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

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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

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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:

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.

On communities and responsibilities

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I try not to get too worked up over other bloggers' behavior. If you want to throw up a generic Wordpress template with a creditcards.com affiliate link, you'll never hear a peep out of me.

Of course, I make an exception for the very small number of credit card affiliate bloggers who dominate the credit card affiliate space, because the nature of the internet tends to concentrate their popularity and wealth far beyond their contributions to the genre. So when a Thought Leader From Behind misbehaves, I'll sometimes throw out some well-deserved snark on Twitter.

Yesterday was interesting

I spent most of the day yesterday in the car, so it wasn't until I got home in the afternoon that I discovered that a minor affiliate blogger had written a post describing how, in the course of manufacturing spend, she was splitting up and concealing money order deposits in order to avoid federal transaction reporting requirements.

The internet being the internet, the comments section of that post exploded with criticism, mockery, and derision. Likewise apparently the entire Twitter travel hacking community chimed in on various sides of both the substantive question of whether what she was describing was the federal crime of structuring and with more emotionally-charged personal attacks.

Individual responsibility is a weird concept

Two sentiments stood out to me in the course of that wide-ranging conversation. First, in two tweets Matt from Saverocity tried to explain to the blogger that she needed to "stop arguing and start thinking if your post can do harm to your readers" and then reiterated "This isn't about you."

The second sentiment that stood out to me was that the blogger wasn't responsible for what her readers did, and that it's everyone's individual responsibility to do their own research to determine if what they're doing is legal or not. That's something I see frequently when larger affiliate bloggers are criticized for peddling bad advice: readers have only themselves to blame if they follow the advice of these jet-setting clowns.

There's an obvious tension between those two sentiments: either we are in a constant war of all against all and answer to no one, or we're responsible for the consequences of our actions — particularly when they cause harm to others.

If you know anything about me, you can guess I fall on the side of taking responsibility for the consequences of our actions.

People have been recording their thoughts, ideas, and experiences for a long time in private and professional journals, diaries, and logs. And a diarist who never publishes a word of her diary really can write anything they want and answer to no one!

But publishing those logs online, and especially doing so for commercial purposes, moves you into the public sphere and embeds you in a community of people. To then suggest that you're not accountable to anyone for anything you write, and placing the onus of judgment entirely on your readers, strikes me as a deeply cynical approach to life.

The blogger's aggressive reaction to criticism treated that criticism as a personal attack on her strong lady blogger identity. But Matt wasn't trying to convince her to get married, pregnant, and join the PTA; he was trying to convince her to take responsibility for correcting her error as quickly as possible, to avoid additional harm to innocent people who might take her advice at face value!

Conclusion

There are as many different approaches to travel hacking as there are travel hackers, and it's not surprising that different bloggers will take a variety of different approaches. In that context I think everyone has responsibilities: bloggers should exercise judgment in putting their readers' interests first, and readers should exercise judgment in both identifying and sharing the blogs they find helpful and steering others away from blogs that are mercenary, unhelpful, or, as in this case, downright dangerous.

Easy wins: Saint Kitts edition

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I was initially going to roll this into last Friday's post on the Park Inn Danube closing out from under me, since it's a related topic: looking for easy wins whenever possible. There's nothing wrong with Rube Goldberg gift card reselling machines — I occasionally indulge — but you want to go after those after you've cashed in your easy wins.

Every hotel loyalty program has regular property turnover

Someone once explained to me that hotels actually get some kind of tax benefit from leaving one loyalty program and entering a new one, but regardless of the back office details, it's a fact that properties periodically move from one chain's loyalty program to another's.

For example, the Radisson Aruba Resort, Casino & Spa was recently rebranded as the Hilton Aruba Caribbean Resort & Casino.

When that happened, guests who had redeemed Club Carlson Gold Points using their last-night-free benefit were suddenly booked at a newly refurbished Hilton rather than an aging Radisson!

That was an easy win.

The Park Hyatt St. Kitts is scheduled to open in December, 2016

When the Park Hyatt St. Kitts opens, it is going to be spectacular. It's scheduled to open in December, 2016, and they plan to start accepting reservations a few months before that.

And they might, in fact, open in December! They might, in fact, honor every reservation that's made through Hyatt as soon as reservations become available.

They also might not. And if they don't, you better believe that they're going to be offering points, nights, upgrades, and amenities to anyone who can't complete a stay they booked months in advance.

That's an easy win.

Conclusion: keep an eye out for new and renovated properties missing their deadlines

Hotels, especially new hotels, really want to put heads in beds. So they tend to err on the side of opening their reservation windows earlier, rather than later, to make sure they get the kind of occupancy rates they need to satisfy their anxious investors. That makes it worth scoping out upcoming properties and putting a reminder on your calendar to book rooms as soon as they become available.

