The rose-colored glasses come off (on Nick’s mind)

It’s time to take off the rose-colored glasses.

Last month, I wrote a post essentially saying that Chase Ultimate Rewards are great for Hyatt but would be very weak if and when Hyatt ever devalued (See: Chase needs to stop banking on Hyatt). I followed up with a post on easy foreign transfer partner programs and challenging foreign partners that are worth some effort. A reader who goes by the name Dugroz Reports, who I know has a Youtube channel advocating for the “Regular Joe” in miles and points, commented on my post about the challenging foreign airline programs — and I’m going to pick a fight with him (sort of). I’m going to challenge Dugroz Reports to take off his Rose-colored glasses and examine his redemption strategy.

Don’t worry, I don’t really have anything against him — he’s a regular reader / commenter with whom I’ve interacted before and I cleared this topic with him before posting it, so I’m not really picking a fight with Dugroz Reports. But I am picking a fight with an idea….and I’m sure he’ll let you know why I’m wrong in the comments below this post!

In the comments of my post about challenging foreign transfer partners that are worthwhile, reader PeterSFO started a train of thought when he mentioned:

I’d rather have 4 good airline transfer partners and 1 good hotel transfer partner than 10 good airline transfer partners and 0 good hotel transfer partner.

That comment is a close approximation of the Chase Ultimate Rewards vs Amex Membership Rewards argument. Dugroz Reports agreed with that sentiment and expanded his feelings on it a bit:

Put me also in the camp of “I’d rather have 4 good airline transfer partners and 1 good hotel transfer partner.”
I think a lot of that comes down to frequency of travel and flexibility of travel. Somewhere in here is an argument about how flexible your life and job are. Nick can more easily “drop everything” and fly to XYZ destination when a good deal comes along or cabin space opens up, even if it’s in February. As a regular old 9-5er, with a wife who teaches, and kids in school, it’s pretty much June-August for me; the peak seasons.
Hyatt offers very predictable, good (if not outsized) value year-round. And without impacting my family budget at all, I can use something like the Chase portal or Southwest, United, etc many times to fit my life. I don’t pay for hotels or airlines, so “just do paid travel” isn’t an option. It has to be points.
Having said that, I do Amex and Chase; so the axiom of “why not both?” seems to apply.  But Chase in an integral part.
Loved the article, BTW.

There are a lot of good points there. There’s no doubt that a blogger like me enjoys outsized flexibility in terms of when to travel. I worked a job in a past life where we bid our vacation schedule about a year in advance, so I can certainly understand the situation that some have in terms of fixed inflexible dates and times. And that can make it a lot harder to take advantage of the sweetest sweet spots.

But one line in particular of his comment stood out to me:

I don’t pay for hotels or airlines so “just do paid travel” isn’t an option. It has to be points.

Well Dugroz Reports, if this is the case, can you please book all my hotels and flights for me this year? I’m sure you won’t mind since you don’t pay for them! 😀

Of course I’m being facetious to make a point: there certainly is a cost involved — and recognizing that Dugroz Reports’s points about flexibility are absolutely true, as much as I love Hyatt, the savings achieved through hotel points don’t compare to the savings achieved through using airline miles to top value unless you’re staying at the lowest category hotels (where points often yield more outsized value) or the very tippy tippy top of the highest-end hotels.

Many times before I have used 20K or 25K Hyatt points to stay at a hotel that otherwise would have cost $500 or $600 a night. I’d have never paid the $500 or $600 to stay at such a property and so I was thrilled to get a swanky hotel for 20 or 25K Hyatt points (and let the record show that I often still do that).

But I think it is important to remember that the 20K or 25K points per night that I have transferred from Chase to Hyatt in those cases could alternatively be cashed out for $200 or $250 in cold hard cash, so in essence, I am “paying” for the hotel when I do that (an old argument I won’t rehash in full).

My point in saying that I’d rather have 10 good airline partners than 4 airlines and 1 hotel is that if we take away Hyatt, I’ll probably still be willing to spend around $150 a night for a hotel (obviously this number varies wildly from person to person, this is just my approximate number). Paying $150 per night in cash is arguably paying less than paying 25,000 Hyatt points per night if those points come from a Chase transfer. If paying cash for the hotel saves me $1,000 worth of points over what I’d have paid for the same flights with that 4 + 1 combo, it will have been a good trade. If that concept doesn’t make sense, I’ll come back to it in a second.

