Making the decision to keep my Delta Platinum Business card

I wrote last month about a little experiment I was running with my American Express Delta Platinum Business companion ticket. By booking a ticket before May 31, 2020, for travel before September 30, 2020, I should be able to move the ticket to any dates before September 30 with no difference in fare, or use the ticket value towards travel anywhere on Delta after that date. Additionally, since my annual fee appeared on my May statement, this would allow me to get my last companion ticket “free” by cancelling my card and having the annual fee refunded (in some states American Express is required to pro-rate annual fee refunds so residents of those states needn’t feel the same urgency).

Against my better judgment, I ultimately decided to keep the card for another year.

American Express gave me an “Appreciation Credit”

As I wrote back at the beginning of May, American Express increased the earning rate on the consumer Delta credit cards to 4 Skymiles per dollar spent at grocery stores through July, 2020. That’s a pretty good earning rate, and if I had a consumer card I’d be hitting it hard. Unfortunately, they didn’t extend the same courtesy to business card holders, so it didn’t affect my decision to close my card.

However, at the end of May, I refreshed my Mint account and found a pleasant surprise: American Express had credited my account with a $75 “Appreciation Credit.” Doctor of Credit had shared some information about the similar ($200) credit for Business Platinum cardholders, but American Express never communicated anything about it to me, by e-mail or in my online account, so I simply don’t know whether I would “keep” the credit if I cancelled my card and had the annual fee refunded. In other words, was the “Appreciation Credit” a retention offer, which in effect lowered my annual fee from $250 (itself an increase from the previous $195 fee), or a free statement credit like the ones provided through Amex Offers, in which case closing my account would produce a negative-$75 account balance and (eventually) a refund check.

Ultimately, I decided to treat the credit as an annual fee reduction, and that the card was worth keeping for another year at $175.

Is the Delta Platinum Business card worth $175 a year?

There are four potential sources of value from a Delta Platinum Business card (as mentioned, the consumer card has the additional temporary benefit of increased earnings at grocery stores):

• a domestic (lower 48 except for residents of Hawaii, Alaska, Puerto Rico or the United States Virgin Islands whose flights also originate there) companion fare;

• free checked bags for the cardholder and up to 8 others traveling on the same reservation;

• access to certain Amex Offers;

• bonus Medallion Qualification Miles at the $25,000 and $50,000 spend thresholds.

The list above is roughly in the order I value the benefits in.

Domestic companion tickets are most valuable when simply sold to someone who is willing to pay some fraction of the fare’s value. For example, someone who would otherwise pay for two $500 fares in cash should be happy to buy a companion ticket for $250, wiping out your annual fee and letting you enjoy the other benefits for free. Unfortunately, unlike Alaska Airlines companion fares, the Delta offer is strictly limited to the cheaper fare classes, making that kind of win-win exchange hard to arrange; no one likes to be told what flights they have to take based on fare buckets!

If you’re going to use a companion ticket for yourself, then you should value it well below your nominal savings — you should value it at what you would other pay for the same tickets, either with a traditional mileage redemption or using a cheaply-earned currency like US Bank Flexpoints or Chase Ultimate Rewards. For that reason, I value Delta companion tickets much more conservatively than many travel hackers, perhaps $100.

Free checked bags, on the other hand, I value more or less at face value, because I don’t have elite status anymore and I really like checking bags! Delta now charges $30 for your first checked bag (and $40 for the second!), so two travelers making 2 round-trips per year with one checked bag each will save $240 just on those fees. We don’t fly Delta quite as much as we used to since our families are now easier to reach on Alaska and American, but between trips to see friends and domestic vacations I’m very comfortable valuing our free checked bags at $120 per year.

The third source of value, Amex Offers, used to be more valuable when each offer could be added to and redeemed on multiple cards; having more American Express cards mechanically increased the savings available to you. That’s less true now, but there are still some offers that are only made available on business or Consumer cards, so having at least one of each gives you the maximum likelihood of being targeted for the most valuable ones. Since my Delta Business is my only business American Express card, I’d assign perhaps $50 in value purely to the additional Amex Offers I receive.

Finally, since I don’t travel on Delta more than once or twice a year (and 2020 will be even less than that), I don’t assign any value to the card’s ability to earn bonus Medallion Qualification Miles. Until we move somewhere with more convenient Delta service, I won’t be coming close to earning even Silver Medallion status. The value you assign to this feature should depend on both how necessary it is to earn status (does it make or break your ability to achieve the status you’re chasing) and how you value that status (how frequently do your upgrades clear, etc.).

So in my case, the $270 in value I conservatively get from the card clears the $175 annual fee hurdle comfortably enough that I reluctantly decided to keep the card for another year, while if I had to pay the entire $250 annual fee, I would have proceeded to cancel the card.

The annual fee isn’t the only cost!

That was my calculus: the card is a little bit better than a wash, so I’ll keep it around and see what develops. I still plan to cancel it next May, but I’m equally prepared to be surprised on the upside as the downside.

Besides assigning the above benefits different values than I did (for example, if you have a particularly high-value companion fare redemption or a good opportunity to sell or gift the companion fare), your cost calculus might also be different than mine. For me, the annual fee is the only cost of holding the card. But since the Delta Business card is a credit card, it counts against your four-card (or five-card) limit with American Express. If you already have four or five American Express credit cards, then an additional cost of holding onto any one card is the inability to open additional American Express credit cards.

That means if your Delta Platinum card is your least valuable American Express credit card, then it is by definition the one keeping you from signing up for additional American Express credit cards, whether your intention is to trigger a signup bonus or add new, different, or more valuable bonus categories to your manufactured spend strategy.

