For about a year now, the new cardmember offer on the World of Hyatt visa card has stunk. While Amex has marched around on a points parade and co-branded cards from United, Southwest, and JetBlue have had six-figure welcome bonuses, Hyatt has plodded on with its measly 45K offer (that they misleadingly advertise as a “60K” offer). And that’s why, over the weekend, I had to email the rest of the Frequent Miler team when I stumbled back over the Hyatt dummy booking offer: is that actually the best Hyatt offer? The answer isn’t necessarily obvious or easy.
Over the weekend, I was booking a Hyatt hotel when the above offer came up during the checkout process and it looked pretty good to me: Get a Category 1-7 free night certificate and a $300 statement credit for just $3,000 spend. Initially, that sounded more generous to me than the current best offer of 45,000 bonus points after $15K spend.
Hyatt likes to push the idea that the current standard bonus offer is for 60,000 “bonus points”, but that’s kind of misleading. The current offer for the World of Hyatt credit card offers the following bonuses:
- 30K points after $3K spend in the first 3 months
- 2 points per dollar spent on up to $15K spend in the first 6 months.
Hyatt counts the second line of that offer as 30K more “bonus” points, but of course you would always get 1 point per dollar spent on that $15K, so the welcome offer only adds 1 “bonus point” per dollar spent on that $15K in purchases. In other words, $15K spend yields 15K points whether you do it as part of the welcome offer or not, so the welcome offer adds at most 15K extra points. Taken with the 30K initial welcome bonus, that’s 45K total bonus points on $15K spend.
Because Chase awards the first tier of the bonus separately, we can calculate the value at both steps. Based on our Reasonable Redemption Value of 1.6c per Hyatt point (which is intentionally conservative), the two levels of the bonus are worth:
- $528 (30K points + 3K bonus points on $3K spend (since you get 2x) x 1.6c per point)
- $192 (12K bonus points (on the remaining $12K spend) x 1.6x per point)
A brief aside on first year value
If you’re wondering why our Best Offers page only lists the first year value of this card at $415 despite the cumulative $720 if you add the two tiers above together, that’s because our spreadsheet calculates the opportunity cost of doing the spend on any given card against the chance to spend on a card that earns 3% cash back. While there are fewer options for 3% cash back everywhere than there once were, the Discover IT Miles card offers an effective 3% cash back for the first year and so we calculate the cost of doing spend on other cards against that kind of benchmark.
For those who like to see the full math:
- $528 + $192 = $720 – $95 (annual fee) = $625
- 3% cash back on $15K spend = $450. Since you get 15K Hyatt points (worth $240) with $15K spend on the Hyatt card, the opportunity cost of spending $15K on the Hyatt card is $450 – $240 = $210
- $625 – $210 = $415 (first year value)
However, since opportunity cost is equal over both the standard offer and the dummy booking offer, I won’t consider that opportunity cost again in this post.
Valuing the dummy offer
Back to the dummy offer….
The offer I ran into while booking a Hyatt hotel offers includes only one tier:
- Spend $3K in the first 3 months, get a Category 1-7 free night certificate and $300 in statement credits for Hyatt purchases in the first 12 months
While I’m not wildly excited by the prospect of a free night certificate with a hard 12-month expiration, a Category 1-7 free night certificate is still somewhat appealing to me since in any normal year I spend at least a night or two in either a Category 6 or 7 Hyatt (and indeed I did spend a couple of nights at the Category 6 Andaz 5th Ave last year, but I wanted to use a suite upgrade – which can’t be applied to nights booked with a free night certificate – so I didn’t use my Cat 1-7 free night certificate. Doh!).
Category 6 and 7 Hyatt properties can often cost well over $500 per night (and in some cases more than $1,000 per night such as the Park Hyatt New York). One could therefore get incredible value out of a Category 1-7 free night certificate. Furthermore, Hyatt free night certificates can be applied even during peak pricing, which means that if you use it for a Category 7 property that is peak-priced, the certificate will save you a total of 35K points.
Of course you don’t really know that you’ll use it for a peak-priced Category 7 hotel, and unless you are the type to regularly spend upwards of $500 or $1,000 per night on a hotel, you need to be careful not to overvalue the certificate. Our conservative estimate for a Category 1-7 free night certificate is $300. You can book many properties that cost more, but it is reasonable to expect to get at least $300 of value out of it. Personally, I have a hard time valuing a free night certificate much higher than that since I know I wouldn’t spend more than that on a single hotel night. I get some intangible value out of staying at a swanky place like the Park Hyatt New York, but if that property were on sale for $400 per night I still wouldn’t pay it because I just don’t spend that much on hotel nights.
The other part of the dummy booking offer bonus is $300 in statement credits for Hyatt purchases. We don’t tend to value statement credits for brand-specific spend at full face value because of the restrictive nature. Greg argued for valuing the statement credit at $240 (80% of face value), but I think I’d value it more like 90% of face value ($270). Even that may be unnecessarily conservative given the ease of using the statement credit — I imagine that even if you don’t travel during 2022, a hotel deposit for a 2023 stay (booked during 2022) would probably trigger the credit.
Therefore, at $3K spend, the value of the dummy booking offer is:
- $300 (Cat 1-7 free night cert) + $270 = $570
That makes the dummy offer look just a bit better for those who prefer to only spend $3,000 on the card rather than completing the entire $15K spending requirement of the standard offer. Those who assign more than $300 in value to the free night certificate may find this offer even more appealing.
However, in our team discussion about the offer, Greg made a solid point: the standard offer is far more flexible. While 33,000 bonus points on $3K spend may not be as mathematically valuable as the free night certificate and statement credit, you can have and hold those points to use how and when you see fit. You could unlock that $528 in value in 2022 or hold on to it to use the points in 2023 or 2024 or 2025. The dummy booking offer requires you to use up all of the value (both the free night certificate and statement credits) in the first year. If something crazy happens and you can’t travel much for the year (hard to imagine as that may be), you could conceivably spend $3,000 and end up with nothing (I’d argue that you’d be silly not to make some sort of speculative future booking to use the $300 Hyatt statement credit, but nonetheless his point was good).
Those who would otherwise do the full $15K spend to reach a free night certificate (a standard card benefit is to get a Category 1-4 free night certificate after $15K calendar year spend) would be better off with the standard offer since the additional $12K spend will yield 24K points rather than only 12K points with the dummy booking offer.
Since the standard offer yields far greater flexibility and certainly better value for those looking to do the full $15K spend, the best offer on our Best Offers page remains the standard offer. I’ve added this dummy booking offer as an “alternate” offer for those who would prefer to only do $3K spend for a Hyatt welcome bonus and who value the certificate and statement credit over the flexibility of the points, but at the end of the day the rest of the team was right to overrule my initial impression that the dummy booking offer was better. That said, this is a good reminder that starting the process for a booking often yields a different offer. Some are objectively better than the standard offer, but you really have to do the math on others to determine what’s best for you.