Did the Marriott Hotel + Air arbitrage opportunity just get even better?

All the way back in September, 2016, I wrote that Marriott Hotel + Air packages offered an outlandishly good opportunity to transfer Starpoints to certain airline (but not train!) partners, even if you never intended to redeem the attached 7-night stay certificate.

A curious post by a Starwood employer on FlyerTalk suggests the deal might have gotten even better.

Use Marriott to transfer Starpoints to certain airline partners

Starpoints can be redeemed in multiples of 20,000 points (up to 80,000 points at a time) to receive the following number of points with a number of airline programs (this is a just an illustrative sample):

• United MileagePlus: 12,500
• Alaska Mileage Plan: 25,000
• Delta SkyMiles: 25,000
• American AAdvantage: 25,000

Because Starpoints can be converted into three Marriott Rewards points each, Marriott Hotel + Air redemptions allow you to transfer Starpoints into the same programs at slightly different ratios. 270,000 Marriott Rewards points (90,000 Starpoints) can be converted into:

• United MileagePlus: 132,000
• Alaska Mileage Plan: 120,000
• Delta SkyMiles: 120,000
• American AAdvantage: 120,000

When making these redemptions, you'll also receive a 7-night certificate good at a Category 1-5 property. Due to the fifth night free on award stays, that stay is worth between 45,000 (7 nights at a Category 1 property) and 150,000 points (at a Category 5 property) according to the current award chart.

"Outstanding Marriott Travel Packages will be cancelled and converted to equivalent points"

One thing that could happen after August 1 is that Marriott Travel Packages would be mapped to the new categories, with Category 5 certificates mapped to the new Category 4, Ritz-Carlton Tier 5 certificates mapped to the new Category 8, and the other certificates falling somewhere in between.

But according to Starwood's representative on Flyertalk, that's not the case. Instead:

"Floater certificates, including outstanding Marriott Travel Packages, will be cancelled and converted to equivalent points, credited to the member’s account for future redemption."

You might say (or sing, if you're so inclined), "what do you mean by that? That is not an answer."

And you'd be right! We have no idea how many points Marriott thinks are "equivalent" to a 7-night stay certificate. But instead of whining about uncertainty, I want to walk through a simple exercise thinking instead about the distribution of possibilities:

• Low-value outcome: Category 1-5 certificates are converted to 45,000 points each;
• Mid-value outcome: Category 1-5 certificates are converted to between 60,000 and 120,000 points each;
• High-value outcome: Category 1-5 certificates are converted to 150,000 points each.

This exercise illustrates that just being a "pessimist" isn't enough. Even If you think there's an 85% likelihood of the low-value outcome, a 10% chance of a mid-value outcome, and just a 5% chance of the high-value outcome, you should estimate the value of a 7-night certificate to be around 55,000 Marriott Rewards points, which means you're almost (5,000 transferred Ultimate Rewards points away) at another 25,000-mile transfer under the new Marriott Rewards program.

Of course, the more confident of the mid- or high-value outcomes you are, the more such redemptions you should be willing to make before August 1.

But no matter how you assess the distribution of possibilities, if you typically redeem your Starpoints by transferring them to airline partners, you should consider leaning into this one-time opportunity.

Is there any value in the latest crop of new credit cards?

[edit 5/14/18: added unlimited Priority Pass Select membership to list of Ritz-Carlton card benefits.]

Several banks have let out a steady trickle of new credit cards and announcements in the last few months, so I thought I'd run through a few of them and see if there are any offers worth signing up for or keeping.

Barclays Arrival Premier

I have had an Arrival Plus card for years, and use it for all my non-manufactured, non-bonused spend, as well as manufacturing spend on it. It has an $89 annual fee, for which you can redeem 8,900 miles as a statement credit. Since it earns a 5% rebate on all the miles you redeem, it functions as a 2% cash back card when you spend "about" $85,000 per year, since when you redeem those 170,000 miles you'll earn 8,500 in rebated miles and another 425 rebated miles when you redeem those, for a total of $89.25 in rebated miles. I also use the card's chip-and-PIN functionality to buy public transit tickets overseas, and Barclays recently added a flight delay benefit.

The new Barclays Arrival Premier has a number of differences from the Arrival Plus:

• $150 annual fee;
• no rebate on redeemed miles. Instead, earn 15,000 bonus miles when you spend $15,000 per cardmember year, and another 10,000 bonus miles when you spend a total of $25,000 per cardmember year;
• $100 Global Entry fee credit every 5 years;
• transfer miles to airline partners (Aeromexico, Air France/KLM Flying Blue, China Eastern, Etihad, EVA Air, Japan Airlines, Jet Privilege, Jet Privilege, Malaysia Airlines, Qantas).

This card is strictly superior to the Arrival Plus for annual spend between $15,000 and $85,000:

• at $15,000 in spend, you receive 15,000 bonus miles, which are enough to cover the $150 annual fee;
• between $15,000 and $25,000, the card acts as a straight 2% cash back card;
• at $25,000 in spend, you receive another 10,000 bonus miles, which means the card has earned a total of $600 on $25,000 in spend, or 2.4% cash back.

Only for spend in excess of $85,000 will the Arrival Plus's mileage rebate make the return on unbonused spend, after accounting for the annual fee, exceed the Arrival Premier.

Verdict: I'm not in any rush to sign up for the Arrival Premier since it doesn't have a signup bonus and it's not yet possible to upgrade from the Arrival Plus. I assume eventually Barclays will target existing Arrival Plus cardholders with an upgrade offer, which I'll likely take. If you don't have an Arrival Plus yet, the Arrival Premier seems like a perfectly reasonable way to get 2.4% cash back on $25,000 in spend each year, plus serving as a go-to card you can use when traveling internationally.

