard for a travel hacker not to stumble into Hilton HHonors Gold status at some point. If you have an HHonors Surpass American Express, you get it automatically. It's also a benefit of the American Express Platinum and Citi Hilton Reserve cards.

The timing of those status benefits is odd enough that getting one of those cards could get you Gold status for 2 or 3 years — practically a lifetime in the travel hacking world!

But it's also possible you just don't have or want any of those cards, but are going to be staying in enough Hiltons to make the free breakfast benefit a valuable perk. Here I'm thinking of a stay somewhere like the Conrad Maldives Rangali Island, where a week's breakfast for a family could set you back hundreds of dollars.

If you really just want Hilton HHonors Gold status, you can buy it for $395 with a FoundersCard membership.

You shouldn't be on an AT&T contract, but if you are...

I use AT&T's GoPhone prepaid service. It costs me $55 per month, and I get unlimited minutes, texts, and 5 gigabytes of data per month, the unused portion of which rolls over from one month to the next. You don't have to use AT&T GoPhone, but you should be using some prepaid phone service.

But you might not be! And if you're using a postpaid (contract) AT&T phone service, FoundersCard will save you 15% off "standard rates on all voice plans and on data plans greater than $30 in value, excluding unlimited voice and iPad data plans." So that's worth a couple shekels per month too.

Resort fees in Las Vegas are expensive

Another potentially valuable benefit currently available from FoundersClub is Diamond status with Total Rewards, the gaming loyalty program of the Caesars Entertainment hotel group, because their Vegas properties waive resort fees for Diamond elites.

When staying at Total Rewards properties in Las Vegas, regardless of your room rate, you'll pay $32.48 per night after tax in resort fees ($28 at Rio). As a Total Rewards Diamond member, those resort fees are waived. This benefit pays for the total cost of a FoundersClub membership after 13 nights (16 nights the first year due to the $95 enrollment fee).

13 nights can be a lot of nights or a few nights, depending on how much you like going to Las Vegas.

But if you do spend 13 or more nights per year in Las Vegas, and are willing to commit to spending them at Total Rewards properties, the FoundersCard can pay for itself.

There are lots of ways to get elite status with gaming programs if you actually gamble, so this should be considered only if you primarily go to Vegas for reasons besides playing the slots, like conferences, performances, and swimming pools (I famously like swimming pools).

FoundersCard benefits change often

Some of the benefits of FoundersCard are negotiated on an annual basis, while others change as frequently as every quarter. When calculating whether FoundersCard makes sense for you, you should focus on those annual benefits. Then if you do get any additional value from the quarterly rotating benefits, you can treat that as icing on your value cake.

Your humble blogger's IHG Rewards Club Priceless Surprises datapoints

Since November, IHG Rewards Club has been running a promotion called "Priceless Surprises." Under the terms of that promotion each time you stay at an IHG Rewards property, starting with your second stay, you are entered into a sweepstakes to earn at least 500 bonus IHG Rewards points, and potentially much more valuable prizes.

Since the promotion is a sweepstakes, there's a way to enter without staying at an IHG Rewards Club property, which many travel hackers have been taking advantage of.

How to enter (1)

In order to enter the Priceless Surprises sweepstakes, you must register your IHG Rewards Club account for the promotion at https://pricelesssurprises.ihg.com/. Go do that now, I'll wait here.

How to enter (2)

Once you've registered, you can enter the sweepstakes by doing the following:

Hand print on a 3" x 5" piece of paper:

1. your full name
2. complete mailing address
3. day and evening phone numbers
4. valid email address
5. member number
6. the first six (6) digits of your MasterCard
7. and date of birth

Then mail that piece of paper in an envelope with proper postage to:

“IHG and MasterCard® Priceless Surprises® Promotion"
c/o HelloWorld, Inc.
P.O. Box 5996, Kalamazoo, MI 49003-5996

You don't have to number or label the 7 required pieces of information in any way: you can just list them in the designated order on a 3" x 5" piece of paper. But you must submit each entry in a separate envelope.

You can enter the sweepstakes using this method a total of 94 times.

What happens once you enter

Once you enter the promotion, you wait. Even though the promotion's rules say that "Once your mail-in request is received, you will receive an email within five (5) business days from the Administrator inviting you to play the Game," that is false.

You will wait, and wait, and wait.

