Exceptions, exemptions, and exclusions from hotel rewards and benefits

After 4 years involved in travel hacking, I still find myself learning something new almost every week. For example, since until this year I'd never had Hyatt Gold Passport Diamond elite status before, it had never occurred to me to dive into the gritty details of Suite Upgrade Awards.

There are in fact quite a few popular benefits of hotel loyalty programs that have cavernous exceptions you may not know about. Here are four.

Hilton HHonors elite 5th night free exceptions

Elites in the Hilton HHonors loyalty program get their 5th night free on all-points award stays (not on "points and money" awards).

But the Hilton HHonors terms and conditions conceal a landmine: the 5th-night-free benefit "[d]oes not apply when stay is booked as part of a Reward Stay offer, package, or promotion offered by Hilton or any of its partners, or at All-Inclusive properties or Distinctive properties."

"All-inclusive properties" is simple enough, although I consider it a bit cheap since there are non-all-inclusive properties that cost more points per night than Hilton's all-inclusives while still managing to honor the 5th-night-free benefit.

That leaves the question: what are "Distinctive" properties? Amazingly, the Hilton HHonors terms and conditions don't say. For that, we'll need to turn to Citibank.

Citi Hilton HHonors Reserve weekend night exemptions

You may have heard of the Citi Hilton HHonors Reserve weekend night certificates offered as a signup bonus after spending $2,500 on the card within 4 months and on each account anniversary if you spend $10,000 during the membership year.

What you may not have heard about are the properties that are exempted from having to honor those free night certificates! Citi excludes all-inclusive properties and distinctive properties, and handily provides us with an actual list of the excluded properties. Besides the all-inclusive properties, they also list all the "Distinctive" properties that are excluded. Most of these are simply timeshare properties operated as Hilton Grand Vacations properties, but the last one, the Qasr Al Sharq, appears to me to just be a very luxurious hotel that managed to carve itself out an exemption.

Hilton HHonors breakfast and upgrade policy exclusions

If you're used to receiving a complimentary continental breakfast when staying at Hilton and Conrad properties, you might be surprised to discover that Waldorf Astoria Hotels and Resorts are excluded from that benefit. Your "My Way" benefit choices are limited to upgrades to preferred rooms and your choice of 1,000 HHonors points, a free in-room movie, or a spa, golf, or restaurant discount.

Speaking of those upgrades to preferred rooms: the Napua Tower at the Grand Wailea and the Imperial Floor at Rome Cavalieri are excluded by name from the preferred room upgrade benefit.

Properties excluded from Hyatt Suite Upgrade Awards

Everyone knows that "Suite upgrade awards are only valid for standard suites, defined as each participating property’s introductory suite category," which can be a real pain when you're trying to figure out which available suites are and aren't eligible for upgrades.

But there are also properties and brands that are completely excluded from suite upgrades!

First of all, "Suite upgrade may not be booked at Hyatt hotels or resorts before they have opened."

And second, "Suite upgrade awards are not available" at:

• Park Hyatt Beaver Creek Resort and Spa
• Park Hyatt Maldives Hadahaa
• Park Hyatt Sydney
• Andaz Tokyo
• Hyatt Regency Kyoto
• Hyatt Regency Phuket Resort
• Hyatt Regency Tulsa
• Hyatt Regency Wichita
• Hyatt Paris Madeleine
• Hyatt Herald Square
• Hyatt Key West Resort and Spa
• Hyatt Manila City of Dreams
• Hyatt Santa Barbara
• Hyatt Residence Club resorts
• Hyatt Place and Hyatt House hotels
• and M life resorts.

Some of these properties, like the Hyatt Place and Hyatt House brands, simply don't offer suites. M Life resorts are only bookable as part of a joint marketing effort, so you can imagine some kind of logic behind them not offering free suite upgrades to Hyatt elites.