Starwood Preferred Guest American Express Luxury Card

I think this is the most interesting of the new Marriott Rewards cards that will be available in August, 2018, since it offers a higher earning rate on Marriott and Starwood purchases than the new Ritz-Carlton card, a more valuable anniversary free night award than the new Premier Plus card, and the ability to earn Platinum status after spending $75,000 during the calendar year.

If you spent $75,000 on the card per year, you'd end up paying a $450 annual fee for:

• a free night award worth up to 50,000 points;
• 150,000 Marriott Rewards points;
• $300 in statement credits against purchases at Marriott and Starwood properties, which should include room charges;
• Platinum status;
• and an unlimited Priority Pass Select membership.

Assuming you are able to redeem your free night award at a Category 6 or off-peak Category 7 property each year, your $75,000 in spend will earn the equivalent of 200,000 Marriott Rewards points, or 2.67 points per dollar. That's not quite as good as the Starwood Preferred Guest American Express card currently earns (3 Marriott Rewards points per dollar), but it does reduce the devaluation from 33% to just 11%.

Verdict: this card is too expensive to bother with for a leisure travel hacker, but a reimbursed business traveler who can choose their own hotel, and can therefore redeem the $300 statement credit for their employer's cash, might consider manufacturing up to $75,000 in order to enjoy Platinum status on a 4-night, off-peak Category 7 vacation starting in 2019.

Ritz-Carlton Rewards Credit Card

This card also has a $450 annual fee, but with almost nothing to show for it:

• a $100 statement credit on two-night paid stays at the Ritz-Carlton;
• 3 annual Club Upgrades on paid stays;
• a $300 travel credit;
• Platinum status after spending $75,000 per account year;
• and an unlimited Priority Pass Select membership.

It's important to note that even if you're a reimbursed business traveler, and even if you spend $75,000 per year at Marriott Rewards and Starwood properties each year, you should be using the Starwood Preferred Guest Luxury Card for that spend since it earns 6, rather than 5, points per dollar spent on those purchases. Using the Ritz-Carlton Rewards card would be leaving 75,000 points on the table.

I know families that love using Club Upgrades to save money feeding their kids when staying at Ritz-Carlton properties, but even if you are able to cash out the $300 travel credit, there's no way I'd be willing to pay $150 to pre-commit to a paid stay at a Ritz-Carlton every single year.

Note that, as is typical for Chase, the Ritz-Carlton card's Platinum status qualification is based on cardmember year spend, not calendar year spend, while typically for American Express, the Starwood Preferred Guest Luxury Card awards Platinum status based on calendar year spend. That means if you sign up for the Ritz-Carlton card for a signup bonus and decide to hit the $75,000 spend threshold to get Platinum status, you'll want to meet the spend requirement early in a calendar year, which should get you Platinum status for the remainder of that year and all of the following year.

Verdict: skip it — nothing to see here.

Marriott Rewards Premier Plus, Starwood Preferred Guest Credit Card, and Starwood Preferred Guest Business Credit Card

In addition to the two ultra-premium cards, Chase is also launching a new Marriott Rewards-branded card with a $95 annual fee and an annual anniversary free night award worth up to 35,000 points, and adding that benefit to the existing Starwood Preferred Guest consumer and business credit cards.

On its own these card aren't very interesting, since Marriott is the worst offender in terms of category creep, seemingly deliberately targeting the few valuable properties where free night certificates can be redeemed and moving them out of the eligible redemption categories, so I would never pay $95 for what's essentially a Category 5 free night certificate (or Category 4 peak season award).

However, one strategy that could make sense for some people is to combine one, two, or three of these cards with the Starwood Preferred Guest Luxury Card mentioned above. If you carried all four cards and spent $75,000 per year on the Luxury card, you could pay $735 in annual fees and $1,500 in opportunity cost (assuming a 2% cash back alternative) for:

• 150,000 Marriott Rewards points;
• 3 35,000-point free night awards;
• 1 50,000-point free night award;
• and Platinum status.

The point is simply that once you've manufactured Platinum status with the Luxury card, you should value the free night awards earned by the other 3 cards more highly than before. A 35,000-point free night award might not be worth $95 with Silver status, but might be worth $95 with Platinum status. Likewise one 35,000-point free night award might not be worth $95, but 3 might be worth $285 (if you can avoid moving hotels or paying cash to stay in the same hotel), and if so, then they should be even more valuable with Platinum status.

Verdict: whether or not stacking free night awards with Platinum status is worth the time and trouble is going to depend on how properties shake out into Marriott's new hotel categories. If, as I suspect, the most appealing city properties start in or quickly move into Category 6 and above, then the 35,000-point free night awards offered under the new program will be as worthless as the Category 5 awards they hand out today are.

Bonus: don't forget to cancel your Citi AAdvantage cards!

Not a brand new credit card, but a few days ago Citi e-mailed to tell me that:

"As a valued cardmember, soon you’ll automatically earn 2X miles at restaurants and at gas stations with the Citi / AAdvantage Platinum Select World Elite Mastercard.

"You’ll also be able to earn a $100 American Airlines flight discount after you spend $20,000 or more in purchases during your card membership year and renew your card. Your purchases on or after ‌July 22‌, ‌2018‌, qualify toward meeting the minimum spend requirement to receive this benefit."

I didn't have to scroll very far down to also see, "The annual membership fee for this card will be increasing to $99."

The card wasn't worth keeping at $95, so don't let them squeeze another $4 out of you!

Which blackout date policy will the new Marriott Rewards program adopt?

Lots of digital ink has already been spilled over what has been announced regarding the upcoming August 1, 2018, merger of the Marriott Rewards and Starwood Preferred Guest programs. One question we won't know the answer to until the changes go into effect is what the blackout-date policy of the new program will be, and even more importantly, how it will be implemented.

