How do you want to think about budgeting for your hotel stays?

I've written a series of posts about my preferred metric for evaluating hotel loyalty programs, which I call imputed redemption values. This is a straightforward metric that tells you if redeeming hotel rewards points gives you a better or worse deal than paying cash that you've manufactured on your most lucrative cashback-earning credit card.

For example, a 95,000-point Hilton Honors redemption would require $15,833 in bonused spend on a Surpass American Express card. If your most lucrative cashback card earns 2%, that gives you a breakeven point of $316 (since for prices above that, a points redemption will require less manufactured spend), if it's 2.105% cashback you have an imputed redemption value of $333, and if it's 2.625% your IRV is $415. 

This metric doesn't tell you what you should do with points you've already earned — I always prefer to redeem points before spending cash. But if your points redemptions come in consistently above your imputed redemption values (95,000 points for a $2,000 night), then you are well-advised to continue earning those points, while if you fall consistently short (95,000 points for a $95 night), you might consider moving away from those loyalty currencies and towards additional cashback, instead.

Yesterday Frequent Miler posted an interesting analysis of some data (with a followup here) from the Hilton Honors program showing, as I'd hypothesized last month, that the new program would see redemptions bunched more tightly around the 0.4 cent per point redemption level. He provides some important insight on different factors that might affect the ultimate value you receive; read the whole thing.

Such analyses are very useful, but it's also helpful to pull back occasionally and give some thought to more basic questions: what's the best way to save money on your hotel stays?

What programs allow you to earn the stays you want as cheaply as possible?

Bottom-tier stays

There are phenomenal values at the very bottom of several hotel loyalty charts:

• If you have a US Bank Club Carlson credit card earning 5 points per dollar on all spend, you can earn a free night at any Category 1 property every time you spend $1,800. Even if your backup card earns 2.625% on unbonused spend, you're exceedingly unlikely to find a room for less than $47.25 per night — taxes alone are likely to be that much!
• With an American Express Hilton Honors Surpass card you can earn 5,000 Honors points, which is, I believe, still technically the fewest points required for a Hilton award stay, after spending $833 at a bonused merchant. That's not a value that any other hotel loyalty program currently offers.

Mid-tier stays

If you're staying in a more expensive market, for example mid-sized or larger cities, there are a few options for getting reliably outsized value:

• If you signed up for a Barclaycard Wyndham Rewards credit card back when the card still earned 2 Wyndham Rewards points for each dollar you spend, you can earn a free night at any of Wyndham's properties for every $7,500 you spend on the card — and Wyndham has a LOT of properties!
• In my experience Hyatt offers consistently reasonable pricing for mid-tier stays. For example, while the Chase Marriott credit card's Category 1-5 annual award certificate has become worthless as desirable properties migrate up and out of Category 5, most of Hyatt's centrally located city properties still top out at Category 3 or 4, costing 12,000 to 15,000 points per night, and are eligible for the Chase Hyatt credit card's annual free night certificate. If you have a Chase Freedom Unlimited credit card earning 1.5 Ultimate Rewards point per dollar, and a premium Ultimate Rewards card that lets you transfer those points to World of Hyatt, these mid-tier properties have an imputed redemption value between $160 and $200, while nightly rates can be substantially higher.

Top-tier stays

At the most expensive properties, a travel hacker has a few options:

• Hilton Honors currently tops out at 95,000 points per night (when standard room awards are available), allowing you to earn a free standard room award night for $15,833 in spend, or $12,667 on stays of exactly 5 nights, since the fifth night is still free on award stays;
• World of Hyatt standard room redemptions top out at 30,000 points per night. If you choose to manufacture unbonused spend on a Chase Freedom Unlimited in order to transfer Ultimate Rewards points to World of Hyatt, such a top-tier redemption would require $20,000 in spend, with an imputed redemption value of between $400 and $525 per night, depending on your best cash back alternative.
• Starwood Preferred Guest, and their new owner Marriott Rewards, seem like they should potentially offer some value, and indeed if you're committed to visiting one of their top-tier properties you should certainly redeem points instead of paying cash. If you're committed to visiting a top-tier, 45,000-point Marriott Rewards property, then manufacturing $15,000 in spend on a Starwood Preferred Guest American Express card and transferring the points to Marriott Rewards at a 1-to-3 ratio is clearly the cheapest way to pay for such a stay. However, for stay categories below top-tier Marriott Rewards stays I believe most travel hackers are likely to find more value elsewhere.