And then one day, a month or so later, you will receive all your contest entries simultaneously:

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I mailed my entries in on or about December 14, 2015, and received all my e-mails overnight on January 20, 2016.

Each e-mail has an entry link, which takes you to an animated elevator. You click "play," then a floor button, and you're told whether you won 500 IHG Rewards Club points (almost every time) or some other, higher-value prize.

Incidentally, each e-mail entry doesn't have a unique URL attached — as far as I can tell you can keep clicking the same link in the same e-mail until you run out of free entries (you'll receive an error message when that happens).

What are the prizes

There are a variety of prizes, but every entry receives at least 500 IHG Rewards Club points.

Today I won 39 prizes of 500 IHG Rewards Club points, and one prize of a $1,099 Bose home stereo system. So the prizes vary in value considerably.

How to claim prizes

If you win anything besides 500 IHG Rewards Club points, you'll immediately be sent an e-mail with a "declaration form" for claiming your more valuable prize. You have to list your Social Security number and mailing address so they can send you an IRS 1099 form declaring the value of the prize you won.

Oddly, they claim to need to receive that form within 5 calendar days of notifying you of your prize, or they'll give the prize to someone else. It's unclear to me whether that language is actually enforced, since it's obviously amateur hour at this sweepstakes administrator. To be on the safe side, I mailed my "declaration form" by priority mail, with a tracking number showing it will be delivered on January 22, 2016.

Conclusion

That was my experience mailing in entries to the IHG Rewards Club Priceless Surprises sweepstakes. Let me know if you have any questions or additional datapoints in the comments.

Comparative advantages of Hyatt and Hilton: beach edition

[editor's note: my worthless MacBook Pro has finally stopped working completely, so I'm using an aged clamshell laptop for my blogging this week. Grammar and punctuation will suffer, and pictures will be minimal/nonexistent.]

Since getting a tier match to Hyatt Diamond status, I've reconfigured quite a few trips this year to maximize the value of my Diamond benefits, like suite upgrades and complimentary breakfast. In many cases that means replacing Hilton HHonors points redemptions with Hyatt Points + Cash reservations, which are eligible for Diamond suite upgrades.

That's left me with an unexpectedly high HHonors point balance. For example, instead of redeeming 240,000 Honors points for 5 nights at the Hilton San Francisco Financial District, I booked a Points + Cash stay at the Grand Hyatt San Francisco and immediately redeemed a Diamond suite upgrade certificate.

That naturally got me wondering: what should I do with all these HHonors points?!?

Let's go to the beach

My partner and I have never gone on a beach vacation by ourselves (we went to Kauai with my family, but we filled up 2 condos with people, so it wasn't exactly tranquil).

That left me with today's question: what are the best beach vacation destinations served by either Hyatt or Hilton, but not both chains? If I can answer that question, I can just book a stay at the nicest Hilton property without a nearby competing Hyatt property, and feel good overall about my life decisions.

Methodology

To start with, I searched Google for top beach destinations. The first page of search results had three seemingly reputable resources:

• Condé Nast Traveler: The 20 Most Beautiful Beaches in the World
• Forbes Travel Guide: 10 Top Beach Resorts Around The World
• Travel+Leisure: The 25 Best Beaches in the World (which in turn links to this Thrillist article)

After listing those 55 beaches, I eliminated all the duplicates as well as beaches with no nearby Hyatt or Hilton properties at all. Then I narrowed it down further to beach destinations with only one of either Hilton or Hyatt properties.

There are two legitimate concerns to be raised about this research method:

• Why would I use some crappy clickbait slideshows as my resource for deciding on what's a "good" beach destination?
• Why would I exclude destinations that are served by both Hyatt and Hilton? After all, the Conrad Maldives Rangali Island might be a better hotel than the Park Hyatt Maldives, in which case I should choose it anyway, even if it means passing up a Hyatt stay credit.

Those are legitimate concerns, and my only answer is that the alternative is using lists of properties that are curated by bloggers who receive money from one or both chains for promoting their co-branded credit cards. A long advertiser-supported list of properties seems marginally more objective than a long affiliate-supported list, although I'm willing to be proven wrong on that point.

Here are my results.