Marriott has a much more restrictive "no-blackout-date" policy than Starwood

As I explained back in 2014, Marriott allows properties to designate "Inventory Control Dates," on which they're allowed to limit the number of standard rooms available for redemptions. The tortured reasoning seems to be that it's not the date that's blacked out, but rather the rooms that are blacked out.

Starwood, on the other hand, states that "As a Starwood Preferred Guest member, you’ll never encounter a blackout date for Free Night Awards at SPG Participating Hotels. Unlike our competitors, we don’t limit the number of standard rooms available for redemption. So, if we have a standard room available at an SPG Participating Hotel, and you have the Starpoints – it's yours."

The merger page simply reads, "No blackout dates to get in your way," without any additional details.

Inventory control dates will infuriate Starwood loyalists

There are many times more Marriott properties than Starwood properties, and Marriott property managers are used to their inventory control dates, so I do not see how it would be possible for the combined program to adopt Starwood's much more generous policy without spending vastly more money reimbursing properties for award nights.

But it almost seems less plausible that starting August 1 Starwood members won't be able to redeem their points without restriction at properties where they can today!

There are ways Marriott could attempt to thread this needle. Since different brands already have different service standards (shampoo, bathrobes, room service), they could simply say that existing Starwood brands will have as one of their service standards a true no-blackout-date policy, while existing Marriott brands will continue to use inventory control dates.

Alternately, they could use Starwood's policy globally, but turn a blind eye to properties abusing the definition of a "standard room" (it may be apocryphal, but my favorite version of this is the property that supposedly put a fax machine in the corner of their standard rooms and called them "executive").

Conclusion

Both Marriott members are rightfully glad they can now book Starwood properties, and Starwood members are looking forward to the big 43% cut to the cost of top-tier properties coming in August. But while Starwood members know to be concerned about the influx of members to their preferred properties, a process that will only accelerate when the programs finally merge and making reservations across brands becomes seamless, the introduction of inventory control dates would mean that bigger pool of members and points will be chasing fewer total available rooms for redemption.

We'll find out soon enough if and how Marriott deals with the problem!

Two takeaways from Starwood Preferred Guest merger announcement

Since blog subscribers already knew about the changes coming to Marriott's elite status qualification in August, I want to highlight two additional takeaways from the details released Monday about the new program.

Starwood Preferred Guest cardholders see a 33% devaluation

Right now Starwood Preferred Guest cardholders earn 1 Starpoint per dollar spent on purchases, and can transfer 20,000 Starpoints to 25,000 airline miles with most of their partner airlines.

After August, they'll earn 2 Marriott Rewards points per dollar spent, and be able to transfer 60,000 Marriott Rewards points to 25,000 airline miles.

The same $20,000 in spend will only get you two-thirds of the way to the same number of airline miles, meaning that on a per-dollar-spent basis, you'll see a 33% devaluation.

Ultimate Rewards transfers look a little better for certain Starwood stays booked in 2018

Currently, flexible Chase Ultimate Rewards points transfer on a one-to-one basis to Marriott Rewards, where they can be transferred on a three-to-one basis to Starwood Preferred Guest. Since Starwood properties top out at 35,000 points, they require up to 105,000 Ultimate Rewards points per night (84,000 Ultimate Rewards points per night on a fifth-night-free award stay).

In August, standard awards will top out at 60,000 Marriott Rewards points, or 43% less than top-tier, peak-season Starwood stays cost today.

"Starting in 2019," standard awards will top out at 100,000 Marriott Rewards points during peak season, bringing the 2019 award chart basically in line with where it is today, although 70,000-point off-peak Category 8 awards will still look better than the 90,000 points they cost today.

Annoyingly, Marriott did not include information one way or the other about whether the new program will continue to offer the fifth night free on award stays. I feel like they could have cut 7 seconds off one of their garbage promotional videos to mention that important piece of information (note that embargoed-for-your-protection Gary Leff says the feature will remain).

Conclusion

Both these observations point in the same direction: if you have a Starwood Preferred Guest credit card today, you have up to 4 more statement closing dates before the changes go into effect. While the Starwood Preferred Guest American Express cards have always been decent for unbonused manufactured spend, especially if you had a particularly lucrative hotel stay or airline transfer partner in mind, all your spend that posts by your July statement closing date will be grandfathered in at the current airline transfer rate and benefit from lower point requirements at Starwood Preferred Guest Category 6 and 7 properties after August 1.

In other words, it's a uniquely auspicious time to pivot away from your other unbonused manufactured spend credit cards and towards your Starwood Preferred Guest, especially if you primarily redeem your Starpoints for Category 6 and 7 redemptions.

This post is focused on Starwood Preferred Guest members because Marriott Rewards members have been so screwed for so long I don't think it's worth dwelling on the fact that the beatings will continue for the foreseeable future.

It's true that the creation of three additional Marriott Rewards redemption tiers above the current maximum redemption rate of 45,000 points will create additional headroom for Marriott to inflate properties into more expensive categories, punishing people who earn Marriott Rewards points through paid stays (and certainly make the 25,000-point and 35,000-point free night certificates just as worthless as they are today). But my working assumption is that anyone who has been earning Marriott Rewards points through paid stays is already so thoroughly downtrodden they'll scarcely notice that the beatings have slightly accelerated.

Rewards programs, ranked by reliability

One fun thing about writing a blog is that reader feedback gives you a chance to see how different ideas interact and collide. Last Friday when I wrote "While I'm willing to take unlimited risk in my investment portfolio, I'm willing to take virtually no risk in my travel hacking portfolio," reader Danny commented:

"This seems like an interesting sentiment. I'd be far more concerned with keeping my investments sound than my points balance."

Then on Monday I wrote with respect to my findings on Hilton all-inclusive award pricing that:

"If points costs will fall to match low revenue rates, it is easier to justify earning large quantities of Hilton points knowing that you'll almost always get close to, or above, their imputed redemption value."