Conclusion

Obviously there are some cards so valuable that this exercise isn’t worth going through in such fine detail, like the Chase Hyatt and legacy Ink Plus and Ink Bold cards. But for most cards with an annual fee, seeing that fee hit is as good an opportunity as any to take a step back and evaluate exactly what role the card is playing in your travel hacking strategy, and whether it still belongs there.

By default, your answer should be “no:” an annual fee is a hole you have to climb out of over the course of the year. Some cards make it relatively easy to get out of that hole and some cards make it relatively hard, but if you’re not digging up, you’re digging down.

Three notes on Chase Sapphire Preferred and Reserve grocery statement credits

I haven’t had a Chase Sapphire card in a long time, having downgraded my Preferred years ago to a second Freedom card and replacing it with an Ink Plus card to maintain the flexibility of my Ultimate Rewards points and the ability to redeem them for 1.25 cents each towards paid travel through the Ultimate Rewards portal.

Still, I’ve obviously been following with interest the news that Sapphire Preferred and Reserve cards will allow Ultimate Rewards points to be redeem for 1.25 and 1.5 cents each, respectively, for “grocery, home improvement, and dining purchases.” That stacks with the accelerated earning on up to $1,500 in monthly grocery store spend on Sapphire cards through the end of June.

I wanted to share three quick notes on this new opportunity.

If you ever redeem points for paid travel, redeem them for groceries

There are three basic value buckets for Ultimate Rewards point redemptions:

• bank account direct deposit and credit card statement credits at 1 cent each;

• paid travel booked through the Ultimate Rewards portal at 1.25 cents (Sapphire Preferred and Ink Bold/Plus/Preferred) or 1.5 cents (Sapphire Reserve);

• travel partner transfers at higher — potentially much higher — redemption values for premium travel.

If you redeem, or plan to redeem, most or all of your Ultimate Rewards point balance for high-value transfers to Chase’s travel partners, then this opportunity doesn’t affect you at all; save your points, transfer them to high-value partners, and make high value redemptions!

If, on the other hand, you think of Ultimate Rewards points as a useful reserve account for paid domestic airline tickets, and were already happy to redeem them for 1.25 or 1.5 cents each for airfare or hotels when award space wasn’t available, then you should be eager to redeem them for the same value as statement credits against eligible grocery purchases. After all, once you’ve redeemed the points for a statement credit, you can use the same cash to buy the same tickets with a different credit card, and earn miles, points, or statement credits on that card!

A word of warning: statement credits aren’t “payments”

I wanted to flag one issue for folks who are planning to hit this deal especially hard. Most responsible travel hackers will tell you not to carry a balance on your credit cards, in order to avoid interest charges that can easily overwhelm the value of any rewards you earn on purchases. The “statement credit” is one way credit card companies have developed to charge fees regardless of how carefully you monitor your balances: according to the terms and conditions of most, if not all, of my credit cards, statement credits are not treated as payments and do not decrease your minimum payment due.

This doesn’t matter if you diligently pay your credit cards off before each statement closes, but one of the nice benefits of travel hacking and manufacturing spend is having several weeks of float to earn interest, meet minimum spend requirements, and spin up other opportunities. In that case, even if you pay off your entire statement balance with statement credits, you may get hit with a late payment or interest charge on the minimum payment. This shouldn’t apply if you reduce your balance to $0, but if you have made additional purchases during the month, your credit card company may consider those purchases to be subject to interest charges since your remaining previous balance was merged with your new balance.

This isn’t an extremely common situation, but I wanted to flag it for folks seeking to redeem tens or hundreds of thousands of Ultimate Rewards points towards grocery store purchases: go ahead and make your minimum payment in addition to any statement credits you redeem, to make sure Chase doesn’t decide to ding you for missing a credit card payment (and take a closer look at your account activity).

Apply or upgrade to Sapphire for redemptions?

Finally, this new opportunity raises the question whether you should upgrade an existing Freedom, Freedom Unlimited, or Sapphire card to a Sapphire Preferred or Sapphire Reserve card, or apply for a new card, in order to take advantage of these new statement credit redemption opportunities. Here, I don’t have a strong feeling either way.

If your credit history made you eligible for a Sapphire Preferred or Reserve offer prior to the new redemption opportunity, then it was probably already worth applying. It’s unclear to me that the new redemption opportunity should change your application calculus.

On the other hand, for folks with an existing large Ultimate Rewards balance held on Chase Ink cards, the new ability to redeem those points for statement credits may well justify upgrading a Slate, Freedom or Freedom Unlimited card to a Sapphire Reserve in order to cash out that existing Ultimate Rewards balance for grocery statement credits while travel redemptions remains a distant prospect.

Conclusion

I have to had it to Chase in making a fairly crafty calculation with this new redemption option. Existing members with large existing points balances, but who found themselves unable to redeem their points during the pandemic, might be tempted to simply cash out and cancel their accounts. Instead, Chase offered them the opportunity to both earn bonus points on their everyday purchases and redeem their Ultimate Rewards points at their “full” 1.25 or 1.5 cent value against them. That both directs spending towards Chase products and reduces the attrition of their “travel” clients during a period when travel is impossible.

But however clever Chase is, it’s still up to you to make the important decisions about how, when, and where to redeem your points.

COVID, cancellations, schedule changes, and refunds

This was originally going to be a quick hit on my experience cancelling an Alaska Airlines reservation for a trip I had been planning to take this summer, but then I noticed lots of people having related issues on a whole range of carriers, so I thought it would be worth taking a more comprehensive look at how different airlines are currently handling schedule changes and cancellations.

