Finding the constellation of rewards programs that's right for you

I do very little speculative earning of miles and points, which doesn't mean that I always earn miles and points with specific redemptions in mind. Rather, it means I earn the points that I know I'm consistently going to be able to redeem for good value and for the kinds of trips I want to take.

When I see a large balance sitting in an account for an extended period of time, it usually means I'm doing something wrong, since it means I earned those points instead of the cash back I could have earned instead — cash back that I know I would have been able to use by now. That's why speculative acquisition of miles and points, even at seemingly cheap prices, usually looks very expensive to me.

Of course there are exceptions: I participated in the IHG Priceless Surprises promotion without any specific plan or intention to redeem the resulting points, mainly because gambling is fun (and I won a sound system!). When I had the Bank of America Alaska Airlines debit card, I cheerfully earned Mileage Plan miles at rock-bottom prices, tens of thousands of which I have yet to redeem even now, years later. Now THAT'S speculative!

Still, my general rule is: I prefer to focus on a few programs, where I tend to rapidly cycle my points balances up and down, rather than spread myself thin chasing every increased credit card signup bonus that comes along.

Find travel rewards programs that work together

If you don't collect miles and points speculatively, then it helps to focus on miles and points that work together, rather than at cross-purposes.

For example, Starwood Preferred Guest runs an excellent hotel loyalty program, and allows Starpoints to be transferred to many airlines at a 1-to-1 ratio, with an additional 5,000 bonus miles added each time you transfer multiples of 20,000 Starpoints. But Starpoint transfers to United Airlines MileagePlus miles are at a mere 2-to-1 ratio! That makes it more expensive for Starwood Preferred Guest to be your main hotel chain if United is your primary airline, since you'll give up more potential hotel nights when transferring Starpoints to United than you would to American, Delta, or Alaska.

On the other hand, since Chase Ultimate Rewards points transfer to Hyatt Gold Passport and both Southwest Airlines and United Airlines, focusing your mile earning and redemption on one of those airlines, and your hotel point earning with Hyatt, allows you to top up both your primary travel rewards accounts with points in a single Ultimate Rewards account.

Find credit cards that work together

It's not just travel rewards programs that can work together, but credit cards as well.

For example:

• Your primary premium Ultimate Rewards account might be linked to a Chase Ink Plus card, which allows you to earn 350,000 Ultimate Rewards points per year in its bonus categories of office supply stores and gas stations.
• Knowing it's one of the best cards out there for earning Ultimate Rewards points, you can apply for a Chase Freedom card as well, and earn an additional 15,000-30,000 Ultimate Rewards points per year, depending on the year's bonus categories.
• Next, tempted by the signup bonus, you might apply for a Chase Sapphire Preferred. After meeting the minimum spend requirement and waiting a suitable period of time, you can product change the Sapphire Preferred to another Freedom card and double each year's bonus Ultimate Rewards points.
• Finally, you can take out a 0% interest rate loan from the Chase Slate, and at the end of the promotional period product change that card to Freedom as well.

This procedure would give you access to a huge pool of bonus and annually recurring Ultimate Rewards points, and would at no point violate Chase's strict "5/24" rule for approval of their own-brand credit cards.

I've written before about other potentially lucrative card combinations, like combining the Citi Premier and Prestige cards, or the American Express EveryDay Preferred and Business Platinum cards, for manufactured spend at gas stations.

If you use United MileagePlus as your primary airline rewards program, it can even be worth signing up for one of their co-branded credit cards just for access to last-seat "Standard"-level award availability, even if you never spend a dollar on the card, since access to those Standard awards can increase the value of Ultimate Rewards points transferred in from Chase.

If Hilton is your primary hotel program, you could carry both the American Express Hilton HHonors Surpass card and the Citi Hilton HHonors Reserve card. While manufacturing gas station and grocery store spend with the Surpass, you could add on $10,000 per calendar year in unbonused spend to the Reserve card and earn 30,000 HHonors points and a free weekend night certificate on each account anniversary.

I'm not the biggest fan of the Citi Hilton HHonors Reserve card because of its $95 annual fee. However, if you consistently redeem your HHonors points and free night certificates at top-tier properties, then paying $95 in cash and $200 in foregone cash back offers a 29% discount compared to manufacturing 125,000 additional HHonors points on the Surpass (which bears $416 in opportunity cost compared to a 2% cash back card).