But the Park Hyatt Beaver Creek and Andaz Tokyo do have suites, and the Park Hyatt Maldives and Park Hyatt Sydney at least have upgraded rooms. They're just extremely expensive and the properties aren't inclined to guarantee them to Diamond elite members in advance, for free.

Conclusion

Travel hacking is the knowledge that the house doesn't always win; it can be beat. But it can only be beat when you know what you're entitled to, and what the loyalty programs and properties can give you at their own discretion.

Why I insist on pedantically comparing award redemptions to cash

In the comments to last Wednesday's post, reader Paul Wellington made a great comment, which read in part:

"this sort of redemption nerd logic makes me chuckle and misses the forest for the trees. You have zero interest in paying for it. So who cares what promotion they're running that nominally reduces the value of your redemption? Absolutely irrelevant. Your focus should be on 1) free 2) quality of amenity/experience. What do you care if the cash payers are getting a small break if you're still getting the same package of goods with points? Obviously, this is an elastic concept - at a certain price point, you'll happily pay cash instead of give up valuable points, but it's nowhere near that sweet spot."

I responded to Paul there, but I think he makes a couple very interesting points I want to address in slightly more depth.

There are (at least) three "costs" that matter when evaluating a redemption

There are two different ways to judge a redemption — and they may produce conflicting results:

• How much did the points cost to acquire? If you manufacture spend, you can add up all the fees you paid to earn the earn the required number of points, and end up will a total out-of-pocket cost. For example, if you buy $300 Visa gift cards from Staples, you may pay 0.59 cents per Ultimate Rewards point, so a 30,000-point Hyatt Gold Passport stay will cost $177 in out-of-pocket fees (although the correct point of comparison is the $300 in cash you could redeem the same 30,000 Ultimate Rewards points for).
• How much could you have earned manufacturing the same spend on a cashback-earning credit card? This value is what I call the "imputed redemption value" or opportunity cost of a redemption. If you buy PIN-enabled Visa gift cards at an unbonused merchant with a Marriott Rewards co-branded credit card, a 50,000-point redemption will cost you the $1,000 you could have earned manufacturing the same spend on a 2% cash back credit card.

Once you know those two costs, you can compare them to the retail cost of the award redemption or (my preferred metric) the cost of the hotel you'd stay in or ticket you'd buy if you didn't have access to loyalty currencies.

There are logically three places that price may fall:

• The hotel may be cheaper than the price you paid for the required points. A 50,000-point Marriott room night might be selling for $250. If you transferred in 50,000 Ultimate Rewards points, you're paying $250 more than you would if you just redeemed your Ultimate Rewards points for cash and booked a paid stay!
• The hotel may be more expensive than the price you pay for the required points, but cheaper than the imputed redemption value. Since I buy my HHonors points for about 0.22 cents each, but they have an imputed redemption value of 0.35 cents each, hotel redemptions falling in that range save me money compared to paying cash, but cost me money compared to manufacturing spend on a cashback-earning credit card instead of on my American Express Hilton HHonors Surpass card.
• The hotel may be more expensive than the imputed redemption value. This is what you should generally think of as a "good" redemption: you're earning more value manufacturing spend on your co-branded credit card than you would have putting the same spend on a cashback-earning credit card.

Direct your spend to the cards that generate the most consistent value

Now, Paul is exactly correct that I have zero interest in paying cash for my stays. Since the least valuable point is always the one you don't redeem, I'll happily, eagerly, ecstatically redeem points at a mediocre or bad value rather than pay cash.

But if, over time, one loyalty currency affords me less and less value compared to earning cash instead, I'll shift my earning away from that currency towards cash or another, more consistently-valuable one.

But it's only possible to make those longterm strategic calculations if you also make sure to conscientiously track the value you get when redeeming your miles and points! That can seem pedantic, but only because the conventional wisdom about the value of manufacturing spend on hotel co-branded credit cards is roughly correct (Starwood, Hilton, and Wyndham are pretty good, the others are very bad).