Conclusion

I have always thought it was a curious fact about travel that, when you do enough of it, transportation itself consumes a smaller and smaller portion of your travel budget. Of course you can make it more expensive by traveling in more expensive cabins, but the fact is a single night in a hotel can easily cost as much as a plane ticket!

I've never had any trouble finding miles, points, or cash to pay for flights; I spend much more time calibrating the points I earn for hotel stays than I do for my air travel.

Wyndham Rewards is a pretty good program. But is it necessary?

The "news hook" for this post is the launch of a new landing page for Barclaycard's Wyndham Rewards Visa cards, raising the annual fee on the Visa Signature card from $69 to $75 and cutting the earning rate on purchases to 1 Wyndham Rewards point per dollar except on gas, utilities, and grocery purchases.

Meanwhile, the landing page for the old offer is still live, showing a $69 annual fee, a signup bonus of 45,000 Wyndham Rewards points after spending $1,000, and an earning rate of 2 Wyndham Rewards points everywhere.

Barclaycard has, in the past, been pretty good about preserving benefits for existing customers after a product has undergone significant changes. For example, Barclaycard US Airways customers who signed up under a 10,000-anniversary-mile offer continue to receive those anniversary miles, to the best of my knowledge (I cancelled my anniversary-mile card when I wasn't offered a retention bonus).

That means that in all likelihood there's a narrow and narrowing window to sign up for the current, superior offer, and retain its superior earning rate on otherwise-unbonused spend.

So, should you?

Wyndham Rewards is a pretty good program

I'm on record from all the way back in April, 2015, saying that the new fixed-rate Wyndham Rewards program would be great.

I think that prediction has been borne out by events. Wyndham hasn't gone to aggressive lengths to exclude properties or dates from their 15,000-point fixed-rate awards, and the program doesn't seem to have experienced mass defections from properties unwilling to accept however much Wyndham is compensating them for these fixed-rate awards.

Compared with a 2% cash back card, the imputed redemption value of Wyndham Rewards award nights is $150, since the same $7,500 in unbonused spend can earn you either $150 in cash back (which can be spent on paid hotel stays or anything else) or a free night at any Wyndham Rewards property in the world.

Comparing Wyndham Rewards

Whether Wyndham Rewards makes sense for your own travel hacking strategy depends on both your goals and your alternatives. First, here's a quick glance at the imputed redemption value of Wyndham Rewards award nights compared to the imputed redemption value of award nights with Hilton HHonors (earned at 6 points per dollar), Hyatt Gold Passport (purchased for one cent each in Ultimate Rewards transfers), Starwood Preferred Guest (earned at 1 point per dollar), and Club Carlson (earned at 5 points per dollar):

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What you see, as you'd expect, is that fixed-rate Wyndham Rewards stays cost less in foregone manufactured spend than higher-tier properties with the other chains, but cost more in foregone cash back than lower-tier properties with the other chains.

In other words, you can save money staying at the Wyndham Grand Chicago Riverfront instead of the Waldorf Astoria Chicago (Hilton), staying at the Wyndham Midtown 45 instead of the Park Hyatt New York (Hyatt), the Wyndham Garden Manhattan Chelsea West instead of the Gramercy Park Hotel (Starwood), and at the Days Inn London Hyde Park instead of the Radisson Blu Edwardian, Sussex (Club Carlson).

Meanwhile, the other programs shown above offer award tiers with imputed redemption values below $150 (highlighted in red) and, of course, some hotel nights simply cost less than $150 in cash, especially when combined with cashback portals and online travel agency rewards programs.

That means that by combining Wyndham Rewards with one or two other programs, as well as a cash back card, you could theoretically limit your downside (since the most you'd ever pay is $150 in foregone cash back) while having almost unlimited upside as you take advantage of cheaper room rates and lower-tier properties in other loyalty programs.

But is Wyndham Rewards necessary to a travel hacker?

All the foregoing is meant to say that I commend Wyndham Rewards for trying something new and fun.