I've been thinking about these two ideas, risk and reliability, and how they interact in my travel hacking practice.

Devaluations are the big, unknown risk

For several years, the US Bank Club Carlson credit card offered the last night free on all award stays. Now, this benefit was never quite as good as it was cracked up to be since Club Carlson properties, even or perhaps especially high-end Club Carlson properties, are dumps (true story: months after the Radisson Blu Warwick Hotel Philadelphia finished their renovations to not be a dump any longer they left the program).

Many people, expecting that benefit to continue indefinitely, earned hundreds of thousands, or millions, of Club Carlson Gold Points (trust me — many of them are readers of this blog).

Then the last-night-free benefit ended, and those points could only be redeemed at still-crappy Club Carlson properties. The same spend that earned those millions of points could have been used to earn 2% cash back, unbonused Ultimate Rewards or Membership Rewards points, or another rewards currency.

That's the kind of risk that I do my best to avoid in my travel hacking practice, by earning the rewards I redeem and redeeming the rewards I earn.

Reliability is the certainty of being able to redeem rewards for the trips you want to take

Reliability is something slightly different than risk. A reliable program offers consistent redemption values, whether or not that value is high or low, attractive or repulsive.

For example, according to Hotel Hustle, the IHG Rewards Club offers quite remarkable consistency, with a median value of 0.58 cents per point, with 75% of award searches above 0.44 cents per point and 75% of awards below 0.68 cents per point. That doesn't make it attractive to manufacture IHG Rewards points, but it gives you a clear view of the value of any points you might earn in one of their periodic sweepstakes or promotions.

My top ten loyalty programs, by reliability

Whether a particular rewards currency is "worth earning" depends on both your cost of acquisition and your particular travel plans, so this is not a list of the top ten most valuable loyalty programs. It's only a list of the top ten rewards programs sorted by my view of their reliability.

1. Cash. Cash has the great benefit of maintaining its dollar redemption value no matter what happens. It is, in that way, the most reliable rewards currency. Into this category also falls the fixed-value redemption of currencies like Ultimate Rewards, Membership Rewards, BankAmericard Travel Rewards, and other rewards programs with fixed values, like Delta SkyMiles Pay with Points redemptions. Their reliability is unimpeachable.
2. IHG Rewards anniversary free night certificates. In the several years I've been travel hacking, I've never seen an IHG property that I would be willing to transfer points, buy points, or manufacture points in order to book. But they really do have a Chase IHG Rewards credit card that gives you an annual award night at any IHG Rewards property in the world! I've never seen a report of the certificate not being honored for any reason, except the chain's preposterously loose rules on award availability. As far as I can tell the thing is completely reliable. Compare that to Marriott's anniversary night certificates, which have become almost unredeemable as properties continually migrate up out of Category 4.
3. Flexible Ultimate Rewards. Chase Ultimate Rewards points held in a Sapphire Preferred, Sapphire Reserve, Ink Bold, or Ink Plus account are more valuable than cash but slightly less reliable, since their value depends in part on the value of transferred points. One component of the value of a flexible Ultimate Rewards point is the value of one United Mileage Plus mile, but the value of a United Mileage Plus mile is highly volatile, so that portion of the value of an Ultimate Rewards point is also volatile. Nonetheless, Chase strongly supports the 1:1 transfer ratio of Ultimate Rewards points to their partners, so the reliability of the program overall is raised by the relative constancy of programs like World of Hyatt and Southwest Rapid Rewards.
4. US Bank Flexpoints. Long-time readers know I love the US Bank Flexperks Travel Rewards Visa because of its generous bonused earning categories, but the process of redeeming Flexpoints introduces some unreliability into the system. Flights will sometimes be shown with odd fare differences which push them into a higher redemption band, for example. Nonetheless, the ability to redeem Flexpoints for between 1.33 and 2 cents per Flexpoint makes them one of the most reliable currencies around.
5. Flexible Membership Rewards. Here the problem of transfer partner volatility is magnified by the eclectic range of partners Membership Rewards has. For example, in 2015 the transfer ratio to British Airways Avios dropped 20%, from 1000:1000 to 1000:800. Then in 2016 British Airways created a special exception to their distance-based award chart in order to charge between 33% (off-peak) and 60% (peak) more for business class flights between Boston and Dublin on Aer Lingus. Today, you may need to transfer 75,000 Membership Rewards points to Avios to pay for a flight that would have cost 37,500 Membership Rewards points before the two devaluations. This doesn't mean that Membership Rewards points themselves have radically decreased in value (how often do you fly between Boston and Dublin?), but the example illustrates the way in which their reliance on transfer partners for value introduces a lot of volatility into the value of their rewards currency, since they don't control their partners' award redemption rates.
6. Southwest Rapid Rewards. Unlike a true fixed-value currency, Southwest Rapid Rewards points have fixed values only within each fare bucket: Wanna Get Away (between 1.4 and 1.6 cents), Anytime (about 1.1 cents), and Business Select (about 0.9 cents). That means that while you know you'll get one of those three values, which one you get depends on availability, reducing in my view the overall reliability of the program. Southwest enthusiasts avoid this problem by carefully watching the schedule and snapping up Wanna Get Away fares as soon as they become available, increasing the overall reliability of the program for them, at least for flights booked far enough in advance.
7. World of Hyatt. According to the Hotel Hustle database of search results, the lowest value redemption at Hyatt properties is 0.91 cents per point (the median is 1.78 cents). If my Chase accounts were abruptly closed and I had to speculative transfer my entire Ultimate Rewards balance, I would choose World of Hyatt in a heartbeat. Hyatt doesn't have properties everywhere in the world, which makes it hard to rely on as a first-string hotel rewards program, but if there's a Hyatt in your destination you're exceedingly likely to get a good redemption value.
8. Starwood Preferred Guest. Starwood has three different sources of value: their points can be redeemed for hotel stays at Starwood and Marriott, they can be transferred to airlines partners (either directly or through a Marriott Hotel + Air package), or they can be redeemed for revenue flights. That makes it almost impossible to get a bad value for your Starpoints, although it also causes the much more serious and common problem of hoarding Starpoints and being unwilling to redeem them for anything but the perfect redemption!
9. Hilton Honors. As I've been discussing lately, the biggest effect of the recent changes to Hilton Honors is that they've apparently deliberately increased the reliability of the program. While there will always be sub-par redemptions in any non-fixed-value loyalty program, Hilton appears to have increased the number of properties where points redemptions make sense compared to paying cash rates.
10. Legacy airline programs. I got into travel hacking at the very tail end of the period when, with flexibility and planning, it was still possible to fairly reliably book low-level domestic award tickets. Those days are over. Virtually all of my domestic travel today, in both economy and first class, are revenue tickets, not because revenue tickets have become cheaper but because award tickets have become completely unreliable as a means of booking domestic travel. International travel, especially on partners, hasn't seen quite as bad a gutting, and flexibility and planning still go a long way to booking flights overseas. Having access to legacy airline currencies through Ultimate Rewards, Membership Rewards, and Starpoints is still a reasonable tactic in case you happen to find award availability, but I don't think it can be the cornerstone of a strategy any longer.