Most flights have been cancelled for the next few months, and more will be

The ongoing disruption to air travel has been catastrophic. Alaska says they’ve reduced their flight schedule by 80% in April and May. Airlines have eliminated some routes completely, while others have dramatically reduced frequency: we normally have our pick of 6 non-stop flights a day to Indianapolis on American, a route that has been completely cancelled until June 7, when it is scheduled to resume once per day.

A cancelled flight is the simplest situation to be in (although not always the simplest situation to resolve): the Department of Transportation recently clarified that for all “flights to, within, or from the United States,”

“Carriers have a longstanding obligation to provide a prompt refund to a ticketed passenger when the carrier cancels the passenger’s flight or makes a significant change in the flight schedule and the passenger chooses not to accept the alternative offered by the carrier.”

As the plague continues to exact its terrible toll, more flights will be cancelled and more schedule changes will be implemented, so if you have a flight booked you know you won’t take, but is still scheduled to depart on time, your best bet is to sit tight for now and see if you become eligible for a cash refund later.

It is faster and easier to take advantage of airline policies than to assert your rights

Now you know you have a right to a refund in the case of a cancellation or significant schedule change. But if your airline pushes back, asserting that right might mean filing a DoT complaint that takes weeks to resolve, as Stephan Segraves described here.

Instead of pursuing your rights, you might want to check out your carrier’s fee waivers instead. Every major airline has voluntarily waived change and cancellation fees, on somewhat different terms.

• Delta: no change or cancellation fees on flights booked through May 31, 2020, existing eCredits extended until September 30, 2022.

• United: no change or cancellation fees until May 31, 2020, existing and new travel certificates valid for 24 months from issuance.

• American: no change fees for all flights booked between March 1 and May 31, 2020 and for flights booked before March 1 for travel through September 30, 2020.

• Alaska: no change or cancellation fees on flights booked through May 31, 2020 (with inscrutably different rules for flights booked before and after February 26, 2020).

• Southwest: new and existing travel funds (from cancelled, non-refundable reservations) have their expiration extended until September 7, 2022. Refundable reservations continue to be refundable (obviously).

• Jetblue: no change or cancellation fees for flights booked through May 31, 2020, for travel through January 4, 2021, and 24 month validity for Travel Bank Credit.

As you can see, there are two slightly different moving pieces here: protections for people who already booked travel they won’t be able to take, and protections for people thinking about booking travel for the future they’re unsure they’ll be able to take.

Obviously travel credits aren’t as good as cash, but for folks who periodically book paid travel on the same one or two carriers, they’re not bad, and by taking advantage of these policies you may be able to avoid a drawn out battle for a cash refund.

My Alaska Airlines refund experience

As I mentioned up top, I called Alaska to ask for a refund for a July trip that won’t be happening. I knew there had been some schedule changes, and I knew Alaska had loosened their cancellation policy, so I didn’t have any doubt I’d be able to cancel the flights, but because I hadn’t read this blog post, I wasn’t prepared for the pushback the phone agent gave me.

To be fair to her, she did instantly agree to cancel the reservation, but then explained the value would be deposited to my travel bank. I told her I needed the refund to go to my original form of payment.

The problem was that despite Alaska’s massive cancellations, none of my four flights had actually been cancelled! All four were operating on the days I’d booked, with the same flight numbers and everything — two were even operating on the exact same schedule, and a third had an adjustment of just 35 minutes.

Fortunately, the fourth had moved its departure from 7:40 am to 9:05 am, just over the hour schedule change Alaska requires to offer a cash refund.

The agent then repeated a version of the most annoying cliche I hear from customer service representatives: “if there hadn’t been that schedule change, you wouldn’t have been eligible for the refund.” Whenever I hear this condescending aphorism I always want to shout into the phone, “but there was, so I was, so why are we still talking about it?”

Of course, what I actually did was politely thank her and hang up. The refund is supposed to take up to 7 days, and I’ll be interested to see how they handle the redeposit of the companion fare I used to book the ticket.

Chase's missed opportunity to do the right thing

I mentioned in Friday’s post that the airport transfer I ordered through the Chase Ultimate Rewards portal to pick us up at the Sofia airport never arrived, and that we ended up taking the (cheap, convenient) subway instead. I wrote, “I have a request in with Ultimate Rewards to refund the points, so hopefully this mistake will end up being free, but overall it was a silly experience and waste of time.”

Oddly, that’s not how it worked out.

Chase wanted the transfer company’s permission to refund me

On my first call with Chase, on Thursday, October 10, I was placed on hold several times as the representative tried to contact the transfer company, but wasn’t ultimately able to. She told me they would contact the company and be in touch by phone or e-mail once they’d resolved the issue.

I received the first e-mail followup on Saturday, from the e-mail address “VNA-INTL.chasetravel@customercare.expedia.com,” which is obviously the e-mail address for the person at Expedia that handles Ultimate Rewards reservations:

“Thank you for contacting Chase Travel about Refund Request for your Budapest Express - Transfers on travel in dates Sep 08,2019 and travel out dates Sep 28,2019 .

“We have made multiple attempts but are still in the process of making contact with [Budapest Express - Transfers] for your Refund Request. Please expect an email update from us within 24 hour.

“Thank you for choosing Chase Travel.