Beach resorts served exclusively by Hilton

• Hilton Moorea Lagoon Resort and Spa. 80,000 HHonors points in June and July, 70,000 HHonors points the rest of the year.
• Hilton Bora Bora Nui Resort & Spa. 80,000 HHonors points all year.
• Hilton Waikoloa Village. 50,000 HHonors points all year.
• DoubleTree Suites by Hilton Hotel Doheny Beach - Dana Point. 50,000 HHonors points May-August, 40,000 HHonors points the rest of the year.
• DoubleTree by Hilton Ocean Point Resort & Spa - North Miami Beach. 70,000 HHonors points December-March, 50,000 HHonors points the rest of the year.
• Hilton Tel Aviv. 70,000 HHonors points all year.

Beach resorts served exclusively by Hyatt

• Andaz Maui at Wailea. Category 6, 25,000 Hyatt Gold Passport points.
• Hyatt Ziva Puerto Vallarta. All-inclusive, 20,000 Hyatt Gold Passport points.
• Hyatt Playa del Carmen. Category 5, 20,000 Hyatt Gold Passport points.

Conclusion

This was a fun exercise, and it gave me a few ideas for award availability and destinations to keep an eye out for. In particular, the Hilton properties in Moorea, Bora Bora, and Waikoloa Village all seem like great hotels, and I hope to end up at one soon!

Done with Delta (SkyMiles)

[editor's note: my worthless Macbook Pro has finally stopped working completely, so I'm using an aged clamshell laptop for my blogging this week. Grammar and punctuation will suffer, and pictures will be minimal/nonexistent.]

I had an enlightening moment on Saturday when I saw on Twitter that Loyalty Lobby had posted an offer for 10,500 Expedia+ Rewards points for booking 6 nights at "VIP Access Hotels" in 2016.

What I realized was that not only was I not interested booking 6 nights at VIP Access Hotels, I wasn't even interested in reading about the offer.

Now to be fair, that's partly because Loyalty Lobby has a terrible website that takes over your web browser with popups and terrible rendering. But it's also because the online hotel booking engines have so gutted their loyalty programs that no number of reward points elicits even the slightest interest compared to straightforward Hilton and Hyatt points redemptions, or simply paying for hotel nights.

Math isn't dispositive — but it's helpful

I wrote on December 31, 2015, that I was going to use the American Express Delta Platinum Business credit card to manufacture $50,000 in spend this year, in order to earn 70,000 SkyMiles and 20,000 Medallion Qualification Miles, securing Silver Medallion status (and free checked bags) for 2017.

Since the Delta American Express cards don't have any interesting bonus categories, all $50,000 in manufactured spend would be done in unbonused spend categories, costing roughly $1,000 compared to a 2% cash back card.

As a Delta American Express cardholder, I could redeem the 70,000 redeemable SkyMiles for $700 in airfare on Delta-operated flights, leaving me roughly $300 out of pocket.

Except the card also carries a $195 annual fee, which will be charged in April, bringing the total cost for the calendar year to $495. And unlike actual travel expenses, annual fees have to be paid for with cash!

To look at it another way, to get $1,195 in value (a $195 annual fee plus $1,000 in foregone cash back) from 70,000 redeemable SkyMiles, you'd need to consistently redeem them for over 1.7 cents each. That's not impossible, but Delta has certainly made it harder in the last few years.

What does $495 buy?

Using the first, conservative calculation and valuing SkyMiles at a flat 1 cent each, my total cost for carrying the American Express Delta Platinum Business card is $495. So what would I be getting for that out-of-pocket expense?

• Domestic companion ticket. If I paid cash for my Delta revenue tickets, a companion ticket would be potentially worth $300-400. But since I don't pay cash for my Delta revenue tickets, a companion ticket is worth perhaps a quarter of that, thanks to price compression. Let's say the companion ticket is worth about $100.
• Free checked bags in 2017. I've already requalified for 2016 Silver Medallion status, but keeping the Platinum card for another year and manufacturing $50,000 in spend would give me Silver Medallion status for all of 2017 as well. To make up the remaining $395 in out-of-pocket cost, I'd need to check bags on something like 8 roundtrip flights in 2017, at $50 per bag, per roundtrip flight.
• More SkyMiles on paid flights in 2017. If Delta keeps the same redeemable SkyMiles earning rates in 2017, then Silver Medallion status is good for an additional 2 SkyMiles per dollar spent on Delta flights in 2017. At one cent each, I'd need to spend $19,750 on paid Delta flights in 2017 to break even. But I only earned $1,870 2015 Medallion Qualification Dollars, a rough approximation of the total ticket price of my paid flights. It's possible I'll spend 10 times more on paid Delta flights in 2017 than I did in 2015 — but unlikely.