Like I said, I’m not swearing off Hyatt — really, the point of my post about Chase was that Hyatt is what makes Ultimate Rewards worthwhile. Hyatt is great and I’ll continue to enjoy transferring there. But without Hyatt, Ultimate Rewards would be a really weak currency. And more importantly here, if I had to choose whether to have Hyatt as a transfer partner or whether to have airline transfer partners that offer better sweet spots, I’d take the better airline partners because the amount I will save by using better airline partners is far more significant than the amount I will save with Hyatt points over my alternative options.

Let me give you a clearer comparison that illustrates why I would sooner accept 10 good airline partners and 0 good hotel partners than 4 good airline partners and 1 good hotel partner (note that I’m not really arguing that Amex has 10 good airline partners or that Chase has only 4 good ones, I’m just illustrating that a really good airline partner makes a more significant difference than a really good hotel partner).

Let’s say you want to take a trip for 2 passengers from New York to Brussels, Belgium from February 20th to the 25th (yes, it’s close-in, but it’s during President’s Week, which is a week off of school here in New York State. Planning this close-in or during off-season to Europe may not be practical, but for the purposes here it’s mathematical). United has Polaris business award availability at 62.4K miles each way per passenger on the way to Brussels and 60K miles per passenger on the way back.

For two people, that’s 244,800 points.

There is a Small Luxury Hotels of the World property in Brussels, the Juliana Hotel Brussels, that is a Category 6 Hyatt and is available for 21K points per night (against a room rate of 343 Euro through Hyatt).

Four nights there would cost 84,000 points. Assuming you would transfer from Chase Ultimate Rewards to United and Hyatt to book that trip, it would cost a total of 328,800 total points. I fully understand that Dugroz Reports might not fly business class and/or he might not consider blowing that many points on a two-person trip, etc. But it illustrates the comparison I’m making. Cashed out, that’s $3,288.00 worth of Ultimate Rewards points — can we agree to call that the opportunity cost of this redemption? With the cost of taxes, that’s $3,412.70 out the door instead of in the bank (as it could be if the points were cashed out).

Instead, thanks to Amex transfer partner ANA, those same United flights to and from Brussels could be booked for 88,000 miles round trip per passenger.

That’s 176,000 points spent on the flights (plus the same $124.70 in taxes).

There is a Holiday Inn Express in the city that is listed “from 126 Euro”, but in reality the cheapest flexible rate (a fair comparison point) is 152. It comes to 624.22 Euro for those 4 nights at the flexible rate. Based on today’s exchange rate, that’s $672. If I didn’t have access to a good hotel transfer partner, that’s a price I might consider paying.

Understanding that Amex points can only be traded for cash with a Business Platinum card and Amex Business Checking account (at $0.01 per point) or the Schwab Platinum card (at $0.011 per point) but looking to keep the math simple, let’s assume Dugroz Reports would value Amex points at the same 1c per point floor value that we gave to Chase points. That redemption “cost” $1,760.00 plus $672 plus $124.70 in taxes on the flights = $2,556.70 in total between points and money.

Better yet, there is a Hotel Indigo that would cost a total of 128,000 points for 4 nights. If you bought your IHG points on sale at half a cent each (a price at which they frequently go on sale), that’s $624 worth of points — dropping your net cost down to $2,508.70.

If you had the IHG Premier card with its 4th night free benefit on awards, it would cut the award cost to 100,000 points (ironically, the 4th night is the cheapest in this case at just 28K points). That’s $500 worth of IHG points purchased on sale, bringing the net trip cost to $2,384.70.

In any of the above cases, I would argue that transferring to United and Hyatt wouldn’t really “save” Dugroz Reports money.

The reality is complex: if he earned only Amex points instead of earning any Chase points, for instance, he couldn’t cash out those Amex points at $0.01 per point to pay cash for hotels (or hotel points) unless he also had an expensive Platinum card (though that may be worth it since, even with the cost of a Platinum card, booking the Hotel Indigo or Holiday Inn Express and using ANA for the flights would still have a lower opportunity cost than the Chase to United and Hyatt transfer). Of course, nothing stops Dugroz Reports from earning cash back (like with a Chase Ink Cash card) and using that cash back to cover “paid” hotels (rather than cash from his family budget). I’d argue that transferring points to book a Hyatt hotel and then thinking that you “didn’t pay for the hotel” is looking at your redemption through rose-colored glasses.

In the examples above, Dugroz Reports may have used Hyatt points and stayed at a nicer property (I’ll just assume that the SLH property is nicer), but having access to a better airline transfer partner — even after using cash for the hotel — saves nearly a grand over being stuck with a lesser airline partner and transferring to that “good” hotel partner when you slice and dice hotel cost as shown above.

