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And the Hyatt Devaluation Suggests We Should Re-Think Our Credit Card Strategy

One Mile at a Time has written more than I will bother to about Hyatt changing their award chart (short version: 6 hotels get moved into a new Tier 7, which costs 30k points/night; suite upgrades are now 6k points per night, not per stay; Tier 5 and 6 hotels cost more points).

There will be many tears shed about this, but I think it just underscores what I’ve been thinking since the United devaluation:

1) Cards that are aligned with multiple programs are now much more valuable;
2) For me that means that Starwood Amex rather than the Ultimate Rewards cards because of the breadth of transfer partners;
3) People who pooh-poohed cash back cards should probably take a second look.

Let’s take a look at those 6 properties that now cost 30,000 points per night – they’re the Park Hyatt hotels in Beaver Creek, Sydney, Tokyo, Milan, Paris and Zurich.

If you put $30k in spend on an Ultimate Rewards card you can get a free night at one of those hotels when you transfer the points to Hyatt.

But – and this is why I like the Barclays Arrival as my cash back card – for 4 of those properties I’m actually better off earning points on the Barclays card and just buying the hotel with those points. The hotels in Beaver Creek, Tokyo, Milan and Zurich are all under $600/night. So that $424 Beaver Creek room will only require $21,200 in spend on the Barclays card (not even including the 10% bonus I’ll get back from Barclays. Plus I’m earning 2,100 Hyatt points per night because I’m buying the room (rather than using their miles). That means I can upgrade to a Club room for only 900 more points per night.

Yes, the math gets more complicated because you’re probably putting some travel/restaurant bonus mile spend on that Sapphire card, but still — the flexibility of that 2.2% cash back you earn on that Barclays Arrival means you’re not subject to the whims of the programs nearly as much as if all your eggs were in one basket (if, God forbid, you were earning points on the Hyatt card, for example).

Personally, I’m torn about how to spread my spend between the Barclay Arrival and the SPG cards. I see value in getting cash back that can be spent on any travel (car rentals, for example), and I see value in airline points that I can generate with the SPG card. For now, I’m just planning on splitting my spend – but I’d be interested to hear if others have a better strategy.

But my larger point was that these devaluations are certainly going to continue and a hedge against them – especially with hotels – is to have some of your spend go onto a cash back card. I was surprised that earning on the cash back card was actually a better deal than just earning points through spend and transferring the points to Hyatt for several of those top hotels.

(Incidentally – I’m talking about everyday spend here….you should certainly feel free to earn points through signups as much as you’re comfortable…)

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  1. If there were an award given for packing the maximum content and advice in the least words, you’d win every time.

  2. “Personally, I’m torn about how to spread my spend between the Barclay Arrival and the SPG cards”

    You should earn on the SPG up to the point where each point is still worth >= 2.2 cents to you

    The more SPG points you have, the less marginal benefit you get from each point – someone who has 0 SPG points can probably get a lot more “value” out of 20000 incremental points than someone who has 500000 SPG points getting an incremental 20000

    I have a ton of points, so I don’t necessarily hold out for a redemption unless it was 3-4 cpp, but if I barely had any points, I wouldn’t just blindly redeem for anything that’s even respectable

  3. Great timing for the Hyatt Deval, my annual fee is coming up soon and now I have more leverage on that retention bonus :)

  4. What’s sad about this is that most folks (including me) don’t think that a hotel room is worth $600 (even in Tokyo or Paris) so if we spent $30,000 on the Barclays’ card, we’d find something more practical to do with those points.

    It seems like the hotel loyalty programs are forgetting that their aspirational awards need to be plausibly priced.

    • That’s a great point – with Air BnB, I can get a 1-bedroom apartment in Tokyo for under $200. Why would I even bother getting a hotel?

      Hotels have not yet woken up to the idea that for leisure travelers, there are now a ton of options with AirBnB and VRBO and the like.

      Yet another reason why cash back cards may make the most sense.

      • Well, it’s funny how the internet affects travel. It’s never been easier to book independent lodging than now. I think 99% of the places to stay in the world have an email address that you could easily write to and make a reservation (use google translate if it’s a really weird place where management won’t understand English). At the same time, it’s never been easier to figure out WHERE to stay (sites like tripadvisor). Yet, most travelers seem to prefer booking with chains and the big online travel agencies. How else can one explain Priceline’s $55 billion market cap and Marriott’s ability to sign up all these independent hotels for their “Autograph” line?
        Still, I do think there are limits to what travelers will pay for chain hotels. You have to have an awfully large number of loyalty points for most of the big chain’s top luxury properties (now that Hyatt has joined the crowd on this). I’m sure there will be fewer redemptions at those top properties, but I’m not sure the hotels will really care.

  5. What about Chase Hyatt card that gives you 2 free nights [anywhere in the world?] after spending $1,500 with no annual fee for the first year?

    It sounds better than spending $30,000.

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