“Sincerely,
”Arnold Fajardo
”Travel Consultant Supervisor
”Chase Travel”

Ignoring Arnold’s grammar, this is a very strange e-mail for multiple reasons: the dates of my trip were not September 8-September 28, they were September 27-October 9. The name of the transfer company is given as “Budapest Express - Transfers,” when the pickup was at the Sofia airport in Bulgaria, and the company in my original reservation was “P-Airbus,” which is obviously a nonsense, but it’s a different nonsense than “Budapest Express - Transfers.”

The transfer company didn’t give it

The next e-mail, from the same Expedia e-mail address, tried to break the news to me gently:

“Thank you for contacting Chase Travel about your cancellation request for your reservation at Budapest Express - Transfers.

“We have advocated your case with Budapest Express - Transfers and due to their policy in relation to your reason for cancelling your reservation, they have unfortunately denied your request.

“We apologize that their response was not more favorable.

“We apologize for the delay in answering your e–mail. We are currently experiencing an extremely high volume of e–mail requests preventing us from responding within our normal standards.

“Thank you for choosing Chase Travel.

“Sincerely,
”Alvin Elona
”Travel Consultant Supervisor
”Chase Travel”

Again, obviously I did not cancel my reservation for any reason. They simply never showed up.

I’m not mad about the points, I’m confused about the missed opportunity

Obviously, in the grand scheme of things, 2,000 Ultimate Rewards points aren’t that big a deal to me, and they certainly aren’t that big a deal to Chase. But in its own way, that makes the situation more, not less, confusing. I understand Chase doesn’t have any way to exercise control over the service providers Expedia uses. But when you’re putting your customers, with whom you have a direct relationship, completely in the hands of your partners, the obvious way to resolve partner disputes is to err on the side of caution. Instead, Chase decided to very mildly annoy me in order to save $25 because they’re not willing to stand up to their partner.

Like I say, I’m not mad, I’m just confused.

I would have been better protected using a credit card

The final piece of this microdrama is that if I had simply booked an airport transfer with a credit card, and they didn’t show up, my credit card company would have cheerfully reversed the charge within minutes. By putting customers through this absurd three-step dance, where Chase contacts Expedia, Expedia contacts their in-country partner, and then it’s up to the partner whether or not to grant a refund, Chase may save 25 bucks here and there, but also sends a loud and clear message not to trust them with third-party reservations.

It’s not going to bankrupt them, and it’s not going to bankrupt me, but that doesn’t make it a good business decision.

The current Choice Privileges promotion is so stupid I expect it to become the norm

I was rummaging around on my Hotel Promotions page (check it out if you have any upcoming stays; current promotions are running as late as June 4, 2019) and noticed some funny language in the terms and conditions of the current Choice Privileges promotion. Once I understood what was going on, I groaned at both the idiocy and genius of the promotion design.

The first “top-up” promotion I’ve seen

How the Choice Privileges promotion works is that you are guaranteed to receive a total of at least 8,000 points when you complete two qualifying stays (a qualifying stay being one booked through the website, app, or over the phone). Your stays should still be eligible for the promotion if you book through an online shopping portal, where Choice has quite broad participation. You’re also guaranteed to receive a minimum of 5,000 bonus points. Here’s what the terms and conditions say:

“Registered members will be awarded a minimum of 5,000 to a maximum of 8,000 bonus points after the second qualifying stay. The number of bonus points awarded depends on the number of base points earned from the two separate qualifying stays, with points varying by hotel. The total of base points plus bonus points awarded, however, will be at least 8,000 points.”

To see how this works, take a real-life example: my two-night stay at the Quality Inn Harpers Ferry in October of last year. I paid $236.55 in room charges on that stay, which as a non-elite member earned me 2,360 Choice Privileges points (I guess they’re so stingy they round down).

If I’d had a second, identical stay, I’d earn another 2,360 points, for a total of 4,720 points, leaving me 3,280 points shy of the 8,000 minimum total points. In that case, I’d earn the promotion minimum of 5,000 bonus points, for a total of 9,720 points. If I’d booked a room rate half as expensive, earning just 2,360 points on my two stays, I’d earn 5,640 bonus points, for a total of 8,000 base points plus bonus points.

As this example makes clear, the value of the promotion (as opposed to the value of the program itself) is higher the lower your room rate: 640 bonus points higher.

A promotion design this dumb has to be a sign

Once I realized what was going on, I knew immediately this won’t be an isolated promotion. After all, despite the assurances of airline executives that they’ll never lose money ever again, nothing has fundamentally changed about the airline industry: it requires enormous, up-front, long-term capital investments and finances those investments by selling individual tickets to customers that are extremely sensitive to prices and the overall condition of the economy.

In other words, when the next recession comes, airlines will lose money hand over fist, just like they have in every previous recession, and will do anything possible to get more customers on their planes. The “rationalization” of frequent flyer programs into revenue-based earning will go out the window, and airlines will start shoveling miles towards anyone willing to buy a ticket.

The “top-up” promotion model is optimized to precisely target the marginal traveler: the airline can still award you 5 miles per dollar you spend on airfare, but, for example, guarantee you’ll receive at least one redeemable mile per mile traveled. Last-minute and business travelers can be handed a nominal minimum (like the 5,000-point minimum Choice is offering), while those buying cheap tickets and without elite status can have their balance “topped up” to the promotion maximum.

When it rains it pours: ending the first quarter on a high note

Earlier this month I’d started to notice that some of the promotions that had popped up fairly regularly in the past hadn’t shown up recently. No sooner did I wonder whether we were in for some dramatic shift in the rewards landscape…than the promotions reappeared. Here’s a quick rundown.