Conclusion

There you have it, my completely subjective top ten ranking of rewards programs by reliability. This is certainly not the only ranking possible: those whose travel regularly brings them to expensive cities with Starwood properties will find they're able to get consistent value from Starwood Preferred Guest, and those who live in cities with many international partner airlines will likely get more consistent value from legacy airline programs than I do. But today, a combination of cash back, Ultimate Rewards or Membership Rewards, and one or two strong hotel programs seems most likely to help you pay as little as possible for the trips you want to take.

Reminder: Starwood Preferred Guest transfers to Amtrak Guest Rewards

It feels like it's been a while since I've written about Amtrak Guest Rewards! That's mainly because the program underwent a dual devaluation in late 2015 and early 2016:

• On December 8, 2015, Chase Ultimate Rewards points could no longer be transferred to Amtrak Guest Rewards;
• On January 24, 2016, the previous fixed-rate award chart was discontinued and all Amtrak Guest Rewards redemptions became revenue-based.

That made Amtrak Guest Rewards points harder to obtain (since they couldn't be transferred from Ultimate Rewards) and less valuable (since obscenely lucrative fixed-rate sleeping cabin redemptions began costing additional points in line with their revenue cost).

The program still has value, though — in fact, more value than I expected.

Starpoints can still be transferred to Amtrak

While there's no 5,000-point bonus for transfers of 20,000 Starpoints or more, all Starwood Preferred Guest members can transfer up to 100,000 Starpoints to Amtrak. The minimum transfer is 2,500 Starpoints for non-elite members, 1,500 Starpoints for Gold Preferred member, and there's no minimum transfer for Platinum Preferred members.

Amtrak Guest Rewards points can be valuable, more valuable, or very valuable

Amtrak has always had last-seat-availability for Amtrak Guest Rewards redemptions, meaning Amtrak Guest Rewards points could be redeemed for any seat on any train up to the moment of departure (although this was mitigated somewhat by their onerous blackout dates). As you'd expect, before the program went revenue-based, that meant there was more value in expensive, last-minute redemptions than there was in further out, cheaper redemptions.

That's still true today, although for a different reason. Today, the reason that Amtrak Guest Rewards points are more valuable for closer-in redemptions is that they can't be used for "Saver" fares. A simple example should help illustrate the point:

• On Friday, October 21, a Northeast Regional "Value" fare between Washington, DC, and Boston costs $140, or 4,830 Amtrak Guest Rewards points, for 2.9 cents per point in value;
• On Friday, November 25, the same train has a "Saver" fare of $79, but Amtrak Guest Rewards points can't be redeemed against "Saver" fares at 2.9 cents each. They can only be redeemed against the more expensive $108 "Value" fare at 2.9 cents each, or 3,726 Amtrak Guest Rewards points. But if you'd otherwise book the available $79 fare, not the $108 fare, you're only getting 2.12 cents per point!

In other words, fixed-value redemptions against "Value" fares are a great deal when "Value" fares are the only ones available. That means close-in redemptions are more likely to give greater value, just like they did before the program's devaluation.

These 2.9 cent-per-point "Value" redemptions are available for coach and sleeper-cabin tickets, while Acela Business and First Class redemptions give between 1.71 and 2.56 cents per point (it's not immediately clear to me why some Acela redemptions are at the 1.71-cent level and some are at the 2.56-cent level).

Conclusion: Starpoints are valuable — and this is one more valuable use of them

I've been doing this long enough to know that everybody has their own favorite use of each rewards currency they collect. You might be earning and saving up your Starpoints for a big Alaska partner award, or a Singapore award, or just a hotel stay at one of Starwood's bespoke properties.

But earning up to 2.9 cents in fixed value per dollar of unbonused spend is well above what you're likely earning on your cash back credit cards. So while you're saving up for your dream Starpoint redemption, you can also be saving money by transferring them as needed to Amtrak Guest Rewards, rather than being stuck paying cash for your Amtrak tickets.

Instead of thinking of Amtrak Guest Rewards redemptions as being less valuable than your perfect redemption, you can think of them as being one more reason Starpoints are so valuable in the first place.

The essential Ritz-Carlton properties

Long-time readers know that I can sometimes have an unfortunately literal approach to travel hacking. So when I decided to look into the Ritz-Carlton program to see if there were any good opportunities to take advantage of Marriott Hotel + Air packages at Ritz-Carlton properties, now that Starpoints can be transferred to Marriott Rewards at a 1:3 ratio, I just looked at every single Ritz-Carlton property.