The trouble is that it's difficult to come up with an actual travel hacking strategy that incorporates Wyndham Rewards.

Let me put it this way: I'm totally indifferent between road trips with your kids and luxury vacations with your romantic partner. You do you!

But if you're taking road trips with your kids, you should be able to take advantage of the dirt cheap low-category properties with the chains highlighted in red above.

And if you're taking luxury vacations with your partners, the difference in imputed redemption value between the most luxurious Hilton and Hyatt properties and the most luxurious Wyndham properties just isn't that big.

Conclusion: the right way to use Wyndham Rewards is to plan Wyndham Rewards trips

The $69 Wyndham Rewards Visa credit card has a good signup bonus (3 nights at any Wyndham Rewards property in the world) and a good earning rate ($150 per night in foregone cash back for a night at any Wyndham Rewards property in the world).

But if you have a developed travel hacking strategy already involving Hilton, Hyatt, and Starwood or Club Carlson points, you're unlikely to accidentally get a good value from a Wyndham Rewards credit card.

That means the right way to pay as little as possible for the trips you want to take is to proactively look for the Wyndham Rewards properties that are going to get you outsized value, earn the points necessary for your stays, and then redeem them. Speculatively signing up for Wyndham Rewards credit cards and speculatively manufacturing spend is unlikely to yield savings any greater than those you can earn much more consistently with other programs.

The concept of loyalty and the Wyndham Rewards revaluation

I had an interesting exchange on Twitter the other day with Seth, the Wandering Aramean, who was arguing in response to Trevor at Tagging Miles that loyalty currencies are on a perpetual downward valuation spiral. While they devalue at different rates and different times, Seth claimed, they never increase in value.

My response was, "What about Wyndham?" After all, the May 11, 2015, revaluation of the Wyndham Rewards program made the 4 cheapest award categories (5,500 to 14,000 Wyndham Rewards points) more expensive, while the 5 most expensive award categories (16,000 to 50,000 Wyndham Rewards points) became less expensive when all properties were realigned at 15,000 Wyndham Rewards points per night.

Meanwhile, the Barclaycard Wyndham Rewards credit cards continue to offer 2 Wyndham Rewards points per dollar spent everywhere.

Reconciling these two positions is easy, as long as you can tell the difference between loyalty programs and loyalty.

If you were a loyal Wyndham guest, you probably got screwed

I admit that I've been travel hacking so long that it's a bit tough to remember what "loyalty" is supposed to signify.

But if "loyalty" means anything, it's surely the willingness to pay more to direct your stays or flights to a particular travel provider, not for any short-term interest but because over multiple nights, flights, stays, and years, your business will be rewarded in a way it wouldn't if you stayed at the cheapest possible hotel and booked the cheapest possible flight each time you traveled.

Since most travelers, most of the time, are traveling domestically, and only rarely staying in the most expensive categories of property, the change of cost of Wyndham Rewards nights to a flat 15,000 points was, as Seth asserted, a radical devaluation for "loyal" travelers, which is to say for travelers who directed their paid stays to Wyndham in order to secure cheap future award nights.

If you're a travel hacker, the Wyndham Rewards revaluation was a godsend

Compared to putting the same spend on a 2% or 2.105% cash back credit card, the Barclaycard Wyndham Rewards credit cards allow you to purchase a night at any Wyndham Rewards property in the world for between $150 and $158. As it is for a "loyal" Wyndham Rewards customer, at many properties that's an increase over the cost prior to the May 11, 2015, revaluation.

But the key takeaway for the travel hacker is that other, cheaper options remain for the nights you'd otherwise have redeemed Wyndham Rewards points for. There's a difficulty in analyzing the situation precisely, but fortunately Wyndham still makes available the list of properties which went up and went down in category in 2013, which at least gives a sense of what properties were in which categories prior to the 2015 revaluation.

With all that in mind, here are some United States properties which, as of 2013, cost less than 15,000 Wyndham Rewards points per night. These are properties that became more expensive after the 2015 revaluation. Next to each property I also suggest the cheapest nearby competing property and its imputed redemption value.

I don't claim this is exhaustive research — anybody can do the same research and find more extreme examples at their leisure using the links provided above.