First Class tickets aren't that expensive

The additional problem is that, thanks to price compression, there's no reason to book economy tickets that require paying for checked bags at all. If you're buying paid flights for 75% off retail, then for all roundtrip first class flights costing less than $200 more than economy, you'll be strictly better off booking the first class flight and checking your bags for free, since you're paying less than $50 for your checked bag (and earning class-of-service bonus miles).

That's not all flights: there certainly are domestic routes where first class tickets cost more than $200 more than economy flights. But when you're working your way back from a $495 deficit, you need to book a LOT of those flights before you break even, compared to simply booking first class seats to begin with.

So I'm done chasing after Delta SkyMiles

Delta is still the best airline in the United States, and I'll keep flying them whenever possible because of their unparalleled air and ground operations.

But the idea of that translating into paying another $195 annual fee, and $1,000 in foregone cash back, just doesn't make any sense to me anymore.

And it's all thanks to Loyalty Lobby's terrible website.

Who are an airline's best customers?

Now that the three biggest US carriers (Delta, already followed by United, and soon to be followed by American) have moved to revenue-based mileage earning, at least on flights marketed or operated by them, we've heard a lot of rhetoric about how these programs will reward the airlines' "most valuable customers."

I think this is nonsense.

Delta markets hotel rooms and rental cars

You might think that Delta is a major US airline that operates with unmatched on-time consistency.

I think Delta's a corporate holding company with a subsidiary that happens to have a particular speciality in operating passenger aircraft. But in addition to operating passenger aircraft, which is a preposterously complex operation involving local, state and national contracts, a commodity trading desk, and is constantly prone to interference from the weather and other hazards, Delta also operates a hotel and car rental booking engine:

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Delta doesn't have any specialization in operating hotels or car rental agencies. Indeed, Delta doesn't own any hotels or car rental agencies. Delta just collects a commission on hotels and rental cars booked through their website, then credits SkyMiles members with a seemingly random number of miles:

• One mile per every $2 spent at delta.com for a completed hotel stay.

• 1,250 miles per car rental for Diamond and Platinum Medallion members.

• 1,000 miles per car rental for Gold and Silver Medallion members.

• 500 miles per car rental for general members.

American licenses a shopping portal

You may be familiar with the AAdvantage eShopping Mall. It's one of those Rube Goldberg contraptions whereby Cartera Commerce, the portal's operator, receives a commission from merchants, then splits that commission with American Airlines, which then awards an arbitrary number of AAdvantage miles depending on their share of the commission.

The key point here is that American does not have any stake in Groupon, Bloomingdale's, Tumi or Dell.

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American could not care less which online merchants participate in its Cartera-licensed portal, because the portal spins off cash regardless of the participating merchants.

An airline's best customers never set foot on a plane

Owning, operating, and maintaining passenger aircraft is expensive and extremely risky. If you're a corporate holding company, you'd naturally like to do as little of it as possible. Of course, somebody's got to operate passenger aircraft, and airlines are, as a matter of corporate organization, ideally suited to doing so.

But it's crazy to say that any airline passenger is among an airline's best customers. An airline's best customers are the ones who book hotels, rent cars, and do their online shopping through the airline's licensed shopping portal! Those customers generate what is indistinguishable from free cash, while even the customer booking a paid business class seat actually has to be conveyed, safely, from origin to destination!

Ok, large corporate travel coordinators are also great customers

If there's one exception to this rule, it's the travel coordinator for a medium or large corporation who gets to decide which airline should serve the company's business travel needs. If you can fill up two or three wide-body jets per year with your company's employees, you might be almost as profitable as the customer who buys a new laptop through the same airline's shopping portal.

But to be clear, that travel coordinator need never set foot on a plane to be the airline's best customer.

Airline tickets are a cost for you, not for the airlines

By focusing on the revenue the airlines get from their portal operations, you may think I'm missing the point: that the miles earned will eventually be redeemed for flights — and potentially expensive ones! That not right.