Then put another reminder on your calendar to cancel the room within the cancellation window if the property ends up opening on schedule!

Entitlement is only the start of a loyalty conversation

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Sometimes travel hacking is about figuring out what you're entitled to and how to get it. It's not unusual to read blog posts about Starwood Preferred Guest elites searching for suites right up until the minute they check in, to make sure that the front desk staff give them the very best room they're entitled to.

Likewise, you're entitled to use Delta voluntary denied boarding vouchers for other passengers, as long as the person the voucher was issued to is one of the passengers on a single reservation. In practice, Delta makes that difficult, but not impossible.

Other times, what you're entitled to is just the starting point of a conversation.

Background: tour of Central Europe, 3 nights at a time

Before the June 1, 2015, Club Carlson devaluation, I booked a 9-night trip through Central Europe, with 3 nights at the Radisson Blu Beke Hotel, Budapest, 3 nights at the Park Inn Danube, Bratislava, and 2 nights at the Radisson Blu Style Hotel, Vienna.

The 3 nights at the Park Inn Danube cost 18,000 Gold Points total, for one 2-night reservation and one 1-night reservation.

The Park Inn Danube closed out from under me!

On Tuesday the manager of the Park Inn Danube e-mailed me to say:

"We hope this mail finds you well and we take this chance to wish you a fantastic start of New Year

We are happy to inform you [editor's note: I have no idea why he's "happy" to inform me of this] that our property, Park Inn Danube Bratislava, will go under full refurbishment from 1st of March 2016 until 1st of September 2016.

Due to this we are, unfortunately, not able to provide you with hotel accommodation as per your reservation...as the hotel operations will be completely ceased for the mentioned period.

We suggest you cancel your reservation trough Club Carlson in order to retrieve your Club Carlson points and we apologize for the short notice.

If you will still be interested to come to Bratislava, we strongly suggest booking the Radisson Blu Carlton that is located in the same area of Park Inn Danube."

How to turn 18,000 Gold Points into 84,000 Gold Points

When I found out my hotel had been closed, I immediately sized up the situation: I had 18,000 Gold Points locked up in my existing reservation. Bratislava doesn't have a ton of hotels in the old city, but as the general manager of the Park Inn Danube pointed out, it does have another Club Carlson property about a block away. Without the last-night-free benefit, three nights at the Radisson Blu Carlton Hotel would cost 84,000 Gold Points.

When I first called the Park Inn reservations line, the best suggestion the representative came up with was to cancel my existing reservations, and use the points for a cash and points reservation at the Radisson Blu. That would have left me out 15,000 Gold Points and $300.

And in fact, that's likely all I was entitled to.

So I took off my travel hacker hat and put on my civilian hat. If a civilian had a 3-night award stay planned a year in advance, and the hotel closed out from under them, they wouldn't agree to replace 3 free nights with a $300 paid stay! Instead, I explained the situation to the phone representative again, and told her I expected Club Carlson to reaccommodate me at the Radisson Blu Carlton Hotel.

She transferred me to their "Customer Care" department, and after a mere 30 minutes on hold, Club Carlson had deposited 66,000 additional Gold Points into my account and made me a 3-night reservation at the Radisson Blu:

Conclusion

Whenever I get a points windfall like this, I take the opportunity to think through my existing reservations to see if there's any way to optimize them for price or comfort.

For example, I could cancel the new award reservation, rebook the hotel with cash (about $300), then use 70,000 of the Gold Points for a third night at the Radisson Blu Style Hotel, Vienna. But hotels in Vienna aren't that expensive! The Park Hyatt Vienna costs just $250 in Ultimate Rewards points or $269 for a Points + Cash redemption (plus a Diamond suite upgrade, naturally).

In fact what I'm likely to do is cancel my existing 2-night reservation at the Radisson Blu Style Hotel, Vienna, upgrade our stay to a premium award redemption at the Radisson Blu Carlton Hotel, and book all three nights in Vienna at the Park Hyatt.

Your humble blogger's IHG Rewards Club Priceless Surprises datapoints

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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:

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

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[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:

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!

On false economy

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[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.]

After dropping off my MacBook Pro at the Apple Store on Sunday, I started poking around the current batch of gadgets and saw the 2 terabyte Time Capsule, currently retailing for a mere $299 before taxes and portal cash back (if you signed up in time to double your Discover cash back, you can get 5% cash back now and another 5% cash back at the end of your doubled year).

My current backup solution is a $54.99, 500 gigabyte external USB hard drive, and it works fine, except for three problems:

  1. I have to remember to plug it in;
  2. I have to remember to plug it in;
  3. and I have to remember to plug it in.

As long as I remember to plug it in, it backs up my hard drive. The longer I forget to plug it in, the more out of date the backup becomes, and the more data I potentially lose.