• Baymont Inn and Suites Florence/Muscle Shoals. Was 14,000 Wyndham Rewards points ($147 IRV). Nearby: Hampton Inn Florence-Midtown. 20,000 Hilton HHonors points ($70 IRV).
• Days Inn Tempe ASU. Was 10,000 Wyndham Rewards points ($105 IRV). Nearby: Embassy Suites Phoenix - Tempe. 30,000 - 40,000 HHonors points ($106 - $141 IRV).
• Days Hotel Oakland Airport-Coliseum. Was 14,000 Wyndham Rewards points ($147 IRV). Nearby: Hilton Oakland Airport. 30,000 HHonors points ($106 IRV).
• Ramada Denver Midtown. Was 10,000 Wyndham Rewards points ($105 IRV). Nearby: Hampton Inn & Suites Denver-Speer Boulevard. 30,000 - 40,000 HHonors points ($106-$141 IRV).
• Knights Inn Lafayette Midwest. Was 5,500 Wyndham Rewards points ($58 IRV). Nearby: 
  Homewood Suites by Hilton Lafayette. 30,000 - 40,000 HHonors points ($106-$141 IRV).
• Travelodge - Columbus. Was 5,500 Wyndham Rewards points ($58 IRV). Nearby: 
  Hyatt Place Columbus/OSU. 8,000 Hyatt Gold Passport points ($80 IRV). Also
  DoubleTree Suites by Hilton Hotel Columbus Downtown. 20,000 - 30,000 Hilton HHonors points ($70 - $106 IRV)

Conclusion

The point of this post is not that the Wyndham Rewards revaluation was "a good thing." Whether or not a particular individual benefited or suffered from it depends on that person's past and future pattern of paid and award stays.

My point is that for a travel hacker the increases in prices at Tier 1-4 Wyndham Rewards properties are easily offset by balances in competing programs with more reasonably priced properties in the same markets.

Meanwhile, the decrease in prices for properties in Wyndham Rewards tiers 5 to 9 (16,000 to 50,000 Wyndham Rewards points) make their top-tier properties radically more affordable in the same markets as their competitors continue to charge high prices, whether you choose to pay in cash or in points.

The May/June Club Carlson devaluation makes it just another middling hotel loyalty program

Before I get to the meat of my analysis of Club Carlson’s recently-announced devaluation, allow me to briefly mention my general approach when it comes to credit card rewards:

• I prefer cash above all other rewards currencies. I can use cash to pay my expenses, save for the future, and of course pay for travel out of pocket;
• There are times when earning rewards currencies besides cash can reduce the cost of a flight or hotel below the cost I would incur making a similar reservation with cash;
• If those situations occur frequently enough in a specific credit card rewards program, I’ll consider prospectively earning those rewards instead of cash.

The point is that my default mode when earning rewards currencies through credit card spend is cash back, and other loyalty currencies need to offer consistent, out-sized value in order to earn my business. Since the least valuable point is always the one you don’t redeem, I also make sure to redeem my hotel, airline, and proprietary credit card rewards points approximately as quickly as I earn them.

Consider the US Bank Flexperks Travel Rewards credit card. By earning 2 Flexpoints per dollar spent at "grocery stores" or "gas stations” each statement cycle, and redeeming those points for up to 2 cents each towards paid airfare, you might think that a return of up to 4% is a no-brainer (and, indeed, I do earn and redeem a lot of Flexpoints).

But last month I took a $500 voluntary denied boarding voucher on an American Airlines-operated flight. The next time I make a paid American reservation, I’ll use that voucher instead of up to 30,000 Flexpoints. Suddenly I have 30,000 more Flexpoints than I would have otherwise!

Sure, I can redeem them for 1 cent each in cash back, but that’s still a $33 loss compared to putting the same $15,000 in gas station or grocery store spend on my Barclaycard Arrival+ card (or, given the categories, another even higher-earning credit card like my Chase Ink Plus).