What would make a Ritz-Carlton Hotel + Air package a good deal?

The first thing to keep in mind is that Ritz-Carlton Hotel + Air packages are priced in just 2 groups: Tier 1-3 packages and Tier 4-5 packages. But the packages are priced on the basis of the highest Tier in each group. In other words, Tier 1-3 packages are priced as 7 nights at a Tier 3 package plus 120,000 miles, and Tier 4-5 packages are priced as 7 nights at a Tier 5 property plus 120,000 miles.

That means, before even getting started, stays at actual Tier 3 and Tier 5 properties are the most likely to prove a good value:

• 7 award nights nights at a Tier 1 property would cost 180,000 Marriott Rewards points. To redeem a Hotel + Air package for those 7 nights, you'd pay 420,000 Marriott Rewards points, giving you a transfer value of 2 Marriott Rewards points per airline mile (0.67 Starpoints per mile) rather than 1 Marriott Rewards point per mile (0.33 Starpoints per mile) at a Tier 3 property.
• 7 nights at a Tier 4 property would cost 360,000 Marriott Rewards points. To redeem a Hotel + Air package for those 7 nights, you'd pay 540,000 Marriott Rewards points, giving you a transfer value of 1.5 Marriott Rewards points per mile (0.5 Starpoints per mile), rather than 1 Marriott Rewards point per mile (0.33 Starpoints per mile) at a Tier 5 property.

Next, any given Ritz-Carlton property could only be a good deal if there are no nearby properties that provide an even better deal. That's the idea of opportunity cost: a Ritz-Carlton stay is only the best deal if it's a better deal than any other equivalent property.

What's an "equivalent" property? Well, here my literal-mindedness kicks in again. I take a look at a map, and if there's a Wyndham, Hilton, Hyatt, or Starwood property in roughly the same neighborhood, I say it's equivalent.

Then I make one exception: since our objective is to convert Starpoints to airline miles at a better rate than the standard 1.25 miles per Starpoint, if the equivalent nearby Starwood property costs more than one third the Ritz-Carlton award price, it's no longer equivalent — the Ritz-Carlton property is likely the better deal.

The five indispensable Ritz-Carlton properties

After looking at every Ritz-Carlton property in the world, and applying the above mechanical filters, there are five Ritz-Carlton properties that are objectively speaking the correct places to redeem 7-night Hotel + Air packages:

• The Ritz-Carlton Amelia Island. If you want to spend 7 nights on the southern end of Amelia Island, Florida, then you want to stay at this Tier 3 Ritz-Carlton property.
• The Ritz-Carlton Key Biscayne, Miami. If you want to stay in Key Biscayne, you want to stay at this Tier 5 Ritz-Carlton property.
• The Ritz-Carlton Lodge, Reynolds Plantation. If you like "rustic elegance" and "Atlanta city dwellers," you'll love this Tier 3 Ritz-Carlton property.
• Al Bustan Palace, A Ritz-Carlton Hotel. Beautiful Al Bustan, Oman, features just one chain hotel, this Tier 5 Ritz-Carlton property.
• The Ritz-Carlton, St. Thomas. Located on the eastern tip of the US Virgin Island of St. Thomas, this Tier 5 Ritz-Carlton property is your only option if you want to catch the sun rising in the East over St. John (note: I have no idea if the sun actually rises over St. John).

The best of the rest

If you're willing to get a slightly worse value for your Starpoints, there are a few more Tier 1, 2, and 4 Ritz-Carlton properties without nearby equivalents:

In the US and Canada:

• Half Moon Bay, Tier 4;
• Laguna Niguel, Tier 4;
• Lake Tahoe, Tier 4;
• Orlando, Tier 2;
• Georgetown, Washington, D.C., Tier 4.

Internationally:

• Jakarta, Mega Kuningan, Tier 1 (Nearby Le Meridien Jakarta costs 10,000 Starpoints per night, making it roughly equivalent);
• Okinawa, Tier 4;
• Bahrain, Tier 2 (Nearby Westin Bahrain City Center costs 25,000 Starpoints per night, making the The Ritz-Carlton, Bahrain Hotel & Spa strictly superior);
• Riyadh, Tier 1;
• Barcelona, Tier 4 (Nearby W Barcelona costs 25,000 Starpoints per night, making the Hotel Arts Barcelona strictly superior).

What did I miss?

I don't have any monopoly on the truth, I just have an internet connection and a pirated copy of Excel. So if you have strong feelings about a Ritz-Carlton property I didn't include here, take a gander at my spreadsheet and tell me what I missed.

Why I manufacture cash

I was chatting with a blog subscriber the other day who expressed surprise when I told him I was manufacturing spend on a 2% cash back card, rather than a mile- or point-earning credit card.

That exchange made me think I should present my argument for why travel hackers as a general rule either should manufacture cash back, or at least should be willing to manufacture cash back. The simple reason is that doing so keeps you honest.

Bonused spend is capped or limited

There are cards that are straightforwardly superior to cashback-earning credit cards, or may be under certain circumstances. For example, if you have access to grocery store manufactured spend, a US Bank Flexperks Travel Rewards card (2x), Hilton HHonors Surpass American Express (6x), Amex EveryDay Preferred (4.5x), or American Express Premier Rewards Gold (2x) card are either clearly or convincingly worth more than manufacturing spend on a simple 2% cash back card.

But manufacturing spend at grocery stores faces all sorts of obstacles, from daily limits on purchases to annual caps on bonused spend. Whether the limits you face are imposed by the stores you visit, the cards you carry, or the inconvenience of visiting bonused retailers, they leave you with a simple choice: restrict your manufactured spend to bonused retailers, or manufacture unbonused spend as well?

