I wrote previously about "Why I Believe the Experts Are Wrong About the True Value of Points". The basic premise of that article was that we make decisions about purchasing things based on how easy or difficult it is to replace the currency that we are about to spend. In other words, "the value of a dollar". Intuitively we know how easy or difficult it is for each of us to replace the money in our bank account. The decision about how easy or hard it is to replace miles or points in our account is not so clear. We don't understand the "value of a point" as intuitively.
Today I want to use a specific example demonstrating my point. To me, flexible points like Starpoints or Ultimate Rewards points are a very valuable currency. Starwood points are probably the best way to accumulate airline miles because of the 25% bonus you receive when transferring into any one of their 31 airline partners. You are earning the same 1:1 ratio of dollars spent to miles earned as you do on your branded airline card, but the 25% transfer bonus means that you are really earning at a ratio of 1.25:1.
Ultimate Reward points are earned through spending on your Chase Sapphire and Chase Ink cards. Ultimate reward points are much easier to earn than Starpoints, but they have fewer transfer partners. Airline transfer partners include; British Air, Korean Air, Southwest and United. Hotel transfer partners are Hyatt, Priority Club, Marriott and Ritz Carlton. The Chase Sapphire card has a 2X bonus category for Restaurants and Travel. Travel is not just limited to airline tickets either. Pretty much any travel related expenses like trains, cabs, shuttles, limousine service, etc are included.
The Ink Bold and Ink Plus cards from Chase earn 2X points on gas purchases and 5X points on office supplies, telecommunications, cable and satellite TV and Internet. At 5X spending, points rack up quickly. Every time I am in an office supply store, I will buy two $500 Visa or MasterCard gift cards. They cost $5.95 each. For my $1011.90, I will earn over 5000 Ultimate Reward points. That brings me to today's point about Hyatt hotels.
Hyatt's award chart looks like this.
I can instantly (as soon as they post to my UR account) transfer 5000 Ultimate Reward points to my Hyatt account in a matter of minutes. I can then use those 5000 Hyatt Gold Passport points to book a category one Hyatt property like the Hyatt Place in Pittsburgh. This hotel is very centrally located to the downtown and is walking distance to the ballpark. That room for the night of April 6th (a date I just picked at random) is selling for $349 for the night. I can book that same room with 5000 Hyatt Gold Passport points! For my $11.90 I get a $349 room for the night. That's before room taxes too. That's all I really "spent" as I still have two $500 gift cards left. I don't need to do the math to know how great a deal I just got. By virtue of having a Chase Hyatt card, I also have Hyatt Gold Passport Status. That might entitle me to a room upgrade!
Let's look for a Marriott in Pittsburgh for the same night of April 6th. The least expensive Marriott I could find was the Courtyard at the airport. It sells for $119/night plus taxes. You can book that same room with 15,000 Marriott Reward points. If I have the Chase Marriott Rewards card, I can earn the same 2X points on restaurants and travel as the Sapphire card, but there are no 5X categories other than Marriott spending. While Marriott is also a transfer partner with Ultimate Rewards, I will have to work much harder to earn enough points to book a room that sells for 1/3 as much as the Hyatt room.
Which room would you book and how would you pay for it? I think the decision is a relatively wasy one to make.
While most of us understand the "value of a dollar", very few of us understand the value of a point. I hope this begins to shed some light on the subject.
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About The Points Doctor
The Points Doctor is Bruce J. Wilderman DDS of Artistic Expressions Dentistry.Dr. Wilderman has a practice limited to Cosmetic Dentistry, serving patients of the Philadelphia Area since 1986.He and wife of 30 years enjoy traveling the world for little or no money with the points and miles they have earned from the credit card companies. Dr. Wilderman would love to teach you how to do the same. You may reach him at ThePointsDoctor@comcast.net