$10 off Office Depot/OfficeMax Visa gift card purchases of $300 or more

This promotion has taken many forms over the years, but it’s always worth cleaning out your local stores if you have a Chase Ink Plus or Ink Cash card earning 5 Ultimate Rewards points per dollar at office supply stores. In previous years, this was stackable with eBates in-store cashback, making the deal even sweeter, but Office Depot/OfficeMax are not currently available for in-store cashback with eBates.

The current promotion runs through March 16, 2019.

3x fuel points on Visa gift card purchases at Giant, Stop&Shop, and Martin’s

Between March 15 and 21, 2019, Visa gift card purchases at Giant and their related brands will earn 3 fuel points per dollar spent on Visa gift card purchases, which usually do not earn fuel rewards.

The various Giant-related brands handle fuel rewards quite differently, so the value of this promotion depends on where you live, how much you drive, and how many friends you have to share your fuel rewards with.

Personally, I don’t own a car and typically only drive when on vacation, and I’ve recently run into trouble trying to redeem my fuel rewards points at Shell stations outside my “home” region. Since I spend maybe $200 on gas per year, this doesn’t bother me much, but if you are planning to hit this promotion hard make sure you understand how your local grocery affiliate and gas stations handle fuel rewards.

Don’t sleep on first quarter bonus earning

Don’t forget about any 5% bonus earning cards you haven’t maximized this quarter. For example, I hold two Chase Freedom cards earning 5 Ultimate Rewards points per dollar spent at drugstores this quarter, but I still haven’t actually done the spend simply because I’ve been putting off thinking about liquidation strategies. If you’re like me, you should get your act together, figure out a liquidation strategy, and go max out your bonus earning. When you do, make sure you’re maximizing third-party rewards as well.

The Discover it grocery store bonus category is even easier to maximize (and stack next week with fuel rewards for folks with access to Giant-affiliated brands!), so if you’ve been using that as an excuse to put it off, well, you’re out of excuses!

Bonus: register for hotel promotions

I’m a little bit lazy about keeping it updated, but I also don’t bombard you with pop-ups every time you open the page, so be sure to check out my Hotel Promotions page to make sure you’re not missing out on any rewards for the hotel stays you’re already paying for.

Hilton, Marriott, Hyatt, and IHG all currently have promotions open for registration.

Hyatt is burying Small Luxury Hotels, so keep an eye out for good values

Over at Running with Miles, Charlie Barkowski has been doing yeoman’s work tracking the “Small Luxury Hotels” eligible for Hyatt Category 1-4 free night certificates, meaning properties that cost up to 15,000 points per night. Check that out if you’re struggling to figure out where to redeem your Hyatt free night certificates.

Today, I want to make a few unrelated points about Small Luxury Hotels.

Non-Globalist World of Hyatt members should slightly prefer Small Luxury Hotels

All else being equal, World of Hyatt members, and Explorist and Discoverist elites, should prefer Small Luxury Hotels stays over otherwise-identical Hyatt properties. That’s because World of Hyatt reservations at Small Luxury Hotels come with continental breakfast for two, and at least the possibility of a 2 pm late checkout.

That shouldn’t be decisive for Globalist elites who receive breakfast and late checkout anyway, or if the Small Luxury Hotel property is more expensive, a worse value, or is much more inconvenient. But as a tiebreaker for the casual Hyatt traveler, it’s worth keeping in mind.

Hyatt buries Small Luxury Hotels at the end of search results, but it’s worth digging

If you search for Hyatt stays in New York City, you’ll see an ocean of properties stretching from the Grand Hyatt on East 42nd Street to the Hyatt Place in Princeton, New Jersey, before you’ll see the HGU NEW YORK, at 34 East 32nd Street.

That’s because all Small Luxury Hotels results are buried at the very end of the search results, long after most people stop looking. Slightly better is the map view, which shows all the properties in a given city, but which makes it more difficult to compare their relative value.

In destinations without Hyatt properties, Small Luxury Hotels are a potential game-changer

Since Manhattan offers a range of Hyatt properties, Small Luxury Hotels aren’t likely to play a huge role in a travel hacking strategy there. But in other areas, they’re potentially decisive. Consider a stay in the center of London next month. There are only two Hyatt properties, the Hyatt Regency London - The Churchill and the Andaz London Liverpool Street, both at 25,000 World of Hyatt points.

But there are 6 Small Luxury Hotels properties, ranging between 20,000 and 25,000 points, in or near the center of London. On a smattering of sample dates, I saw redemption rates at those properties between 1.58 and 2.84 cents per World of Hyatt point. Not breathtaking, but properly calibrated to the value of the program as a whole.

Compare that to Hilton’s central London properties on the same dates. From a high of 0.61 cents per point at the DoubleTree by Hilton Hotel London - Kensington (50,000 points for a 231 GBP stay) to a low of 0.45 cents per point at the London Hilton on Park Lane (80,000 points for a 273 GBP stay), what you see across the board from Hilton is replacement-level redemptions. There’s nothing wrong with those redemptions — I would make them myself in a pinch, and a 5th-night-free redemption would improve the value further — but the Small Luxury Hotel redemptions offer the kind of outsized value we’ve come to expect from Hyatt points.

Conclusion

The addition of Small Luxury Hotels as a redemption option in World of Hyatt hasn’t increased the value of individual Hyatt points (still worth between 1.5 and 3 cents each), nor has it increased the value of individual Hilton points (still worth about 0.5 cents each).

What it has done is increase the value of a portfolio of both Hyatt and Hilton points, allowing Hyatt points to be redeemed more readily in cities like London and New York where Hilton points are typically redeemed at their replacement value, while allowing Hilton points to be saved up for redemption at the very few properties and redemptions where they get outsized value.