If hotel occupancy rates stay high, and programs continue to devalue, their currencies will edge closer and closer to the breakeven point, and even programs like Hyatt Gold Passport will stop generating consistently outsized value. If you don't know how to calculate the value you're getting from your points, you're at risk of being left behind as those shifts take place.

Western Hemisphere all-inclusive resorts

I wrote a few weeks ago that I've been craving a beach vacation, and I decided to take a look at so-called "all-inclusive" resorts, mainly out of curiosity: I've never stayed at one of these resorts (although I did crash one in Cuba's Veradero beach community) and I have a hard time conceptualizing exactly how they work. With the points currencies I have easy access to, there are 4 obvious options in the Americas:

• Hyatt Zilara Cancun
• Hyatt Zilara Rose Hall
• Hilton Rose Hall Resort & Spa
• Hilton Puerto Vallarta Resort

The Zilara properties are Hyatt's brand of adults-only all-inclusive properties, while the Hilton properties are all-ages (a slight disadvantage in my book as a childless person, no offense meant to childful people) but available using Hilton HHonors points, an account where I've found myself with an uncomfortably large balance.

Methodology

In deciding between the four properties, I want to be as rational as possible. In my view there are two main considerations:

• Nightly room rates. What's the imputed redemption value of a points stay, and what are some typical nightly rates: are points redemptions a good deal?;
• Flight options. Paying for your stay is only the part of a trip's total cost — you've also got to get there. Especially if you're booking for two or more people, a small difference in flight costs can swamp any difference in room rates.

Hyatt Zilara Cancun

The Hyatt Zilara Cancun costs 25,000 Gold Passport points per night for single or double occupancy rooms (40,000 for single or double occupancy suite nights), and 12,500 points per additional person after the first two.

Meanwhile, due to a current 50% discount promotion, a 5-night stay in mid-July costs $2,400, giving an upfront value of just 1.92 cents per Hyatt Gold Passport point. Since paying for that stay would also earn a Diamond elite member 15,600 points, the net value per point is just 1.71 cents each. That's a perfectly good redemption if you're transferring in Ultimate Rewards points worth a penny each, but it is on the low end of possible Hyatt redemptions. 

I have quite a few flight options to Cancun for the same July dates. Southwest flies from relatively-nearby Chicago nonstop in each direction for 30,014 Rapid Rewards points and $73.69 in taxes and fees ($373.83 in cash value if the Rapid Rewards points are transferred from Ultimate Rewards). A business class itinerary operated by American would cost me 60,000 Alaska Airlines Mileage Plan miles and $105. And an economy US Bank Flexperks redemption from my home airport would cost just 40,000 Flexpoints (redeemable for $400 in cash). Given those options, I'll pay the extra $25 to redeem Flexpoints and fly from my home airport.

Total cost for 5-night trip: $1,250 in Ultimate Rewards points, $400 in Flexpoints per person, $2,050 for two people.

Hyatt Zilara Rose Hall

Like the Hyatt Zilara Cancun, the Hyatt Zilara Rose Hall costs 25,000 Hyatt Gold Passport points per night for single or double occupancy reservations.

With the same ongoing 50% discount promotion, five nights at the Hyatt Zilara Rose Hall cost $2,215, or 1.77 cents per Gold Passport point. After accounting for points earned on paid stays (14,397), a Diamond elite would get a total of 1.59 cents per Gold Passport point redeemed.

While the two Zilara properties cost the same number of Gold Passport points, flights to Montego Bay are much more expensive than to Cancun: I can redeem 60,000 Alaska Airlines Mileage Plan miles plus $145.31 in fees per passenger, or 60,000 Delta SkyMiles plus $120.31 per passenger. The corresponding flights are just a hair over $1,000, so they'd cost 60,000 US Bank Flexpoints per passenger. Here Southwest comes to the rescue, with $586.79 roundtrip flights from Chicago Midway. That would cost me 30,000 Flexpoints per ticket ($300 cash value) or 32,832 Rapid Rewards points plus $114.69 per passenger ($443.01 cash value).