The airlines, against their better judgment, continue to operate high-fixed-cost, low-marginal-cost flights throughout the year. Giving away empty seats to their best customers — their shopping portal customers — is a no-brainer if it keeps that free cash coming in.

Shopping portals are profit engines

I always find extreme examples to be most illustrative. So let's say you decide to buy a 20,000-AAdvantage-mile one-way off-peak award (October 15 to May 15) to Europe exclusively by buying Proactiv+ through the AAdvantage eShopping Mall. You'll need to spend $1,000 on Proactiv+ to earn those 20,000 AAdvantge miles, for which we can assume American receives something like $200-$300.

You then get to redeem those 20,000 miles for:

1. empty seats;
2. during low season;
3. on dates of American's choice.

And all American has to do is provide you with a couple cocktails and some flavorless fish.

Airlines shouldn't award miles for revenue flights at all

Since airline miles don't cost the airline companies anything, you might wonder why they're being so stingy in handing them out.

I have the opposite question: since operating passenger aircraft is by far the most expensive source of revenue for the airline holding companies, why do they reward people for buying passenger airline tickets at all?

After all, however small the cost of airline mile redemptions is (and it is very small), it's not zero, which means that rebate value could be used to reduce airfares and move your airlines' flights higher in the now-ubiquitous price-sorted booking engines.

Airline miles would make much more sense as a reward for directing your online purchases towards one airline's booking engine rather than another's, or for putting spend on one airline's co-branded credit cards rather than another's.

Rewarding people for booking flights on your full, gas-guzzling passenger aircraft seems like a serious strategic miscalculation.

Still can't get your Hyatt status to match to Mlife? Do this now.

Last month I shared my experience getting a Haytt Gold Passport Diamond tier match. I mentioned that I was unable to use Hyatt's online tool to match my Diamond status to Mlife Platinum.

My initial assumption was that my new Hyatt status hadn't yet populated to the database the two loyalty programs share. But a few weeks having passed, I was still unable to update my Mlife status online. It was time to act.

Hyatt doesn't handle Mlife status matches

My first move was to call 1-800-514-9288, since that's the number listed on the Mlife status match page. But that number turns out to be for Hyatt member services, and the representative I spoke with told me that there was nothing Hyatt could do.

But she did give me the number for Mlife member services: 1-866-761-7111.

Mlife can verify your Hyatt status in real time

It took me two tries to find the right representative to help me at Mlife. The correct automated phone selections are "5" (partnerships) followed by "1" (Hyatt Gold Passport partnership).

That immediately took me to a phone representative, who asked for my name, my Mlife account number, and my Hyatt Gold Passport account number. She then placed me on hold for a few minutes while she verified my Hyatt Diamond status.

When the representative came back, she told me she had updated my Mlife status to Platinum, and that it would be reflected online in 10-15 minutes.

The entire call took about 6 minutes, and my status was updated well within the timeframe she mentioned.

Does Mlife status have any tangible benefits?

Only after I jumped through all these hoops did I finally look into the benefits of Mlife Platinum status, to which I am now entitled. I wasn't exactly overwhelmed. Here are the most tangible benefits of the partnership:

• Earn elite-qualifying night and stay credit at Mlife properties. Unlike the Starwood Preferred Guest partnership with Total Rewards, which limits elite-qualifying nights to 10 annually, and doesn't award elite-qualifying stays, the Hyatt-Mlife partnership allows you to earn unlimited elite-qualifying stays and nights while staying at Mlife properties. That's convenient for picking up extra stays if you think you'll fall short by the year's end (it's nice that winter is a less popular time to visit Vegas anyway, driving down your per-stay cost even further).
• Redeem Hyatt Gold Passport points at Mlife properties. While it's usually possible to find Las Vegas properties cheap enough to make point redemptions feel wasteful, that's not always the case. If you need to be in Vegas on a particularly expensive weekend, and especially if you need to stay at a particularly expensive Mlife property on that weekend, a Hyatt Gold Passport reservation could save you some serious cash.
• On-property Mlife Platinum benefits. These are quite a bit more nebulous than the foregoing, but they're not nothing. If you've ever waited for an hour or more in a Las Vegas buffet line, you may find the ability to skip those lines extremely tangible! Skipping cab lines and priority access to pool bungalows and cabanas can save you time and make your vacation that much more relaxing as well.