The Club Carlson credit cards used to offer consistent, super-sized value

The tool I use to analyze the value of hotel co-branded credit cards is the "imputed redemption value” of award reservations made with the chain: that’s the value you’re implicitly putting on a hotel redemption when you earn enough points through manufactured spend to make an award stay instead of earning cash back with the same spend. The last-night free benefit of the Club Carlson credit cards produced extremely low (that’s good, remember) imputed redemption values for stays of at least 2 nights:

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The only other hotel program which I have found to offer consistent value compared to cash back is Hilton HHonors, when you manufacture gas station and grocery store spend with the Surpass co-branded American Express card. While their 2014 devaluation dramatically raised the points cost of their properties, the exceptionally high earning rate of 6 HHonors points per dollar leaves relatively reasonable imputed redemption values, especially on stays of exactly 5 nights, when elites can take advantage of the 5th-night-free benefit:

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As I wrote on Friday, Wyndham’s new rewards program, which will, starting May 11, 2015, offer free nights at all participating Wyndham properties for 15,000 Wyndham Rewards points, has a single imputed redemption value. Manufacturing a single night at their properties will cost $166.50 in foregone cash back:

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Club Carlson’s program will be fine, if you really want to stay at Club Carlson properties

I have a commenter who always pokes fun at me when I talk about staying at dumps like the Radisson Blu es. Hotel, Rome or Radisson Martinique on Broadway just because the last-night-free benefit made them so cheap.

The fact is, I’m a poor person, so if I want to travel as much as I do, I need to do it cheaply. The Club Carlson credit card helped me do that. New York’s an expensive place to stay, and while I could always transfer Ultimate Rewards points to Hyatt and stay at one of their Manhattan properties, those points have an extremely high opportunity cost since they can also be redeemed for cash or paid airfare, or transferred to the right partner at the right moment. The Martinique made sense for me as an (admittedly run-down) alternative.

But beginning June 1, Club Carlson will not offer the outsized rewards that justified manufacturing thousands of dollars per month on their co-branded credit card. Here’s a side-by-side comparison of the imputed redemption values of Club Carlson stays and their competition, with the cheapest, second-cheapest, and most expensive stays highlighted in green, yellow, and red:

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Note: For Hilton I used a synthetic "mid tier" value of 45,000 HHonors points, which does not actually exist on their award chart; they have an even number of hotel categories.

As the chart clearly illustrates, at bottom-, mid-, and top-tier properties, Club Carlson is consistently the cheapest or second-cheapest chain to manufacture stays of less than 5 nights (top-tier, 5-night Hilton stays do clock in cheaper at $281, as shown in the chart further above), even without the discontinued last-night-free benefit.

The problem is that in exchange for your Club Carlson points, you’ll have to stay at Club Carlson properties, and many Club Carlson properties are dumps. Unless you have a clutch of Club Carlson properties you visit regularly, or a specific property you have your heart set on visiting, it no longer makes sense to manufacture large numbers of Club Carlson Gold Points speculatively.

If you feel like it, buy 3 domestic nights each year for $326.40 (or $351.40)

The Club Carlson co-branded credit cards still offer a single, specific value proposition:

• the US Bank Club Carlson Premier Rewards card has an annual fee of $85, while the Business Rewards card has an annual fee of $60;
• each year you renew your membership with either card, you receive 40,000 Gold Points;
• starting June 1, 2015, each year you spend $10,000 with the card you receive a free night at any Club Carlson property in the United States.

Since the earning rate of the card hasn’t changed, all this adds up to paying $222 in foregone cash back and a $60 or $85 annual fee, and receiving 90,000 Gold Points and a free night in the United States. Even if you have to manufacture an additional $2,000 in order to “top up” your Gold Points to 100,000 each year, you’ll end up paying $266.40 in foregone cash back, for which you’ll receive at least 3 nights at any US Club Carlson property (there are no domestic Category 7 hotels).

Since my partner and I visit Chicago at least a couple times per year, I’ll probably do exactly that, paying $108.80 per night for an annual 3-night stay at the Radisson Blu Aqua Hotel Chicago in downtown Chicago, which is a lovely hotel we’ve stayed at many times before (using the last-night-free benefit, of course).

By way of comparison, the imputed redemption value of the Hilton downtown Chicago properties (ranging from 40,000 to 60,000 HHonors points, depending on the season) is $118 to $178, while a reservation at the three Category 4 Hyatt properties in downtown Chicago would cost 15,000 transferred Ultimate Rewards points (worth $150 in cash).

Conclusion

The Club Carlson last-night-free benefit was so lucrative it justified a lot of otherwise-bizarre behavior. At the end of May, it’ll be gone, and Club Carlson will be just another middling hotel chain, packed with dilapidated, aging properties and struggling for relevance.

