Vacation vs. Inflation: How to Overcome Sky High Prices
Using Credit Card Reward Points and Travel Partners to Hack Travel
Hi Everyone!
Welcome to 58 new subscribers! If you’re reading this and haven’t signed up yet, join our community of 500+ financial enthusiasts!
What I'll Cover Today:
Raging inflation and surging travel demand have pushed vacation prices through the roof. With dream vacations seemingly unaffordable, knowing how to extract value from credit card reward points, and specifically, leveraging their arrangements with travel partners, can be your lifeline. Below I'm going to focus specifically on using credit card points and travel partners to get amazing deals on hotels.
Section 1: How using travel partners can maximize credit card point value.
Section 2: Getting 4x value using Chase Points and Hyatt’s Loyalty Program (example).
Section 3: Step-by-step guide on how to transfer points to Hyatt’s Loyalty Program.
Maximizing Credit Card Point Value Through Travel Partners:
Most of us are aware of credit card points and their basic travel value - they can be redeemed for flights and hotels. I've redeemed points for both of these numerous times and it really helps to make the cost of travel feel lighter. Hotel costs, especially if you want to stay somewhere decent, can quickly add up, so using points to cover your stay can be really valuable.
But directly exchanging points for your hotel stay isn't how to get maximum value from your points. Instead, you should look to leverage your card's Travel Partner Loyalty Programs. Here's why:
You use points to cover the cost of a hotel. But hotel costs increase with demand. This means that when hotels become more expensive, you need to spend more points. And if the hotel becomes a lot more expensive, you need to spend a lot more points. Conversely, hotel loyalty programs don't increase the point cost of their rooms to the same degree they increase the dollar cost, meaning you can get good deals on rooms even when prices are surging.
Hotels come with taxes and fees which increase the cost of the stay. These are avoided when you use the hotel's loyalty points.
What I like to call 'Point Arbitrage'. In some cases, the value of your credit card points is worth significantly more when converted to a hotel loyalty program's points. Meaning, for example, that if your points are worth $100 when directly booking a hotel, they can potentially be worth (significantly) more than $100 when converted to the hotel's loyalty points.
Let's use a real-world example to put this into context. I've had the most success using my Chase points (I have the Sapphire Reserve) with Hyatt's Loyalty Program, so that's what I'll use for this example.
First, let's demonstrate how the point cost of a hotel room doesn't increase by the same degree as its dollar price.
An off-peak hotel room at the Park Hyatt New York, a luxury hotel overlooking Central Park, costs about $915 after taxes and fees and costs 35,000 Hyatt Points.
The same hotel in peak season costs $1719 after taxes and fees and costs 45,000 Hyatt Points.
That means that the dollar cost of the room increased by nearly 90%, while the point cost increased by only 29%!
Secondly, notice how much extra cost is incurred as a result of taxes and fees:
And lastly, here's the real magic, the 'Point Arbitrage'…
The 'magic' here lies in the fact that my Chase points are worth more when I convert them to Hyatt's loyalty program. Like, A LOT more…
In fact, when converting my Chase points to Hyatt Points, and booking the Central Park hotel during peak season, my Chase points are worth a whopping 3.82x more!
This means that in exchange for $450 worth of Chase points, I can book a room worth over $1,700, effectively quadrupling the value of my points!!! If I were to book this hotel directly through Chase using my points, I would likely need to spend closer to 170,000 points. This demonstrates the incredible value of transferring my points to Hyatt's Loyalty Program.
And for the real savvy people out there who know about the Chase Sapphire Reserve 1.5x travel multiplier, the answer is yes, the value is still there.
How to transfer points to travel partners:
To help make this easier, I'll provide a quick tutorial on how to actually do this. Note: I'm using Chase points here and have the Sapphire Reserve Card, which entitles me to certain perks. You'll need to check your card's benefits to see if they work with travel partners.
Also, be sure to check that you're getting more value by transferring points to the loyalty program. Based on the program/hotel, it may not make as much sense, so just do a little bit of math to make sure you're getting a good deal.
Step 1: Create a loyalty account with Hyatt. Once you sign up, you'll get an account #. Hold onto this because you'll need it for the points transfer.
Step 2: Figure out how many Hyatt Points you need to book your room. You can do this by going to Hyatt.com, finding your hotel, and clicking the 'View Points' option.
Step 3: Head to the Chase website and navigate to the Ultimate Rewards page.
Click the drop-down and select Transfer to Travel Partners and look for Hyatt.
Step 4: Lastly, you'll be asked to enter in your loyalty number and how many points you want to transfer. Make sure you pay attention here, the transfer is irreversible.
And BOOM! You've just maximized the value of your points and hopefully secured a vacation that may have seemed too expensive prior to this hack.
Best,
FiDi Guy