Four use cases for Hilton credit card spend

Lately I’ve been mulling a series of posts by Nick Reyes over at Frequent Miler about the relative value of earning Hilton Honors points directly through credit card spend, versus purchasing them for 0.5 cents each during Hilton’s periodic point sales. As someone who considers Hilton indispensable to my travel hacking practice, I took the opportunity to reflect on what I might be doing wrong (or right).

The Deal

As Reyes explains, the opportunity comes from the fact that while Hilton normally sells their points for 1 cent each, they very frequently offer sales where you can purchase up to 80,000 points per calendar year for $800, and receive 80,000 bonus points, bringing the cost per point down to 0.5 cents.

Moreover, you should be able to receive the same deal clicking through the TopCashBack portal and earning 2.5% cash back, or up to $20 on an $800 purchase. And of course the purchase itself will earn cash back, worth another $16 on a 2% cash back credit card. That means you can purchase up to 160,000 Hilton Honors points per year for $764, or 0.4775 cents each.

If that’s the cash cost of 160,000 Hilton Honors points, you should be at least reluctant, if not unwilling, to pay more than that in opportunity cost. For example, Hilton Honors credit cards earn 3 points per dollar on unbonused spend. If you can otherwise earn 2% cash back on unbonused spend, putting the same spend on a HIlton credit card would mean paying 0.67 cents per points — 40% more than they cost on the open market.

Even manufacturing spend in the Hilton Ascend bonus categories may mean overpaying: earning 6 Hilton Honors points per dollar spent at grocery stores means giving up 3 cents in travel on the US Bank Flexperks Travel Rewards card, while at gas stations it means giving up 2 Ultimate Rewards points per dollar on the Chase Ink Plus and Ink Cash.

All that is straightforward enough. What I wondered was, under what circumstances does it still make sense to put spend on a Hilton co-branded credit card?

Reimbursed business travel

It’s easy to forget today, but travel loyalty programs were not actually designed with cheapskates like me in mind. Instead, they were meant to encourage business travelers with control over their reservations to prefer one travel provider over another by offering to kick back a portion of the company’s travel budget to the traveler for later, personal use. And to an extent, that’s still what they do.

If you’re a reimbursed business traveler, it can make sense to charge your Hilton reservations to an Ascend or Aspire credit card. The former earns 12 points, and the latter 14 points, per dollar spent at Hilton properties, including taxes, resort fees, and room charges, the equivalent of 5.73% and 6.69% cash back, respectively (since 12 points can be bought for 5.73 cents during 100% bonus promotions on purchased points). That compares favorably to the 3 ThankYou points per dollar spent at hotels with the Citi ThankYou Prestige and 2 Ultimate Rewards points per dollar spent with the Chase Ink Plus.

Indeed, you would need to value the marginal ThankYou point at 1.91 or 2.23 cents each, and the marginal Ultimate Rewards point at 2.865 or 3.34 cents each to be willing to give up 12 or 14 Hilton Honors points per dollar spent. Those are not incredibly unrealistic values, but they’re well above the rate at which I would acquire those points speculatively.

And of course, American Express Offers linked to your Hilton credit cards may offer substantial additional savings, like the $70 off $350 offer I took advantage of in Hawaii last month.

Ascend free weekend night award spend threshold

If you don’t manufacture spend, and you don’t have reimbursed travel you can direct to Hilton, then you probably shouldn’t carry an Aspire card (with its $450 annual fee) and you absolutely should not carry an Ascend card unless you’re willing to meet the $15,000 cardmember year spend threshold to trigger a free weekend night award.

That free weekend night award has two costs: the card’s $95 annual fee, and the opportunity cost of putting $15,000 on the Ascend card instead of your next best alternative. Here I’ll assume that opportunity cost is 2% for unbonused spend, and 3% for bonused spend (gas stations and grocery stores). You should re-run these calculations if your opportunity cost differs, of course.

That brings the total cost of the free weekend night award to $395 or $545, from which we can back out the 45,000 points (worth $214.88) or 90,000 (worth $429.75) points earned on the spend, for a net cost of $180.12 or $115.25.

Using the same base cost of 0.4775 cents per Hilton point, we know $180.12 can buy you 37,721 points, and $115.25 can buy you 24,136 points. In other words, any Hilton free weekend night redemption above those values leaves you at least marginally better off than if you had put the $15,000 in spend on a 2% or 3% cash back card instead and simply purchased the corresponding number of points.

But ideally, you won’t be making breakeven redemptions. At a 95,000-point property, a free weekend night is worth $453.63 in purchased points, for a profit of $273.51 or $338.38. If the new Waldorf Astoria Maldives Ithaafushi really charges 120,000 points per night for a standard award — and those awards can be booked with free weekend night awards — then the potential profit is even larger.

Increased float

Even replacement-level affiliate bloggers have enough of a conscience to warn the folks they sell credit cards to that you should pay off your balance in full every month, since the high interest rates credit cards charge (sometimes after a low-interest or zero-interest introductory period) will almost immediately reclaim the value of any rewards you earn on spend.

A newbie taking this advice literally might use their manufactured spend to immediately pay off the card used to generate it. And indeed, during opportunities like the unlimited 5% cash back offered by Wells Fargo credit cards in the past, that’s sometimes the most lucrative strategy.