The breakeven point comes when redeeming the Reserve's free night certificate at 60,000-point properties: at that point you see a wash between manufacturing $15,000 on the Surpass (earning 90,000 HHonors points and foregoing $300 in cash back) or paying a $95 annual fee and manufacturing $10,000 on the Reserve (earning the equivalent of 90,000 HHonors points, paying a $95 annual fee, and foregoing $200 in cash back).

The point here is that it can be worth carrying co-branded cards that see little or no use if they provide ancillary benefits that supplement the value of your other activity.

Conclusion

As I wrote on Monday, in general I find high balances in a few programs to be more valuable than small balances spread across a number of programs. In fact, even when a narrow earning focus causes you to pay more for a flight or room than you would if you had access to the "right" points currency, you can still be saving money after taking into account the annual fees you'd pay for that access.

And of course, most people are busy, and cramming more and more knowledge of increasingly esoteric loyalty programs into your head will eventually reach a point of diminishing returns. That point may come sooner or it may come later, but knowing when you've reached it is the beginning of travel hacking wisdom.

What to do with IHG Priceless Surprises points

At this point I assume everyone who is planning to participate in the IHG Priceless Surprises promotion has done so, which means you either are or will soon be in possession of roughly 50,000 IHG Rewards points (assuming you scored at least one or two 1,000 and 2,000 point prizes).

If, like me, those 50,000 points are your entire IHG Rewards balance, then three possible approaches to redeeming them suggest themselves.

At the low end: PointsBreaks list and more remote properties

Everyone knows about the IHG Rewards PointsBreaks list, a rotating list of properties which can be redeemed for just 5,000 points per night. It's always worth a quick glance on the off-chance that you're planning to visit an area with a participating property. I was living in Brno one summer when the Holiday Inn there was on the list and considered simply moving in for 5,000 IHG Rewards points per night!

Besides that promotional list, there are properties which belong to the lowest rungs of IHG's award chart. If you're passing through Sheridan, Wyoming, why not stay at the Candlewood Suites for 10,000 IHG Rewards points per night?

Your Priceless Surprises points haul will even get you 5 nights at The Lodge At Eagle Crest Holiday Inn Resort in central Oregon. The place looks nice!

In the middle: Category 4 and 5 properties

Category 4 IHG Rewards properties cost 25,000 points, meaning your 50,000-point Priceless Surprises haul will get you 2 nights at places like the Intercontinental Presidente Merida in Mexico, the InterContinental Mar Menor Golf Resort & Spa in Spain or the InterContinental Bucharest.

I always find it annoying when bloggers treat being married as a travel hack, but if you participated in Priceless Surprises with a partner/child/dog, you might have enough points for 4 nights at one of those properties. That begins to sound like a real vacation, or at least a long weekend.

Unfortunately, 25,000 IHG Rewards points isn't even halfway up the IHG Rewards chart, and most centrally located or desirable properties are going to be more expensive than that. One popular option to widen your options is purchasing additional IHG Rewards points for as little as 0.6 cents each. Buying an additional 15,000 points at that rate would get you above 60,000 points, allowing you to book 2 nights at a Category 5 property like the InterContinental Fiji Golf Resort & Spa or InterContinental Kuala Lumpur.

At the top: Category 11 properties

Meanwhile, 50,000 IHG Rewards points isn't even enough for one night at top-tier IHG Rewards properties after their February 17, 2016, devaluation. After that date, you'll have to buy an extra 10,000 IHG Rewards points to get up to the 60,000 points required for a single night at properties like the InterContinental Bora Bora Resort Thalasso Spa or InterContinental Le Moana Bora Bora.

Alternatively, if you had a willing partner, you could imagine both applying for the IHG Rewards credit card and receiving 80,000 IHG Rewards points each. If you were willing to wait until your first account anniversary to receive two additional bonus night certificates, you'd end up with enough points and certificates for a six-night stay between the two of you. That wouldn't be too bad a redemption for a $49 annual fee and $46 in stamps per person.

That Rube Goldberg machine requires you to assume, of course, that IHG Rewards won't devalue again before your plans come to fruition!

Other redemptions

Of course, if you don't actually have any upcoming hotel needs and just participated in Priceless Surprises on a lark, you may just be looking to cash out your points at a profit. In that case, you could pick up two $50 Walmart gift cards for 40,000 points, or transfer your IHG Rewards points to airline miles at a 10,000-point to 2,000-mile ratio.