Total cost for 5-night trip: $1,250 in Ultimate Rewards points, $300 in Flexpoints per person, $1,850 for two people.

Hilton Rose Hall Resort & Spa

Remember, my motivation for booking this beach vacation was at least in part to use up some orphaned Hilton HHonors points after I started directing as many reservations as possible to Hyatt in order to take advantage of my matched Diamond status.

It turns out, however, that Hilton doesn't honor the 5th-night-free on award reservations at their all-inclusive resorts! That means a 5-night stay at the Hilton Rose Hall Resort & Spa costs 350,000 HHonors points, which if earned at 2.105% in opportunity cost comes to $245.58 per night — within striking distance of the $250 per night in cash value of Ultimate Rewards points redeemed at the Hyatt Zilara properties above.

By way of reference, the same 5-night stay would cost $1,745, or 0.5 cents per HHonors point.

Total cost for 5-night trip: 350,000 HHonors points ($1,228 in opportunity cost), $300 in Flexpoints per person, $1,827 for two people.

Hilton Puerto Vallarta Resort

The final entry here is Hilton's Puerto Vallarta Resort, which is just 50,000 HHonors points per night in July. Without the benefit of a 5th night free, you'll pay 250,000 HHonors points for a five night stay that otherwise retails for roughly $1,107, or 0.44 cents per HHonors point. Given a 2.105% cash back opportunity cost on manufactured spend, that comes to about $175 per night at this resort, the cheapest we've see so far.

Given that lower cost, it would be dynamite if I could get there on the cheap. Southwest isn't an option because of their punishingly early flights from the only two nearby airports they serve (there's a 5:30 AM now?). But I can pay 60,000 Alaska Airlines Mileage Plan miles and $133 per passenger for business class tickets, which is better than paying the 70,000 US Bank Flexpoints it would take to pay for the oddly expensive revenue economy tickets.

Total cost for 5-night trip: 250,000 HHonors points ($877 imputed redemption value), 60,000 Mileage Plan miles and $133 per passenger, 120,000 Mileage Plan miles and $1,143 for two people.

Conclusion

Presumably these calculations won't be useful to anybody else unless they want to visit an all-inclusive resort in mid-July! But this is the kind of calculation I run when I'm thinking about visiting a new property: how much will it cost to stay there, how much will it cost to get there, and what will I get for my money?

Personal finance digression: Robinhood is a pretty good app

Every once in a while I take a break from blogging about travel hacking and write about whatever personal finance topics are on my mind. For the past few weeks I've been playing around with an app called Robinhood, and thought I'd share my impressions.

Robinhood is a mobile-only trading platform

I don't exactly understand why mobile-only applications are so popular at the moment, but Robinhood is a good example of one. As far as I can tell, there is no way to log into your Robinhood account on their website to view past trades, deposits, withdrawals, dividends, etc.

Fortunately, the app is pretty good! The main page of the app shows the current value of your account, including cash and the market value of all the shares you currently own. Below that, there's a newsfeed that shows headlines based on general market events and news specific to the shares you're tracking. Finally, the main page shows your current share positions and any ticker symbols you've saved for the app to track.

That latter functionality works even if you don't have any shares deposited with Robinhood. In other words, you can use the app to simply track the price of any stocks and ETF's you're interested in.

I've always been curious why most brokerages report share prices with a 20-minute delay, which doesn't seem particularly consumer-friendly. In any case, it's cool that Robinhood reports share prices in real-time.

Buried slightly deeper in the app's menus are the options to view past transactions, make deposits to and withdrawals from your Robinhood account, cancel pending orders, and all the other things you might want to do with a brokerage account. They even show you all your scheduled dividend payouts on a single screen, which I've never seen in a brokerage account before (although my experience with them is limited).