But more experienced folks understand that while credit card interest should be avoided, there are lots of advantages to holding onto cash, rather than plowing it back into the card used to generate it. A card with a 30-day billing cycle and 20-day grace period effectively offers a series of rolling 50-day interest-free loans. The more lucrative your short-term investment opportunities, the more willing you should be to maximize the value of those interest-free loans, a strategy discussed by Sam Simon and Robert Dwyer in the February 1, 2019, episode of their Milenomics Squared podcast.

That means if your credit limits are too low to meet your needs for cash to plow into your most profitable gigs, you may well find it worthwhile to put spend on a second-best or third-best card.

Ascend Hilton Honors Diamond spend threshold

In general, Hilton Honor Diamond status doesn’t afford very many concrete or guaranteed benefits. In fact, the only guaranteed benefit I’m aware of is that Gold members are only entitled to executive club access when they’re upgraded to a club floor, while Diamond members receive club access even when they are not upgraded. That’s not nothing, but it’s also not much.

Moreover, Hilton status seems to last more or less forever. So while Diamond status is a benefit of spending $40,000 per year on the Hilton Honors Ascend American Express card, you don’t have to spend $40,000 every year. If you spend that much even once, you’ll probably have Diamond status for at least 2-3 years, if not longer.

However, if you’re keeping the Ascend in order to hit the $15,000 spend threshold every cardmember year, you may find it worthwhile to also hit the $40,000 Diamond status spend threshold every few years, especially if you can do so in bonused spend categories.

Bonus use case: you just need more points

As Reyes pointed out in his post, while each individual Hilton account holder is limited to purchasing 80,000 (and receiving 160,000) points per year, Hilton has made it easy to transfer and pool points, so in principle you can simply enlist as many people as needed to buy points during each promotion and then combine them for your desired redemptions.

In reality, conscripting friends and family to help you spend thousands of dollars on virtual currency is as likely to generate dead-eyed stares as it is Hilton Honors points. Once you’ve picked the low-hanging fruit of yourself, your spouse, and your kids, you might simply not have any good options for additional points purchases. At that point, instead of wasting time trying to cajole your relatives into playing along, you might find that it’s worth slightly “over-paying” to avoid the fuss.

Top-tier Hilton properties eligible for the Aspire resort credit

Thanks to lifecycle effects I haven’t taken as many sprawling international vacations as I did when my life was governed by the academic calendar, which has had the ancillary effect of nudging me towards somewhat more luxurious travel plans. To give a trivial illustration, 250,000 annual Ultimate Rewards points earned through office supply spend on a Chase Ink Plus are worth 16 nights at 15,000-point World of Hyatt properties but only 8 nights at 30,000-point World of Hyatt properties, so the decision of whether to stay at a 15,000-point property or a 30,000-point property is in part governed by how many nights I need to book each year.

That has made me more curious about top-tier properties in each chain, like the Grand Wailea in Maui where we stayed earlier this month. Since I earn a lot of Hilton Honors points (and they can be purchased for less than 0.5 cents each through a cash back portal during Hilton’s frequent promotions), I wanted to take a look at all the top-tier Hilton properties where the Hilton Honors Aspire American Express card’s $250 resort credit can be redeemed.

In principle, these would be the properties where you can get the most value (in points) from American Express free weekend night certificates, the elite 5th-night-free benefit on award stays, and the Aspire credit card resort statement credit. I couldn’t find an existing list anywhere online, so I decided to assemble it myself for my and your future reference.

95,000-point Hilton Honors properties eligible for $250 Aspire resort credit

Note that due to Hilton variable award pricing, these are properties where the maximum, standard room award rate is 95,000 points. The actual rate for the dates you want may vary, sometimes substantially, below the maximum rate. After each property, I’ve indicated a sample redemption value for a 5-night, 380,000-point reservation 6 months from now.

Waldorf Astoria

• Grand Wailea, A Waldorf Astoria Resort, $3,467.42 (0.96 cents per point)

Curio Collection by Hilton

• Hotel del Coronado, Curio Collection by Hilton, $2,342.41 (0.62 cents per point)

Conrad

• Conrad Fort Lauderdale Beach, $1,903.73 (0.5 cents per point)

• Conrad Maldives Rangali Island, $4,249.29 (1.12 cents per point)

• Conrad Koh Samui, $3,404.35 (0.9 cents per point)

Hilton

• Hilton Odawara Resort & Spa, $1,967.32 (0.52 cents per point)

• Hilton Seychelles Northolme Resort & Spa, $3,111.88 (0.82 cents per point)

A clarifying exercise

I arrived at this list by applying two filters to the entire list of Hilton properties: eliminate properties that don’t have a maximum redemption rate of 95,000 points per night, and eliminate properties that don’t qualify for the Aspire resort credit. However, while this is a good way of determining the properties where you can take advantage of Hilton program rules to save the most points, it says nothing about where you can use Hilton Honors to save the most money. Indeed, since I looked at 5-night stays 6 months in the future (July, 2019), I didn’t even look at the highest-dollar-value redemptions at these properties, most of which I assume would fall over spring break, Thanksgiving, Christmas, or other peak-travel holidays.

Moreover, while there are only 15 total properties in the Hilton Honors system that charge a maximum of 95,000 points per night (according to Loyalty Lobby’s March, 2018, update) there are 65 properties that charge 80,000 points per night and 145 that charge a maximum of 70,000 points per night. In other words, there are ample areas to fish for high-value redemptions outside the 95,000-point pond.

Conclusion

I am a big fan of Hilton Honors, but since I use my miles and points to book the trips I want to go on, I was a bit disappointed by my findings. I had a great time at the Grand Wailea, and would happily return there, but don’t have any special interest in visiting the Maldives, Seychelles, or Koh Samui, let alone Coronado, California, or Fort Lauderdale, Florida, so the Hilton Odawara is the only property on this list I could conceivably plan on visiting in the foreseeable future.