Buying 10,000 miles for $46 and a few hours of work may not sound like a great deal, but it's better than letting your IHG Rewards points sit in your account unredeemed. After all, your least valuable point is always the one you don't redeem.

Understanding booking channels

Judging by the headlines I see in my RSS reader, Bank of America is running a bounty for Alaska Airlines credit card applications. Internet Brands went ahead and declared it the best travel credit card of 2016 on their Frugal Travel Guy storefront, while Thought Leader From Behind Gary Leff managed to shoehorn it into a post ostensibly about an unrelated Virgin America promotion.

This got me thinking about an issue I've touched on periodically and that I think needs to be thoroughly understood to get the most value from travel hacking: booking channels.

What is a booking channel?

A booking channel is any method you use to purchase airfare (or make hotel or car reservations, although I'll set that aside for now).

For example, when purchasing airfare with Ultimate Rewards points in a Chase Sapphire Preferred or Ink Plus account for 1.25 cents each, you're required to use the Ultimate Rewards travel portal.

Likewise when redeeming an American Airlines voluntary denied boarding voucher, you're required to make a reservation through American Airlines' website or phone agents, then mail the voucher to Florida (or drop it off in person at an American Airlines office).

Your choice of booking channel restricts your options for savings

I've written before that statement credits are worth (much) less than cash and that the Delta Platinum and Reserve American Express companion tickets have to be paid for with American Express cards, which are both examples of the general rule that your options to save on flights are limited by the booking channel you're required to use.

Better fewer, but better

That suggests a general rule that small balances spread across a number of booking channels are less valuable than high balances in a single booking channel.

For example, while US Bank Flexpoints are worth up to 2 cents each when redeemed for airfare (and the US Bank Flexperks Travel Rewards card earns 2 Flexpoints per dollar spent at either gas stations or grocery stores each month), and Citi ThankYou points in a Citi Prestige account are worth 1.6 cents each when redeemed for American Airlines-marketed flights, you can't combine both Flexpoints and ThankYou points on a single reservation: 20,000 Flexpoints and 25,000 ThankYou points won't buy you an $800 reservation, while 40,000 Flexpoints or 50,000 ThankYou points will.

Understand booking channels to manage exceptions

If that's the general rule, then in reality things are much more complicated.

Let's take another look at that Bank of America Alaska Airlines companion ticket. It has three important restrictions:

• It takes the form of a "discount code" that has to be entered on Alaska Airlines' website. That makes it impossible to directly redeem any points currency for an Alaska Airlines companion ticket (or use an Alaska voluntary denied boarding voucher, since those also take the form of a discount code).
• The Bank of America credit card holder has to be one of the two passengers on the companion ticket, or the ticket has to be booked with a credit card in the Bank of America credit card holder's name (read that three times).
• If paying with funds in an Alaska Airlines "My Wallet," it has to be the "My Wallet" of the Bank of America Alaska Airlines credit card holder.

Now let's square the circle: up to 60 days before departure (up to departure for MVP Gold and MVP Gold 75K elites), Alaska Airlines flights can be cancelled and the full value of the flight redeposited into the passenger's "My Wallet" for use on future flights.

Another typical situation comes up if you've earned a Southwest Airlines companion pass. That pass allows you to add your companion to any Southwest Airlines revenue or award reservation for no additional airfare (you pay just the taxes and fees for your companion's ticket). There are two difficulties here:

• Southwest doesn't publish its fares on the unified airfare platform most other airlines use, which means you have to call to redeem third-party loyalty currencies like Flexpoints.
• And third-party loyalty programs can't book companion tickets!

Just as in the case of Alaska, one solution might be to redeem your third-party currency for a ticket of any value, have the value refunded to your Southwest account, and then book your own companion ticket using that value.

Conclusion

If you want to use an American Airlines voluntary denied boarding voucher to pay for part of your airfare, you can't pay for the rest by redeeming Citi ThankYou points for 1.6 cents each. Likewise you can't combine a Delta voluntary denied boarding voucher with an American Express Business Platinum discount on Membership Rewards redemptions.

But by learning the nuances of each loyalty program — and thinking outside the box — you can start to identify the ways in which seemingly rigid booking channels may be more flexible than they appear, allowing you to stack certificates, coupons, and other discounts with your already-heavily-discounted rewards currencies.

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:

View fullsize

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.