Robinhood executes commission-free trades of US stocks and ETF's

Now we come to the real point of the app: Robinhood doesn't charge any commission to buy or sell US stocks and exchange-traded funds.

Most brokerage firms will charge you $7 or more to execute simple trades. If you want to buy or sell a single share, that commission can easily dwarf any paper profits you made on the underlying security.

There's not much else to say: Robinhood doesn't charge those commissions. They do list a number of fees for trading listed foreign securities, "Euroclear," and "Canadian." Those situations haven't come up for me yet.

Robinhood makes deposits from a bank account immediately available

This is a neat gimmick: in order to get you trading as soon as possible, Robinhood makes funds available immediately when you initiate a deposit from your linked bank account.

When I initiated a purchase in my Vanguard brokerage account the other day, it took 3 or 4 days for the funds to become available and the price had already moved away from me, so I do appreciate this feature of Robinhood.

Two minor problems and one philosophical grievance

There are two things that will become immediately obvious as soon as you start using Robinhood:

• Robinhood does not service tax-advantaged accounts. You can't set up Robinhood as a traditional IRA, Roth IRA, Health Savings Account, 529 College Savings account, or any other kind of account besides a taxable brokerage account. If you're in a tax bracket where short term and long term capital gains are taxed at different rates from ordinary income, you have to be aware of what kinds of capital gains and losses you create through the app. For my sins I've already earned $15 in short term capital gains which I'm not looking forward to reporting next year.
• Robinhood's newsfeed function is not hosted natively in the app. I think the newsfeed is a sort of silly gimmick, but if a headline does catch your attention you have to wait for your mobile browser to load the website, which more often than not has a paywall keeping you from reading the article that interested you! Note to all app developers: If you're going to have a newsfeed, host the articles on your app!

Still, those are both quibbles. The real problem with Robinhood is that it makes day-trading incredibly easy, and more or less encourages its users to day-trade. It does this in two ways.

First, by not charging fees for each trade, Robinhood removes any disincentive from quickly moving in and out of stocks. Don't get me wrong: I don't think it's good that brokerages charge fees for trades. That's money customers would rather keep. But that basically bad practice does at least discourage people from buying and selling stocks based on minor price changes. It acts as a subtle encouragement to hold securities for the long term.

Second, the newsfeed is, more or less, a stream of constant headlines telling you to buy, sell, or short whatever stocks you happen to have loaded into Robinhood. Their algorithm simply shows all headlines related to your shares from a range of financial websites, blogs, and actual news sources. For ConocoPhilips, my current newsfeed shows:

• ConocoPhilips: Shorts Closing In On The Bottom
• How To Play The Growth In US Oil Exports With Fat Dividends (Part 1)
• Oil Patch: The 'Circle The Drain' Phase Begins
• Short Conoco Philips Now

You can, and should, ignore the newsfeed, but as far as I can tell you can't hide or mute it, and it creates this sensation of light dread whenever I open the app.

Conclusion: Gambling is fun

Robinhood should not be your main brokerage account. That should be some place like Vanguard, where you can buy low-cost mutual funds without paying a commission, and set up tax-advantaged accounts like IRA's.

But if you have some money set aside for fun, Robinhood really does allow you to buy and sell US listed shares and ETF's without paying a commission, leaving you all the upside — and downside — risk from your stock market hunches.

Besides that, Robinhood allows you to buy and sell Vanguard ETF's like VTI (Total Stock Market ETF) and VXUS (Total International Stock ETF). As I like to say, although the personal finance and financial planning industries are obsessed with tax-advantaged accounts, there's no law against holding securities in a normal, taxable brokerage account. So if you'd like to save more money than you're able to in your IRA's and 401(k) accounts, you can buy and hold low-cost Vanguard ETF's in Robinhood without paying any commissions for the trades.

P.S. My top-secret gambling strategy

It seems crazy to write this much about a trading platform without revealing my proprietary gambling strategy. I have a simple rule: always bet the hard ways.