Things US Bank told me about Flexperks Travel Rewards

It's difficult to know how to frame information you receive from US Bank over the phone. For example, a US Bank representative once told me I could product change my Club Carlson Business Rewards card to a Business Edge Cash Rewards card. I couldn't.

But after someone on Twitter reached out to me with a question about some language in the Flexperks Travel Rewards terms and conditions, I decided against my better judgment to call and ask what the heck they meant.

The $120,000 cap on Flexperks Travel Rewards earning

If you visit the website of the US Bank Flexperks Travel Rewards credit card, you'll find the following description of the card's rewards structure:

"Yearly Award Level: For Net Purchases less than or equal to $120,000, earn one FlexPoint for every $1. If during the calendar year, Net Purchases exceed $120,000, all FlexPoints for the remainder of the calendar year are earned at a rate of one FlexPoint for every $2. Exemption: FlexPerks Travel Rewards Visa Signature AutoPay Cardmembers who select the full payment option on the first available payment date after their statement date."

I've mentioned before the $120,000 calendar year purchase limit on FlexPoint earning, but never noticed the "exemption" for people with AutoPay set up. So I decided to call.

My representative had no idea what he was talking about

This is pretty much par for the course when calling US Bank, so I wasn't terribly surprised. But I kept asking for clarification, so he put me on hold and talked to someone who had worked at US Bank for all of 2 years(!), and who gave him the "complete" picture.

My representative's (secondhand) information was that if you have autopay set up to pay your bill in full, then there's no limit on Flexpoint earning. If you don't have autopay set up, then you have to make your payment on the first available payment date after your statement closes.

That sounds like nonsense, and strikes me as vanishingly unlikely to be correct.

A quick aside on base points and bonus points

There's some important credit card terminology that's relevant here. Typically, a credit card will earn some number of "base" miles or points on purchases everywhere. The American Express Hilton HHonors Surpass earns 3 "base" HHonors points everywhere, the Chase Sapphire Preferred earns 1 "base" Ultimate Rewards point everywhere, etc.

Then in certain spend categories, a credit card will earn "bonus" points. The HHonors Surpass card earns 9 "bonus" HHonors points for purchases made at Hilton properties, for example, and the Sapphire Preferred earns 1 "bonus" Ultimate Rewards point at restaurants and on most travel purchases.

That's not how the Flexperks Travel Rewards terms and conditions are framed

The language I quoted above was from the second clause of the rewards structure. The third clause reads:

"FlexPerks Travel Rewards Visa cardmembers may earn additional FlexPoints for purchases at merchant locations in the following categories: airline, gas or grocery (each, a "Category"). You will earn FlexPoints at a rate of two FlexPoints for every $1 in the one Category in any given monthly billing cycle that has the highest total of Net Purchases charged to your Account (the "Highest Category")...FlexPerks Travel Rewards Visa Signature cardmembers will be awarded FlexPoints at the rate of two FlexPoints for every $1 in Net Purchases during the current month's billing cycle for any merchant location that classifies itself as having telecommunication services/products."

There is no language about "base" FlexPoints and "bonus" FlexPoints: these are simply given as the earning rates for a variety of purchases. The same is true of charitable contributions, in the fourth clause:

"FlexPerks Travel Rewards Visa Signature cardmembers will earn FlexPoints at a rate of three (3) FlexPoints per every $1 in Net Purchases during the current month's billing cycle for any merchant location that classifies itself as a Charitable and Social Service Organization."

But that is how FlexPoints are actually earned

Here's a screenshot from one of my US Bank Flexperks Travel Rewards statements:

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As you can see, US Bank is actually following the usual practice of awarding "base" and "bonus" points separately on each statement.

Conclusion: I have no idea what's going on at US Bank

I've never bumped up against the $120,000 limit calendar year limit, so I don't know how it's implemented in practice. But it seems to me there are three possibilities:

• Earning is actually capped at $120,000 in total purchases, and all spend beyond that earns one FlexPoint per $2 spent, unless you set up AutoPay and pay your entire statement balance on the first available date after your statement closes. If you do, your earning is uncapped. This would be the simplest reading of the terms and conditions as written.
• The above, except bonused spend at gas stations, grocery stores, air travel, and charitable contributions is completely uncapped, whether or not you set up AutoPay. This would be another literal reading of the terms and conditions, but would conflict with the above — only one of the two can be true.
• A hybrid, based on how FlexPoints are actually awarded, whereby "base" points are earned at one FlexPoint per $2 spent above $120,000 but "bonus" point are uncapped. This would mean charitable contributions continued to earn 2.5 FlexPoints per dollar, which would still be a fairly strong choice for making Kiva loans.