It sure was fun while it lasted, though!

Yes, the new Wyndham Rewards program will be great

I saw yesterday morning that Shawn at Miles to Memories had taken a crack at comparing the much-beloved Club Carlson rewards program with the just-announced changes to the Wyndham Rewards program, effective May 11, 2015.

There are many methods of comparing co-branded hotel credit cards. Personally, I prefer using a metric I call "imputed redemption values:" the amount of cash back foregone by using a hotel's co-branded credit card instead of a 2% or 2.22% cash back card.

The method isn't perfect (it ignores points earned on paid stays and elite-qualifying nights and stays) but it has two key benefits: it makes co-branded hotel credit cards directly comparable; and it gives a rough guideline for how much your typical room redemptions should cost to make hotel points worth manufacturing at the expense of cash back.

For example, here's an imputed redemption value chart for Club Carlson, in which I've helpfully included the last-night-free benefit:

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This chart illustrates the decreasing impact of the last-night-free benefit on longer stays.

By contrast, here's an imputed redemption value chart I whipped up just now for Wyndham Rewards' revalued post-May 11, 2015, program, using the Barclaycard no-annual-fee co-branded credit card earning 2 Wyndham Rewards points on all purchases:

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Stating the obvious

A glance at the charts shows that, unsurprisingly, It's still true that if you're staying exactly two nights somewhere with a Club Carlson property where you'll be happy staying, those two nights will always be cheaper if manufactured with a Club Carlson credit card than with a Wyndham Rewards credit card (or any other hotel's co-branded credit card).

Some people take vacations of more or fewer than 2 days

But if you're staying a single night, your last-night-free benefit is worthless. If you're staying more than 2 nights, and especially if you don't have a second Club Carlson account you can use to book alternating pairs of nights, the last-night-free benefit rapidly loses value.

Wyndham and Club Carlson have different property footprints

This works in two different ways. First, Club Carlson and Wyndham properties are located in different places. If you want to stay where a Wyndham property is located, you need to use Wyndham points or cash. If you want to stay where the Club Carlson property is located, you need to use Club Carlson points or cash.

Second, the distribution of properties within category bands is different. In a city with exclusively high-category Club Carlson properties, Wyndham stays are more likely to be cheaper (except on two-night stays, as mentioned above), while areas with low-category Club Carlson properties will have relatively expensive Wyndham properties.

The important thing to note here is that these distributions are not random. It is knowable (or at least predictable) in advance whether you're going to be visiting areas with relatively expensive or relatively cheap Wyndham properties (for example by looking at your travel pattern for the previous few years).

In other words, you don't need to decide between Club Carlson and Wyndham in a vacuum: you can make an educated guess about how well each program will work for you based on your actual and planned travel.

Club Carlson properties are wildly inconsistent

I'm checking in for a 2-night Club Carlson stay this afternoon. A few days ago I checked out of another 2-night Club Carlson stay. I had a 2-night Club Carlson stay in Rome in January. Last year I had several 2-night Club Carlson stays in New York City.

Suffice it to say, I love Club Carlson's program, and I love the last-night-free benefit.

With that out of the way, let's be honest: Club Carlson properties can be pretty terrible. The Radisson Blu in Rome has a great location right by the train station and a great breakfast buffet, and it costs just 44,000 Gold Points per 2-night stay (about $98 in foregone cash back per night). But I'll never stay there again; it's a dump.

Of course, readers have also shared wonderful experiences at various Club Carlson properties. The point is simply that locking yourself into Club Carlson because it's the "best" rewards program requires you to be indifferent to the quality of the properties themselves.

As travel hackers, we can hold ourselves to (at least slightly) higher standards than that!

Conclusion

The Wyndham Rewards co-branded credit card paired with the May 11, 2015, revaluation of the Wyndham Rewards program will make Wyndham Rewards stays in areas with high-category properties in other chains the cheapest or second-cheapest to manufacture, depending on the length of your stay.

However, whether it makes sense to prospectively manufacture large numbers of Wyndham Rewards points will still depend entirely on the distribution and quality of Wyndham and other hotel properties in the areas you actually intend to visit.