Wait, that's craps.

My proprietary gambling-on-the-stock-market strategy is to buy consistent dividend-paying stocks when they near their 52-week low. If the stock price recovers, I sell it. If it doesn't, I collect the dividend until it does. So I bought Royal Dutch Shell at an average of $38.73 and sold it at $44.86 (for my sins it's now at $45.27). Currently I'm holding BP, International Paper (IP), ConocoPhilips (COP), and the aforementioned VXUS.

I don't recommend this strategy to anybody, since it's based on nothing. But gambling, famously, is pretty fun.

Points don't care how much you paid for them

There's been some interesting discussion lately of how much you should be willing to pay for miles and points. I got the conversation started on Twitter by asking how much people would be willing to pay for an Ultimate Rewards point. The Saverocity Observation Deck podcast continued the conversation, and Joe at As The Joe Flies shared his thoughts as well.

It's possible to track the cost of individual points, but you probably shouldn't

One thing that I think is sometimes lost in these conversations is that it shouldn't matter how much you pay for any individual mile or point.

It is possible to track the cost of each mile and point you earn throughout the course of a manufactured spend cycle:

• At the front end, you can see the fees you pay for each prepaid debit card you buy and each load fee you incur.
• At the back end, you can see the price you pay when liquidating your manufactured spend back to cash: money order fees, bill payment charges, over-the-counter cash disbursement fees, etc.

There's an obvious advantage to doing so: if every individual transaction is profitable from start to finish, then you can't accidentally slip up and pay too much for your miles and points.

But there's a disadvantage, too: it doesn't make any conceptual sense.

Your points don't care how much you paid for them

If you insisted on rigidly tracking your cost per point, you might conceive of the following system: rank all your credit cards from most-lucrative to least-lucrative, then rank all your liquidation techniques from most-expensive to least-expensive.

You could then match your most lucrative credit card with your most expensive liquidation technique, your second-most-lucrative card with your second-most-expensive technique, and so on.

But since your points don't care how much you paid for them, that's virtually guaranteed to be the wrong approach.

Purchase and liquidation should be conceptually distinct

All manufactured spend, no matter how cheap, should generate the most valuable balance of miles, points, or cash, as possible.

All manufactured spend, no matter how valuable, should be liquidated back to cash as cheaply as possible.

Within that framework, it doesn't matter which gift cards you liquidate at your most expensive and cheapest merchants. Paying $1.88 to make a Walmart bill payment with a prepaid debit card you purchased for $3.95 at an unbonused merchant may not make sense in strict isolation, but if that's just one of hundreds of prepaid debit cards you purchased over the course of the month, it doesn't make sense to "keep track" of which prepaid debit cards you purchased with more-lucrative and which with less-lucrative credit cards.

Once you've put a charge on your credit card, the earning side is complete. At that point, all your prepaid debit cards need to be turned back into cash with whatever tools you have at your disposal, whether free, cheap, or expensive.

Conclusion

Once you accept that the cost of acquisition shouldn't influence the price you're wiling to pay for liquidation, you may well discover it's remarkably liberating: it doesn't matter which Metabank-issued prepaid debit cards you buy at grocery stores and which you buy at shopping malls — those are the cheap ones to liquidate. It doesn't matter which Vanilla-branded prepaid debit cards you paid more or less for — those cost more to liquidate.

The only thing that matters is whether you're maximizing your overall value, and minimizing your overall costs, over the course of a month, quarter, or year of manufactured spend.

Quick hit: Visa Supplier Locator

A reader recently pointed out to me that last week over at Travel with Grant, Grant wrote that he noticed on his last US Bank Flexperks Travel Rewards credit card statement the following curious text:

"Beginning March 1, 2016, the accelerated earn category of 'grocery' will be changed to 'grocery stores'. This may result in double FlexPoints not being awarded on transactions at discount/retail stores which may sell some groceries but do not primarily sell groceries."