Unbonused spend should present hard choices between rewards currencies

I loosely consider the 3 most lucrative travel rewards-earning credit cards for unbonused spend to be:

• Chase Freedom Unlimited. 1.5 Ultimate Rewards points per dollar spent, flexible if transferred to Chase Sapphire Preferred, Ink Plus, or Sapphire Reserve.
• Amex EveryDay Preferred. 1.5 flexible Membership Rewards points per dollar spent.
• Starwood Preferred Guest American Express. 1 Starpoint (1.25 airline miles) per dollar spent.

You would need to get 1.33 cents per Ultimate Rewards or Membership Rewards point in value, or 2 cents per Starpoint (1.6 cents per mile when transferred in 20,000-Starpoint increments), to break even compared to a 2% cashback-earning credit card.

Those thresholds are, on the one hand, trivially easy to meet. Getting 1.33 cents per Hyatt Gold Passport point or United Mileage Plus mile is considered a poor redemption of those currencies since it's so easy to get so much more value from them. Even 1.6 cents per transferred Starpoint is relatively easy to achieve on long-haul flights, especially in premium cabins.

On the other hand, those thresholds are only easy to meet when the points are redeemed for travel. When you earn rewards currencies other than cash because of their possible future value, then fail to redeem them, you are ultimately paying a premium for an inferior product.

Consider two travel hackers, each of whom manufactures $10,000 in unbonused spend each month for a year. The first uses a Chase Freedom Unlimited and earns 15,000 Ultimate Rewards points. The second uses a 2% cash back card, and earns $200 in cash back. Both pay the same purchase and liquidation fees. At the end of the year (in the 13th month), the first travel hacker will have 180,000 Ultimate Rewards points, and the second will have $2,400 in cash.

To make up the $600 in cash value, the first could redeem all 180,000 Ultimate Rewards points for 1.33 cents each — an easy lift, as described above.

But what if the first travel hacker redeems just 120,000 of their Ultimate Rewards points for travel, leaving them with a 60,000-point balance? Now she needs to get 1.5 cents per Ultimate Rewards point — still not too difficult, on long-haul United award redemptions or at mid-tier Hyatt properties. After all, Hotel Hustle pegs the median Hyatt Gold Passport point value at 1.862 cents.

Finally, consider if the first travel hacker redeems just 60,000 of their 180,000 Ultimate Rewards point haul for the year. They still have $1,200 in cash value, but that means they'll need to get 2 cents per Ultimate Rewards point to break even with the 2%-cashback travel hacker. Now we've found ourselves, rather than being safely below the median Hyatt point value, 7.5% above it. Rather than merely looking for a decent United redemption, we need an excellent one. All to break even with the person who's been taking their rewards to the bank in the form of cash each and every month!

This has nothing to with devaluations

When I point out the folly of hoarding miles and points, people often think I'm talking about the risk of devaluations. But as I wrote in the linked post, 

"For all the wailing and gnashing of teeth whenever an airline or hotel devalues its miles, that process is relatively gradual and relatively predictable.

After all these years, despite everything that's happened in the airline loyalty industry, the 25,000 domestic saver award ticket still exists."

If there is never another devaluation of any loyalty program under the sun; if every loyalty program opened up every seat, in every cabin, on every flight, for award redemptions, unredeemed points will still be worth nothing, while cashback earned can still be put to work paying for the expense of your choice, from groceries to retirement savings.

Conclusion

Past performance is no guarantee of future results. But it's as good a place as any to start!

When deciding between a cashback-earning credit card or putting the same unbonused spend on a travel rewards-earning credit card, take a look at your existing balances and your account history. Do you redeem the points you earn? Are you consistently getting the value you need to break even compared to a 2% or higher cashback card, taking into account the orphaned points you don't redeem?

If so, terrific — keep doing what you're doing. If not, then it's time to ask further questions about your manufactured spend strategy.

And those questions are how cashback credit cards keep travel hackers honest.

I don't buy points, but maybe you should!

Every major loyalty program sells their points for cash, normally at a fixed rate through the industry-sponsored site Points.com.

For example, you can buy up to 60,000 Delta SkyMiles per calendar year for 3.76 cents each, up to 75,000 United MileagePlus miles for 3.76 cents each, up to 150,000 American AAdvantage miles for 3.19 cents each, and up to 60,000 Alaska Mileage Plan miles for 2.96 cents each.

Hotel programs likewise sell their points currencies for cash, with IHG Rewards Club selling up to 60,000 points for 1.15 cents each, Hilton HHonors selling 80,000 points for one cent each, Marriott Rewards selling up to 50,000 points for 1.25 cents each, Starwood Preferred Guest selling up to 30,000 points for 3.5 cents each, and Hyatt Gold Passport selling up to 55,000 points for 2.4 cents each.

Purchased points are too expensive for me

I don't personally buy miles or points because it's a more expensive way of acquiring miles and points than the other methods I have available.

United MileagePlus miles and Hyatt Gold Passport points cost just 1 cent each when purchased with Ultimate Rewards points transferred from a Chase Ink Plus account.

I happen to have a Citi AAdvantage Platinum Select MasterCard, so if I ever needed to stock up on AAdvantage miles, I can do so for 2.105 cents each — the cash back I'd earn manufacturing the same unbonused spend on my Barclaycard Arrival+ MasterCard.

And of course I earn 6 HHonors points per dollar spent with my American Express Hilton HHonors Surpass card at grocery stores, so even compared to an "optimal" redemption rate of 2 cents per US Bank Flexpoint, I'm already buying HHonors points at a mere 0.67 cents each, 33% less than the 1 cent per point Hilton wants to charge.

Purchased points may make sense for you

As the examples above make clear, the decision whether to purchase miles and points or manufacture them rightly depends upon your next best alternative: your opportunity cost.