Of course it's theoretically possible that the version I was told by my US Bank representative is actually correct: that if you have AutoPay set up at all, then you're not subject to any limits on FlexPoint earning. Possible, but unlikely.

So I'm turning it over to my readers who do even more Flexperks Travel Rewards volume than I do: what's your experience earning base and bonus FlexPoints once you've reached the $120,000 calendar year cap?

Overpay by booking Cathay Pacific premium seats with Avios

There's a tempting intuition that says high balances across a variety of programs are a goal worth pursuing, since they allow you to deploy the right rewards currency for the right job. That's never been my view: I prefer building up balances in programs where I have planned, or at least foreseeable, redemptions in mind. That's why I don't hesitate to accumulate Delta SkyMiles, since even if I don't have planned Delta travel, I fly Delta often enough that I'm certain to be able to redeem them at some point. The same is true with Hilton HHonors points: there's no risk that I won't be able to redeem them, since there are Hilton properties everywhere.

Of course, being focused on a small number of rewards currencies has a downside: by definition, it's more expensive to book flights if you don't have the currency that makes those flights cheapest.

For example, until March 22, 2016, American AAdvantage charges 67,500 miles to fly between the United States and Hong Kong in first class on their oneworld partner Cathay Pacific, with minimal taxes and fees.

That's a great deal, and if you have a slew of AAdvantage miles and a flexible-enough schedule, it's certainly the best way to get to Hong Kong. Since I don't hoard AAdvantage miles, I'm out of luck, right?

Not so fast.

British Airways charges a lot for long premium cabin flights

The conventional wisdom says to redeem distance-based British Airways Avios for short-haul domestic flights or a few select "sweet spot awards" that fall in the top of their distance bands, and redeem region-based awards for longer and premium cabin flights.

And indeed, if you had huge quantities of every rewards currency, for any given award you would want to redeem the fewest miles or points possible, using a tool like AwardAce.

But if you don't want to accumulate huge rewards balances speculatively, you have another option: simply overpay.

British Airways doesn't charge that much for long premium cabin flights

A Cathay Pacific first class flight from Los Angeles or San Francisco to Hong Kong costs 140,000 Avios each way, plus about $50 in taxes and fees:

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After American Airlines' March 22, 2016, devaluation, they'll charge 110,000 AAdvantage miles plus the same taxes and fees. Of course, the American award, in addition to being cheaper, allows you to depart from anywhere in the United States, not just the west coast, and connect onward from Hong Kong.

140,000 Avios cost $1,400 in cash if you transfer them in from an Ultimate Rewards account, giving you about 6.66 cents per Ultimate Rewards point in value for that $9,367 flight.

If you earn your miles and points primarily through manufactured spend, 140,000 Avios are likely easier to earn than 110,000 AAdvantage miles, thanks to the Ink Plus bonus categories of office supply stores and gas stations and the quarterly Chase Freedom bonus categories allowing you to earn 5 Ultimate Rewards points per dollar spent in rotating groups of merchants.

But even more importantly, using an Ultimate Rewards point transfer to British Airways to book this flight keeps your overall miles and points strategy simple. Instead of signing up for one or more American Airlines co-branded credit cards, requiring multiple credit pulls and bearing the risk of your application being denied, you can keep doing what you're doing: aggressively earning Ultimate Rewards points in bonus categories.

If you end up finding award space for dates that work for you, transfer the points and make the reservation. If you don't, transfer them instead to Hyatt, United, Southwest, or even redeem them for cash. You haven't lost anything by earning "extra" Ultimate Rewards points. You just have to slightly overpay for your award when you decide to book it.

Speaking of award availability...

There's a reason that I've used Cathay Pacific as my example throughout this post: it's because award availability on Cathay Pacific is quite scarce, and can't be searched on American's website. Instead, you're likely going to be using British Airways to search for award availability anyway, since they display it online.

Not only that, but British Airways allows reservations to be made further in advance than American does! Take another look at the search result above: it's for a first class flight departing December 10, 2016. That's 354 days from now, while American only allows reservations to be made through November 17, 2016 — 331 days from now.