Let me be clear: I have no idea what this means, and am not particularly inclined to speculate. We know when Chase Freedom cards bonus grocery store spend they specifically exclude Target and Walmart store locations, but in that cases they exclude Target and Walmart by name — they don't beat around the bush with "mays" and "may nots."

But it does give me an excuse to remind readers about one of my favorite tools: the Visa Supplier Locator.

Look up an individual store's Industry/MCC code with the Visa Supplier Locator

Many stores, even stores which belong to national chains, have different MCC codes depending on the way their credit card processing accounts were configured. There are patterns, but those patterns aren't particularly interesting since you can look up the MCC code of any individual store using the Visa Supplier Locator.

Those MCC codes determine, under most circumstances, whether you'll receive bonus points on Visa and MasterCard credit cards that bonus purchases made in specific categories. If a Visa or MasterCard credit card bonuses purchases at gas stations, you want MCC 5541 — SERVICE STATIONS. Drug stores and pharmacies? That's 5912 — DRUG STORES & PHARMACIES.

And if you're using your Flexperks Travel Rewards credit card at grocery stores in a given statement cycle (each month you should decide between gas stations and grocery stores), you'll want to look out for 5411 — GROCERY STORES/SUPERMARKETS.

Conclusion

We should find out in the first week or two of March what, if anything, the change to the Flexperks Travel Rewards "grocery store" bonus category really entails.

But in the meantime, do yourself a favor: take 20 minutes and look for some undiscovered bonused earning gems near you!

Let's all remember why (keeping) Chase Sapphire Preferred is so bad

I was going about my appointed rounds the other day enjoying the latest episode of the Saverocity Observation Deck podcast when I was suddenly felled by a violent attack of chagrin: here was Matt, the Fearless Leader(TM) over at Saverocity, defending the Chase Sapphire Preferred!

I'm not about to let all my hard work tearing that card to shreds be undone by a careless podcaster, no matter how dulcet his tones. So here's a refresher course on why almost no one should get the Sapphire Preferred (except for the signup bonus), put any spend on the Sapphire Preferred (after meeting the minimum spend requirement), or keep the Sapphire Preferred after the first year.

Everyday spend should be a rounding error in your miles and points strategy

Matt's first point was that on a trip into the city to meet some colleagues, he needed to buy a train ticket, catch a cab, pay for lunch, and do the whole thing in reverse. If he didn't want to bring a bulky wallet, he could grab the Chase Sapphire Preferred on his way out the door and use it for all his expenses, merrily earning bonus points all along the way.

A $100 roundtrip train ticket, $30 cab, and $400 lunch (Manhattan's expensive!) paid for with the Sapphire Preferred would earn Matt 1,060 Ultimate Rewards points. Valuing those points at a conservative 10 cents each means Matt has scored $106 in value, just from making purchases he was planning to make anyway!

But Matt knows perfectly well how to buy 1,060 Ultimate Rewards points for less than a penny each all day, every day. Using your actual purchases to decide which cards to get and keep is a surefire way to trick yourself into making bad — and expensive — decisions.

A Sapphire Preferred is a Freedom that hasn't hatched yet

Keeping a Sapphire Preferred after the first year for the bonus categories makes particularly little sense since the Sapphire Preferred can be product changed to a Chase Freedom. While great for manufacturing spend, the Chase Freedom has also bonused restaurants in one quarter for at least the last 4 years. So for 3 months of the year Matt shouldn't be putting his $400 lunches on the Sapphire Preferred anyway!

Likewise, in the current quarter Freedom is bonusing local commuter transportation, so if Matt's inclined to earn Ultimate Rewards points for his train tickets (Amtrak excepted), he can buy a whole year's worth of rail passes and earn 5 Ultimate Rewards points per dollar rather than the measly 2 points offered by Sapphire Preferred!