Compare that to the list of top-tier World of Hyatt properties: New York, Paris, Milan, Zurich, Sydney, and Tokyo are all cities I’d be happy to splurge for a stay on with points (New York’s Park Hyatt was a bust, but Zurich’s was lovely).

That doesn’t mean you can’t get good value during your first year of Aspire cardmembership stacking free-weekend-night and 5th-night-free awards with the card’s $250 resort credit. But it does mean that you may want to hunt for the highest dollar-value savings outside the highest point-cost properties.

The Hilton Honors Ascend American Express Priority Pass Membership "Year"

Unlimited access to the Priority Pass network of airport lounges, which was long an afterthought compared to airline lounges and, more recently, the superb American Express Centurion lounges, has quietly become an impressive benefit of many super-premium credit cards, like American Express Platinum cards, the Chase Sapphire Reserve, and the Citi Prestige. In part that’s because Priority Pass has aggressively added airport restaurant locations where you can typically receive about $28 towards your food and drink bill (excluding gratuities). When I first started tracking that option, I recorded just 23 participating restaurants. The number is now up to 49!

Credit cards issued in the United States have typically offered either unlimited Priority Pass memberships or, like the Chase Ink Plus, “memberships” in name only where “members” pay $32 or so for lounge access. Obviously those memberships don’t offer any value at all at non-lounge locations, since the benefit is usually capped at $28-$30, although they might theoretically still be useful on long international layovers.

The Hilton Honors Ascend American Express struck an interesting compromise, offering a Priority Pass membership that includes 10 free visits per year, a benefit I enjoyed last year (although my partner’s new Hilton Honors Aspire card will give us both unlimited free visits while traveling together).

If you have an Ascend card and don’t otherwise have unlimited Priority Pass access, you should already be asking an important question: what’s a “year?”

Three ways a year could be defined

The two most common ways credit card benefits are restricted are by cardmember year and by calendar year. For example, American Express airline fee reimbursements are offered on a calendar year basis, while American Express Delta companion tickets are offered on a cardmember year basis, with the companion ticket appearing in your SkyMiles account shortly after your annual fee is charged each cardmember year.

There’s a third option, however, when benefits are provided by a third party: third-party program year benefits. For example, American Express Platinum cards offer Hilton Honors Gold status as an incidental benefit, but your Hilton Honors Gold status doesn’t depend on either the calendar year or your cardmember anniversary. Instead, it depends on the Hilton Honors program year, and your Gold status will continue for a year or longer even if you don’t renew your Platinum card.

American Express claims Priority Pass membership is based on a third-party program year

You can find American Express’s description of the Ascend Priority Pass benefit on the online application or by logging into your account. It’s more or less identical in both cases, and crystal clear (this text comes from the description in my online account, emphasis mine throughout):

“Your Priority Pass Membership year begins on the date you enroll. Once enrolled, you will receive your Priority Pass Select card directly from Priority Pass within 10-14 business days. There is no membership fee with your Hilton Honors American Express Ascend Card. With your Hilton Honors American Express Ascend Card you will receive 10 complimentary lounge visits each Priority Pass Membership year. Once your 10 complimentary lounge visits are used, all subsequent lounge visits during the remainder of the Priority Pass Membership year are subject to a fee equal to the amount of the guest visit fee of the Priority Pass Standard program per person per visit, which will be automatically charged to your Card. To check on your remaining complimentary visit balance, please contact Priority Pass directly. Any unused complimentary lounge visits will be forfeited at the end of each Priority Pass Membership year.”

In other words, whenever you get around to enrolling in Priority Pass, the clock starts on your Priority Pass membership year, during which you can make 10 total visits, including guests. This would theoretically be gameable, for example by waiting until a few weeks before the first trip you expect to use Priority Pass on, thereby delaying the start of your Priority Pass membership year.

But it’s not true.

The Hilton Honors Ascend Priority Pass membership is a calendar year benefit

I know travel hackers all fancy themselves jailhouse lawyers, so before anyone starts commenting about how crystal clear the terms and conditions are, let me say: I know how crystal clear the terms and conditions are. But if you rely on the terms and conditions, you’re going to end up with a bunch of $32 credit card charges before you know it.

Fortunately, I only ended up with one, but it illustrates the issue perfectly:

• My Hilton Honors Ascend annual fee was charged on January 19, 2018;

• I registered for Priority Pass on February 7, 2018;

• I made 11 visits between August 20, 2018, and December 26, 2018, and was charged $32 for the 11th visit;

• I made another visit on January 2, 2019, and was not charged.

There’s simply no other way to explain this set of facts than the benefit being based on the calendar year, contrary to the explicit terms and conditions of the benefit.

My secondary piece of evidence is that I called Priority Pass today to ask how the benefit works, and spoke to a lovely woman with a perfect British accent who nevertheless understood no English. After both of us shouted at each other in perfect English long enough, she finally understood my question and told me I get 10 free visits per calendar year, I’ve used 1, and I have 9 remaining. At that point I politely thanked her and she politely hung up on me, to both of our relief.

Conclusion

For me, travel hacking is about staying focused on a simple question: how does it really work? The systems we take advantage of lie on the intersection of marketing, engineering, and law. Sometimes the marketers talk to the engineers, sometimes the engineers talk to the lawyers, and sometimes nobody talks to anybody at all. It isn’t enough to ask what the marketers intended, or what the lawyers wrote, if you don’t pay attention to what the engineers actually programmed.