But wait — it isn’t really fair to compare apples and oranges, right? I have never stayed at the Hotel Indigo in Brussels or the Juliana Hotel Brussels (the SLH property), but based on my limited SLH and Hotel Indigo experience, I think it is probably fair to assume that the SLH property is much nicer. Dugroz Reports may argue that he really wants to stay at the Juliana Hotel and he likes his Chase points to transfer to Hyatt for the fancypants hotels (probably not an argument he would actually make if you watch his Youtube channel, but let’s imagine that he would make that argument).

Good news for Dugroz Reports: The Juliana Hotel Brussels is available for those dates for a total of $1,136 (including taxes & fees) via Hotels.com when signed in to a Hotels.com account.

One could probably book through a shopping portal and/or use discounted Hotels.com gift cards to pay even less — and if you value Hotels.com rewards, the deal above could get significantly better.

But let’s imagine you don’t use a shopping portal or get discounted gift cards or value Hotels.com rewards. Again valuing Amex points at a penny each, the flights and stay at that same property come at a total combined cost of $2,896 ($1,760 worth of points valued at 1c per point for the flights + $1,136 for the hotel). I’d argue that using Amex points saves $392 worth of cash / rewards.

This may seem like a cherry-picked example, and to some extent it is in the sense that I knew Brussels would have easy award availability based on recent trends in my Seatspy award searches and you will sometimes find Hyatt properties with much better award prices or during peak seasons cash prices for competing properties may be much higher. And I need to recognize again that the entire comparison is flawed in the sense that Amex points are not as easily traded for cash as Chase points and if the flights in the example were on Lufthansa, Amex wouldn’t have had a cheaper transfer partner than United (unless they were offering a transfer bonus to Avianca LifeMiles, which does happen now and then).

But the fact is that I originally wrote the meat and potatoes of this post a month ago with a different city pair and different hotels — and the difference between Amex and Chase came out similarly (in fact, the spread was even wider because in that other city there were even cheaper IHG award options, but due to availability changes in the time since I put together the initial example, I wanted to update with a current example before I published this).

If one were really considering whether to focus on only Chase points or only Amex points, there would be a lot of other factors to consider. There’s the fact that Amex offers more frequent transfer bonuses, offering chances to pay even fewer points for flights — but then there’s the fact that Amex cards are not as widely accepted (especially overseas) and that many Amex Offers for hotel chains are limited to US properties. There’s the fact that Chase’s partners likely offer more options for US domestic flights since the US-based airlines are releasing such little award availability to partners and Chase has both United and Southwest. Amex has more welcome bonuses to earn, but Chase has the Ink Cash card for great rewards at office supply stores. And for someone who primarily travels domestically, it’s hard to beat the value of a Category 1 or Category 2 Hyatt. I think Chase would likely be my program of choice for primarily domestic travel. There are lots of complexities to consider. I’m not really suggesting that you should earn Amex points instead of Chase points but rather I found it interesting to consider whether the savings of great airline partner programs outweighs the savings of the one great hotel transfer program.

The heart of my point here is that, at least for those who value premium cabin international travel, the savings possible with the best airline transfer partners can far outpace the savings of a good hotel transfer program. This example was based on 2 passengers, but the gap would widen substantially over 3 passengers (assuming the hotels allow for an occupancy of 3).

Bottom line

At the end of the day, I have no plans to choose whether to collect only Chase Ultimate Rewards points or only Amex Membership Rewards points — I’ll keep collecting both and taking advantage of the best opportunities that each has to offer. And I have no plans to stop redeeming Hyatt points to pay cash for the Holiday Inn Express. And I think that Dugroz Reports has a viewpoint that is very common: better to not pay for travel than to take away money that needs to go for more important budgetary concerns. I really picked a fight with Dugroz Reports here to reiterate that using points isn’t free and paying cash can sometimes cost you less (in the examples in this post, Dugroz Reports would be better off cashing out Chase points to “pay” for the hotels than transferring to Hyatt and either having points left over to use for another day or cashing out the difference in points and using it to cover other travel expenses like food and activities.

I refuse to choose between 10 good airline partners or 4 good airline partners and 1 good hotel partner because it isn’t necessary to do so — you can play this game and have your cake and eat it, too. And I think Hyatt is great — but I think it’s important not to overstate the value that Hyatt provides. I love it in conjunction with flight awards booked with my Amex (and Capital One and Citi) points — but I’d like it less if having it meant that I couldn’t have access to great airline transfer partner programs to pair with it.

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