As Twitter user @BoonDR concisely put it, "a CSP is a Freedom that hasn't hatched yet." Keeping a Sapphire Preferred out of regard for its bonus earning categories is leaving literally tens of thousands of Ultimate Rewards points on the table every year you persist.

The value of flexibility depends entirely on your earning ability

Now let's get to the core issue: if you don't have or want a Chase Ink Plus small business credit card, you have no choice but to carry a Sapphire Preferred if you want your Ultimate Rewards points to be transferrable to Chase's travel partners (or redeemable for 1.25 cents towards travel booked through the Ultimate Rewards portal).

The problem is that without a Chase Ink Plus (and as many Freedoms as you can talk Chase into), you aren't going to be able to cheaply earn the kind of Ultimate Rewards balances that let you maximize the value of Ultimate Rewards' flexibility: the most valuable Ultimate Rewards redemptions give you a high redemption value per point (the appeal of Ultimate Rewards), but individually require large numbers of points.

Drawing on some examples I've used before, a 15.6-cent-per-point redemption at the Park Hyatt Milan is a great redemption — that costs 30,000 Gold Passport points per night ($30,000 in unbonused Sapphire Preferred spend). A 10-cent-per-point Lufthansa First Class redemption is a great value, but costs 110,000 United MileagePlus miles ($110,000 in unbonused spend).

The transferability of Ultimate Rewards points, whether it comes from a Sapphire Preferred or Ink Plus card, is valuable precisely to the extent that you are able to easily and cheaply manufacture Ultimate Rewards points. A combination of Ink Plus and Freedom gives that earning ability in a way that a Sapphire Preferred alone doesn't, which makes the Sapphire Preferred radically less valuable than the other two.

It's even worse if you're cannibalizing bonused spend

If you have limited liquidation bandwidth, as most of us do, then a dollar of unbonused spend put on the Sapphire Preferred might actually be displacing a dollar of bonused manufactured spend. And that's virtually never a good idea.

Ultimate Rewards points can be transferred to Hyatt at a 1-to-1 rate, which is a great deal if you're earning 2 or 5 Ultimate Rewards points per dollar. But if an unbonused dollar of Sapphire Preferred spend is displacing a dollar of bonused Hilton HHonors Surpass spend, you're exchanging 6 HHonors points for a single Hyatt Gold Passport point.

While Gold Passport points are worth more than HHonors points, they aren't worth 6 times more — Hilton's award chart tops out at 95,000 HHonors points, while Hyatt's ends at 30,000 Gold Passport points.

If you have a lot of reimbursed business travel expenses, fine, go for it

Since the Chase Ink Plus also gives 2 Ultimate Rewards points per dollar spent at hotels (up to $50,000 per year), it's still a strong choice for a lot of business travelers. But if you travel very regularly for business and are reimbursed by your employer for plane tickets, car rentals, and meals, you may have tens or hundreds of thousands of dollars in travel expenses each year to charge to the Sapphire Preferred. In that case, be my guest: keep Sapphire Preferred and you won't hear a peep out of me.

But if you're just charging the occasional taxes and fees on award tickets, and domestic economy tickets when you can't find award availability, we're likely talking about a few thousand bonus Ultimate Rewards points per year.

So do yourself a favor: call Chase and ask nicely for a product change to Freedom. You can thank me later.

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

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

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

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

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

Find travel rewards programs that work together

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

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

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

Find credit cards that work together

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

For example:

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

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

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

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

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

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

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

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

Conclusion

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

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

What to do with IHG Priceless Surprises points

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

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

At the low end: PointsBreaks list and more remote properties

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

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

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

In the middle: Category 4 and 5 properties

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

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

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

At the top: Category 11 properties

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

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

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

Other redemptions

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

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

Understanding booking channels

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

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

What is a booking channel?

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

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

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

Your choice of booking channel restricts your options for savings

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

Better fewer, but better

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

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

Understand booking channels to manage exceptions

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

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

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

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

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

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

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

Conclusion

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

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