This got me thinking about the question of false economy, which happens to be very relevant to travel hacking, in several ways.

Thinking critically about false economy

It's easy — and dangerous — to fall into sloppy thinking about false economy, and the best defense is to carefully define our terms. For me, false economy doesn't mean "paying less for an inferior product." That's just economy — we expect things that cost less to be of lesser quality! For me, false economy means specifically saving money upfront in a way that ultimately ends up costing more money, by some order of magnitude, than the amount saved. Further, it helps if the larger, future costs are somehow foreseeable, but irrationally ignored for the sake of saving money upfront.

The best illustrations of my vision of false economy are when amateurs try to make do without the help of professionals. Regular economy is using masking tape to fix a plumbing problem. False economy is leaving town, the masking tape bursting, short-circuiting your refrigerator and causing a devastating fire (it happened to Edward Norton).

It's simply impossible to imagine saving enough money on plumbers in the short term to rationalize losing your home to fire in the longer term.

Think holistically to avoid false economy

There are two popular options college students use to save money when flying from South Central Wisconsin:

  • a $46 roundtrip bus to General Mitchell International Airport in Milwaukee, which is served by Southwest Airlines.
  • a $60 roundtrip bus to Chicago's Midway (served by Southwest) and O'Hare airports (served by Alaska), which occasionally have lower fares.

You can see the appeal of both options (especially if you're the parents paying to bring your kid home or, worse yet, send them to Cancun for spring break): if a Southwest ticket saves you $47, why not put your munchkin on the bus for an hour and make them fly out of Milwaukee? It's not like you're the one sitting on the bus.

When the travel hacker is the one traveling, the calculus suddenly changes dramatically:

  • Flexpoint redemption bands means more expensive local flights may cost you the same number of Flexpoints as flights which require a bus ride;
  • Discounted point redemptions mean even more expensive flights don't cost as much as they would when paying cash. For example, to justify paying $60 for a bus trip you'd have to save $75 in airfare if redeeming Ultimate Rewards points out of a Sapphire Preferred or Ink Plus Ultimate Rewards account (1.25 cents each), $85.80 when using "pay with points" in an American Express Business Platinum Membership Rewards account (1.43 cents each), or $96 when redeeming Citi ThankYou points from a ThankYou Prestige card on American Airlines (1.6 cents each).

As a mid-career white collar professional you might find these examples ridiculous: why would anyone take a bus instead of flying out of their local airport? The reason I raise them is that I want to take the idea of economy seriously, because spending tens or hundreds of dollars for "convenience" is really out of the question for a lot of people in this country.

And let me tell you: the busses to Milwaukee and Chicago are full, all day every day, with people doing their best to save a few dollars on airfare.

Avoiding false economy isn't an excuse to splurge

I think it was Matt from Saverocity who quipped on Twitter after reading yet another first class trip report that he couldn't justify paying $1,000 for an $80 bottle of champagne (well, he said "champers").

And that's the way I feel about a lot of so-called "aspirational" travel. It's not that there's anything wrong with getting a good night's sleep on a plane, or flying across the world to spend a week at the beach, it's that the marginal benefit of doing so over a far cheaper vacation (or many, many far cheaper vacations) isn't worth it to me personally.

And I think that's a real risk: once you recognize that false economy is a problem, there's a temptation to err in the opposite direction. If a $299 2-terabyte Apple Time Capsule is a good deal, well it's just $100 more for a 3-terabyte Time Capsule. That's just 33% more money for 50% more storage space (whether you need it or not)!

Yesterday's post on chasing Delta elite status illustrates the point nicely: booking a $350 first class ticket instead of a $250 economy class ticket with Flexpoints is a no-brainer: both tickets cost 20,000 Flexpoints, but one includes free checked bags, making elite status worthless.

But booking a $550 first class ticket instead of a $350 economy class ticket isn't a no-brainer: you're paying $100 (the cash value of 10,000 more Flexpoints) and saving just $50 in roundtrip checked bag fees. $50 in cash isn't a lot of money to pay for a roundtrip first class upgrade, but it's also not free.

You don't have to make rational decisions all the time

One of the advantages of paying such a small fraction of retail for our travel is that mistakes don't have catastrophic consequences. If you forget to book through a cash back portal, you might lose a 4% cash back payout on paid Hilton stays, but your reservation won't be canceled, you won't be arrested, you'll just pay slightly more than you could have if you'd remembered to click through.

But thinking through these questions in advance will help you develop the analytical tools you need to make better decisions, more often, than you would if you approached each decision from scratch each time you have to make a reservation.

I haven't bought a 2-terabyte Apple Time Capsule yet. But I'm thinking about it, and the reason I'm thinking about it is that a 2-terabyte Time Capsule doesn't have to save me very much time, stress, and money to be worth $299.

