Quickest spend to real stays


Updated: 5/8/2015

In the past few days I analyzed options for manufacturing spend in order to earn top tier hotel stays (see this post), and bottom tier hotel stays (see this post).  The former analysis showed that, for most situations, the best path to luxury hotel nights is to manufacture cash rather than points via a 5% cash back card.  If you have your eye on a particular high end property within the Club Carlson, Hyatt, or Hilton brands, though, it might make sense to manufacture those points, but only if the room rates would otherwise be incredibly high (e.g. over $700 per night).  At the other extreme, 5% cash back, Hilton, and Club Carlson were shown to all be good choices if you want to stay in bottom tier hotels.

OK, good enough, but what about real stays?  What about those family trips to the coast, or driving trips through the west?  Where does manufactured spend fit in if you want to stay in a nice, but not overwhelmingly opulent property?  To answer this question, I went back to my spreadsheets and changed the numbers to target mid-tier properties…

Shown above: Radisson Fort McDowell Resort in Scottsdale, Arizona.  This is a Category 4 Club Carlson property which costs 38,000 per night.

For each hotel chain, I identified the middle category and the number of points required for that category.  For example, Hyatt has 7 categories, so I used the middle category (4) which requires 15,000 points for a free night.  Hilton, with 10 categories, has two middles: category 5 requires 30K to 40K points per night, and category 6 requires 30K to 50K points per night.  I somewhat arbitrarily chose 40,000 points as the middle-ish point between these two categories.  And, with Ritz Carlton, I chose the bottom tier (30K points) since the entire brand is upscale.

In addition to figuring out the mid-points for hotel point stays, I estimated the cash price for a mid tier hotel to be $150 per night.

For details about the rest of the methodology, please see the prior posts (here and here).  Here were the results:

Hotel Chain Points Required for Mid Tier Free Night # Gift Cards Req for Free Night Total Fees
Pay w Cash * 15,000 6 $29.70
Pay w Arrival Plus Points ** 13,500 14 $55.30
Hilton 40,000 14 $83.30
Hyatt 15,000 15 $104.25
Club Carlson 38,000 16 $63.20
Starwood 10,000 20 $79.00
Marriott 25,000 25 $173.75
IHG 30,000 30 $208.50
Ritz Carlton *** 30,000 30 $208.50

* $150 translates to 15,000 “penny points” in the Pay with Cash option.
** When paying with Arrival points, you get an automatic 10% rebate.  A $150 charge costs 15,000 points, then the 1,500 point rebate results in a 13,500 point net cost.
*** For the Ritz Carlton chain, I chose the bottom tier to represent mid tier type hotels

As you can see above, once again earning 5% cash back and paying for rooms outright is the best way to go.  A distant second is the Arrival Plus with Club Carlson finishing third.

What if we increase the expected cash price of a mid tier hotel?  Will cash still win out?  Here are the results assuming $300 per night rooms:

Hotel Chain Points Required for Mid Tier Free Night # Gift Cards Req for Free Night Total Fees
Pay w Cash * 30,000 12 $59.40
Hilton 40,000 14 $83.30
Hyatt 15,000 15 $104.25
Club Carlson 38,000 16 $63.20
Starwood 10,000 20 $79.00
Marriott 25,000 25 $173.75
Pay w Arrival Plus Points ** 27,000 27 $106.65
IHG 30,000 30 $208.50
Ritz Carlton *** 30,000 30 $208.50

At $300 per night, 5% cash back is still the best with Club Carlson moving up to second.  Starwood and Hilton not far behind.  That said, I’m not sure how often you’ll encounter chain hotels categorized as mid-tier that would otherwise cost $300 per night or more.  I know this happens at times (particularly when events or seasonality drive up demand and prices), but it is not the norm.

What this means

If you want to manufacture spend to earn hotel nights, the most logical choice is to earn cash with a 5% cash back card (see “Playing 5X everywhere Whack a Mole”).  Yes, there will be situations where you can do better by manufacturing points (specifically with Club Carlson, Hilton, and Hyatt), but most of the time you’ll do better and have more options by going with cash.

The problem with this conclusion, though, is that paying cash does not feel as good as paying with points.  I discussed this in the post “Rationality is overrated.”  Paying for a hotel with points feels free, whereas paying with cash does not.  For some people the “joy of free” could add enough value to hotel stays to make it worth pursuing less rational approaches.  If that is you, and you want to earn free hotel nights (vs. free flights, for example), I’d recommend these approaches:

  • Use an Ink Plus or Ink Cash card when buying gift cards at office supply stores (where this card earns 5 points per dollar).  Points earned with the Ink Plus card allow 1 to 1 transfers to numerous airline and hotel programs (including Hyatt) and even to Amtrak (see “Easy wins”).  More than any other point options, Ultimate Rewards points have many high value uses so I would never consider it a waste to build up these points.
  • Use the Hilton Surpass card to buy $500 Visa gift cards at your local supermarket or gas station (to get 6 points per dollar).  This card also grants automatic Hilton Gold status (which means free breakfast and internet).  If you’re really lucky, you might even earn fuel points when buying gift cards at your grocery store.  
  • Use the Club Carlson Premier or Business card when buying gift cards with low fees at any location or merchant since this card earns 5 points per dollar on all spend.
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