Thursday, June 26, 2014

Hotel Points vs. Frequent Flyer Miles

The other day, I gave out some tactics that my family uses to generate some extra hotel points and frequent flyer miles while minimizing actual cash outlays. I concluded the post with a few different options in terms of using these extra points/miles - either for free hotel rooms or for free flights.

Now, there's a few different schools of thought here as both point currencies have their merits and drawbacks. But which is better?

Spoiler Alert - it really depends.

Pro-Hotel Points
Even getting a premium first class seat on the longest commercial flight in the world would only be about 16 hours long. Chances are, you'll spend more than 16 hours in your hotel room on vacation. So wouldn't it be a better to focus your resources on a travel product that you'll be spending more time in?

Further, some people view the flight as just a means to an end. The end being the destination (read: hotel). While sometimes people want to venture out of the hotel when traveling, let's be honest. You're still going to spend a meaningful amount of time there.

And many of those people want that time spent in a place that's a little better than what they have at home - basically, an "aspirational hotel." I mean, if someone offered you a free night or two at a hotel such as The Westin Riverfront or Conrad Koh Samui, who wouldn't jump at the chance?

And though not every hotel chain truly follows the "no blackout date" policy to a perfect tee, some chains are very true to their word. They will almost always allow point redemptions whenever a standard room is available for cash. Flight redemptions using miles, however, are almost the opposite. Most flights are not available unless the airline determines they won't sell out the flight for cash.

Additionally, with hotel redemptions, you could also "stretch" out your points depending on which hotel program you have points in. Most of the big ones have a Cash & Points option where you can pay for a portion of the room using points with the balance as a modest cash co-pay. As an example, my parents were able to use their SPG points to subsidize their four nights at the Le Meridien Chiang Mai in Thailand and only spend about $30 cash per night. Redemptions for flights using frequent flyer miles, on the other hand, are more "all or nothing" type deals (with the exception of taxes and occasional fuel surcharges).

Pro-Flight Miles
Not an error - this is what a hotel
room looks like when you're sleeping
The other group of travelers don't value the hotel component as critical to their travel experience. They would rather focus on the cuisine, shopping, entertainment and attractions that their destination offers. A hotel room is just a place to sleep and secure your belongings while you're out living life. All hotel rooms look exactly the same when you're sleeping. You get the idea.

These types of people are more likely to focus on loyalty currencies in the form of frequent flyer miles. After all, you can always save cash on your hotel by using one of a dozen different hotel search engines. Low cost housing options include hostels, guest houses, home shares and couch-surfing.

However, you can't always find a low cost alternative transportation option. A flight to Europe will almost always cost at least $800+/person (absent a mistake fare). I mean, if you want to get from New York to Paris, are you really going to take a boat to save money? Ignoring the huge increase in transit time, would it even be any cheaper?

So from a pure saving money perspective, it may be wiser to earn frequent flyer miles over hotel points given that you can find cheaper housing alternatives (but not flight options).

There's clearly no "right" way to play this game. Some people prefer getting a few nights in a luxury suite while others want to stretch their points as much as possible to cover their entire vacation. Some would rather feel like a VIP in the air while others view planes as nothing more than a flying bus that will get you from Point A to Point B.

The one key takeaway, however, should be that we should all be strategic in our points/miles accumulation. Getting "a little" across "a lot" of programs is pointless (no pun intended).

You're much better off having a specific goal in mind and then working your way towards that goal. Don't focus your spend on your Hyatt credit card if you want to vacation where they have no Hyatt hotels. Don't earn United miles if you're planning on going to a region where Star Alliance airlines are under-represented.

1 comment:

  1. Im not a flyer rather take a long distance drive when possible. Thats easy with no kids. I always stay at one brand hotel and add up all the points I can. I never prepay as you can get bonus points by not. Plus using same brand can get you gold status a lot quicker. Which means more perks better rooms.