Done with Delta (SkyMiles)

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[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.

The Grand Hyatt New York is a weird hotel

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Last weekend my partner and I went to New York City to see Hamilton, the hit new Broadway musical. As a newly minted Diamond member of Hyatt Gold Passport, I decided to book us at the Grand Hyatt New York and see what all the Hyatt fuss is about.

Before arrival

Since my Diamond tier match was only confirmed in mid-December, I wasn't surprised that no suites were available for a confirmed Diamond suite upgrade (there was also a conference taking place in the hotel during our stay).

On December 24, 2015, the Grand Hyatt sent me the following e-mail:

"Dear Valued Grand Club Guest,
 
Thank you for choosing Grand Hyatt New York! It is a pleasure to have you as our guest and we hope to make your stay a memorable one!
Please note that due to seasonal maintenance, the Grand Club Lounge on the 16th floor will be closed from January 4th until January 10th  2016. During this period, we will be offering the following:

  1. 500 Gold Passport Bonus points for your stay per room.

  2. Complimentary breakfast in New York Central from 630AM – 1030AM.

  3. Half off appetizers, cocktails and house wines in New York Central from 5PM-8PM.

  4. “Plymouth” Business Room located on the conference level of our Hotel for your tranquility and business needs. “Plymouth” will be open from 6AM – 10PM daily. 

We sincerely apologize for this inconvenience and thank you for your patience during this necessary maintenance."

I though this was a pretty good deal. In addition to 500 bonus Gold Passport points, I'd also get a full breakfast in the hotel restaurant, rather than whatever the Grand Club decided to put out.

On arrival

Since our flight was arriving at 9:30 am, I proactively reached out to the Hyatt and told them we'd be arriving early. They responded that they'd try to have a room ready for us, but if it wasn't, they'd store our bags for us.

When we arrived, they were able to check us in immediately, and gave me an updated version of the Grand Club closure letter:

The letter's identical to the e-mail I received with the exception of the first point: instead of 500 Gold Passport points, now they were offering 2,500 bonus points!

Except the clerk who handed me the letter had obviously not looked at it, so she initially said she was giving me 500 bonus points. When I pointed out the discrepancy, she said she was adding another 1,500 bonus Gold Passport points to my account.

Well, I'm sure you can see where this is going. When the stay posted to my account, not only did I not get 2,500 points, I didn't even get 500 bonus points:

I'll get the points sorted out eventually, but I hate having to do multiple laps with a property to get what they've promised.

The room

We were given a standard King Grand Club room, which I think was "large for a New York hotel room." The room featured some odd design choices. The shower had this curious ledge sticking out at shin-height:

At first I assumed it was a seat that slid out, as some kind of gesture at ADA compliance. But it doesn't actually move, which makes me think either they cut the tile to the wrong length or it's a "shaving ledge" to rest your foot on while you shave your legs. Not a bad idea.

The bathroom also featured this bizarre motion-activated nightlight:

Maintenance issues

After our early morning flight, we decided to take a nap before exploring the city (yeah yeah, I'm old and boring).

My partner immediately noticed that one of the lamps in the room was rapidly flashing, even though it was turned off.

After napping, we went downstairs and told the front desk about the malfunctioning lamp, then went out to explore. A few minutes after we got back in the evening, we heard a knock at the door, and this small man came into the room with a stepladder and proceeded to install lightbulbs in the overhead fixtures (we hadn't noticed the missing bulbs):

When he was done he said, "Alright, you should be all set now." In other words, the actual problem we had complained about to the front desk had not made it to the handyman. All he knew was "there's something wrong with the lights." Once we explained the situation to him — again — he finally replaced the bulb in the lamp and left us alone.

Besides the problem with the lamp, one of the room's power outlets was coming out of the wall. I'm not sure if it's technically a safety hazard, but it's certainly not ideal:

Restaurant breakfast

Saturday and Sunday morning we had breakfast in New York Central, the restaurant in the lobby of the Grand Hyatt. Since we hadn't been given any cap on our complimentary breakfast, we did our best to get our money's worth. This is what $106 in hotel breakfast looks like:

Joe Cheung tweeted me that around the corner at the Andaz 5th Avenue he was given a cap of $75 on his restaurant breakfast, so I was pleased to see that they took the entire charge off our bill at checkout.

Conclusion

Since I'm new to Hyatt's variety of brands, I didn't know what to expect from a Grand Hyatt. If the Grand Hyatt New York is typical, then it's a no-frills, full-service brand with spotty customer service training.

If that sounds harsh, keep in mind that the Grand Hyatt New York is typically one of the cheapest Hyatt properties in Manhattan, which is why we stayed there in the first place. I'm sure the room and the service would have been better at the Andaz 5th Avenue, but I would have paid over twice as much for the pleasure.