As you'd expect, award availability tightens up quickly once American's award booking window opens. Given that Cathay Pacific frequently makes just a single first class award seat available, those 23 days may spell the difference between getting your first class award or having to sit in business class.

In that sense, you aren't overpaying for Cathay Pacific first class by using British Airways Avios; you're simply paying the only price at which the first class seats you need are, in fact, available!

You should never buy points for what they're worth

The frame of reference for my manufactured spend practice is not usually the cost I pay per point that I earn, although I naturally privilege cheaper techniques above more expensive techniques, and there are certain techniques that are too expensive to fit into my practice at all.

Rather, my analytical framework is based on opportunity costs: am I better off manufacturing a hotel or airline loyalty currency, or using the same technique to manufacture cash back instead?

In the hotel sphere, it's easy to calculate "breakeven" points, which I call a property's "imputed redemption value:" the amount of cash you have to save in order to justify earning sufficient points to make a redemption instead of simply paying for a stay with cash.

It's also possible to buy points

There is a clutch of high-profile bloggers who write exhaustively about the constant stream of airline offers to sell miles at a discount compared to their normal prices. For example, American AAdvantage normally sells miles for about 3.19 cents each, but during their current promotion you can buy them as "cheaply" as 1.81 cents each (because of the fixed $30 processing charge, the rate will always be lowest when you buy the maximum allowed number of miles).

So the question is, should you buy American Airlines miles for 1.81 cents each? There are two ways to look at that question.

How much are AAdvantage miles worth?

If you redeem your AAdvantage miles for expensive flights with low or no fuel surcharges, your answer to this question might be "far more than 1.81 cents each." After all, until March 22, 2016, 67,500 AAdvantage miles and some nominal fees will get you from San Francisco to Hong Kong in Cathay Pacific's first class cabin, a $9,367 value next fall — 13.9 cents per point!

If this is your view, then paying anything less than 13.9 cents per point is a straightforward win: you get a $9,367 flight, but pay only a small fraction of that amount. Alternatively, you could pick a "realistic" valuation for the flight and use that instead. For example, if you think Cathay first class is worth just twice the price of economy, you could use that value instead ($1,486 for the same dates), and get a valuation of 2.2 cents each — still more than the 1.81 cents American is selling them for.

How much do AAdvantage miles cost?

If you manufacture AAdvantage miles instead of using a 2% cash back card, your answer to this question should be "2 cents each." In this case you might consider buying AAdvantage miles in bulk for 1.81 cents each, and direct that manufactured spend back towards your 2% cash back cards, ending up with more value overall.

On the other hand, if you earn AAdvantage miles by signing up for their co-branded credit cards and spending $3,000 to earn 53,000 AAdvantage miles, your answer should be "0.11 cents each" — that's your $60 in foregone cash back spread over 53,000 AAdvantage miles. In this case, you'd be crazy to overpay by 15 times for miles you could earn so much more cheaply.

Of course, if you're a rich weirdo, you may be burning AAdvantage miles more quickly than you can earn them exclusively through signup bonuses. In that case, the important thing is your marginal cost: how much are you paying for each additional AAdvantage mile, and is it more or less than American is currently charging for the same mile?

Never buy points for what they're worth

Travel hacking is ultimately about the spread between the price you pay for your trips and the price travel providers would like to charge you. In other words, acquire travel cheaply but redeem it dearly.

That means a basic mistake to avoid is overpaying for your miles and points. If you're currently buying AAdvantage miles for 2 cents each and an opportunity comes along to buy them for less than 2 cents each, that's a no-brainer.

But another way you can overpay is by allowing a high theoretical valuation induce you to narrow the spread between your cost of acquisition and value of redemption. For example, one of my regular readers values Hilton HHonors points at 1 cent each, since that's they value he's able to get from them as a Diamond elite with the program. If you take that valuation seriously, you'd conclude that he would be better off earning 6 HHonors points per dollar at grocery stores than 5% cash back — buying HHonors points for just 0.83 cents each.

But a moment of reflection shows that's crazy: instead, he could earn 5% cash back at grocery stores and use his American Express Hilton HHonors Surpass credit card for non-bonused spend where he'd otherwise earn 2% cash back — buying his HHonors points for just 0.67 cents each instead!