If you're currently manufacturing the bulk of your otherwise-unbonused spend on a 5% cash back card like the Wells Fargo Rewards Visa during the introductory promotional period, then manufacturing spend on a one-mile-per-dollar card costs not 2.105 cents per mile, but 5 cents per mile, 57% more than, for example, American is willing to sell them!

Likewise, if you have $100,000 on deposit with Bank of America, you might be earning 2.625% cash back with a BankAmericard Travel Rewards card. That may make purchasing Hyatt Gold Passport points at 2.4 cents each worthwhile, compared to manufacturing spend on a Chase Hyatt credit card.

Purchase small numbers of points for high-value, upcoming redemptions

While you usually see affiliate bloggers advocate buying large numbers of points speculatively when loyalty programs offer the highest bonuses on purchased points (bringing down the cost per point), I have exactly the opposite view.

If you find yourself with an upcoming, high-value redemption, and don't have the time to manufacture the required points, then go ahead and buy them. Paying "too much" per point, if it drastically brings down your total out-of-pocket cost, makes perfect sense: the goal isn't to pay as little as possible per point, it's to spend as little money as possible on the trips you actually want to take!

But the money you spend speculatively buying miles for redemptions you don't actually have planned could almost invariably be better spent building a credit card and manufacturing spend strategy that generates the trips you want to take at far lower out-of-pocket expense.

My Hyatt Gold Passport Diamond tier match experience

Background

As my regular readers no doubt already know, on November 19, 2015, the official Hyatt Concierge Twitter account sent out a tweet asking, "Looking for a new loyalty program? DM us and let’s talk."

The travel hacking blogosphere subsequently went absolutely nuts. Things then seem to have proceeded in three stages:

1. In Stage 1, the first few hours after the tweet was sent out, Hyatt was matching all elites in other hotel loyalty programs to their Diamond status. So a Hilton HHonors Gold elite could be matched to Hyatt Gold Passport Diamond status, as long as they could show a stay with HIlton in the last year.
2. The door quickly shut on Stage 1, and in Stage 2, only Starwood Preferred Guest Platinum elites were being matched to Hyatt Gold Passport Diamond status. Elites with programs besides Starwood Preferred Guest could be matched only to Hyatt Gold Passport Platinum status (the same status that comes with their co-branded credit card).
3. Shortly after that, even Starwood Preferred Guest Platinum elites were only being matched to Hyatt Gold Passport Platinum status. As I understand it, this is the current state of play, and Stage 3 continues to this date. For way, way more datapoints read the FlyerTalk thread on the topic, starting at the end for the most recent datapoints.

My tier match experience

I sent my first e-mail to Hyatt Gold Passport on November 20 with my Hilton HHonors Diamond status information. Since the door had already closed on Stage 1, I was told that only Starwood Preferred Guest Platinum elites were being matched to Hyatt Diamond status, and that I could only be matched to Hyatt Platinum status.

Since I wasn't at home, I replied with a screenshot from the SPG app on my iPhone. A few days later, they replied that they couldn't use that to match me to Hyatt Diamond because it didn't have my Starwood account number.

I replied again with a screenshot from the desktop version of the Starwood Preferred Guest website, and again a few days later they replied that they couldn't read the file I sent them.

Finally, I printed the screenshot as a PDF file and they were able to open that. Again, after waiting a few days I finally received a response that I had been matched to Hyatt Gold Passport Diamond status, which was immediately reflected online.

The total time my tier match took was 23 days from my initial submission on November 20 to my final tier match confirmation on December 13, 2015.

The key lesson is that it seems people were entitled to treatment based on the "Stage" during which they submitted their original request. In other words, even if they required additional documentation, the earlier you submitted your first request, the more likely it was to be honored.

Life as a Diamond

After being notified that I'd been matched to Hyatt Gold Passport Diamond status, I had three priorities:

• Where it makes sense, rebook stays I currently have with other chains at Hyatt properties instead. For example, for our upcoming trip to New York City, I was able to replace a $473.90 Hilton reservation with a $503.12 Hyatt reservation which will earn me 3 elite night credits and an elite stay credit.
• Where possible, apply suite upgrades to my paid Hyatt reservations.
• Match my Hyatt Gold Passport Diamond status to Mlife Platinum status.

Suite upgrade rules are confusing

Much digital ink and already been spilled on this topic, so the only point I'll make here is that each Hyatt brand — and even property — refers to their "base-level" suite differently. The Grand Hyatt Berlin has a "Grand Suite King," the Grand Hyatt New York has a "Junior Suite," and the Grand Hyatt San Francisco goes straight to "Executive Suite."

In other words, unless you're familiar with a particular property, you don't have any way to easily check whether the suites for sale online are the suites that are eligible for Diamond suite upgrades.

Mlife Platinum status doesn't seem to be instantly available

As soon as my Diamond tier match was processed I went to this page to request a match to Mlife Platinum status. While the request was processed successfully, my Mlife status wasn't updated!

I asked around on Twitter and my guess is that Hyatt only occasionally updates the database of Gold Passport elites which it makes available to Mlife. Since that process isn't instant, you won't have immediate access to Mlife Platinum benefits.

Since Hyatt Gold Passport is offline until December 19, I haven't been able to try again, but I'm optimistic I'll be matched to Mlife Platinum once the system comes back online.

Conclusion

I've mentioned to multiple folks going through the process of tier matching that this offer, while woefully mishandled and generating a lot of ill-will on the part of people who felt they'd been cheated, is still going to be a business coup for Hyatt.

That's because people like me who are already top-tier elites in multiple programs would never consider earning up to Hyatt Diamond from scratch, but as matched top-tier Hyatt Diamonds will make sure we requalify each year with 25 stays or 50 nights, which have to be either paid or "Points + Cash" reservations.