How Credit Cards Affect the Cost of a Free Night

During an on-going analysis of hotel loyalty programs, I decided to take a look at the credit card bonuses each offered. There is an opportunity cost when you use a co-branded card rather than some other credit card. For example, you may give up 2.14 Ultimate Rewards points you could have earned with your Sapphire Preferred card on travel purchases. But sometimes the co-branded card offers a particularly good deal. For example, the Hyatt Credit Card offers 3 points per dollar. If you were going to transfer your Ultimate Rewards points to Hyatt anyway, then it would be much better to skip the middle man.

The first two charts show the distribution of award costs for each category in each program. I did this only for general members and for the top elite tier, originally publishing these a few weeks ago. The data show how elite status can rectify some remarkable disparities in a program’s award chart. For example, Starwood has the highest award costs due to its expensive Category 6 and 7 awards, but it offers a generous elite bonus. Instead of a 3-fold difference compared to other programs, Platinum status (at 25 stays/50 nights) results in a mere 2-fold difference.

General Member cost per award night

Elite Member cost per award night

But what about changes between intermediate levels of elite status? All these dots are getting distracting, so I just averaged them together to create a single number for each program. (For example, Hyatt requires an average of 16,429 points per award night.) It’s important to note this is not a weighted average, which would be more useful information. But I don’t have the distribution of properties in each award category easily available and am not interested in counting them by hand.

Award Cost with Status

Disclaimers: (1) I skipped over “Middle” status when no such status existed. (2) “Middle” status for Starwood is their 25-stay or 50-night Platinum tier; “Top” status includes the higher bonus for 75+ nights.

As you can see from the chart, elite status has a large effect on the cost of an award night. It can reduce the amount of revenue required (dollars spent on paid nights) before earning an award by up to one-half or as little as less than one-third of the cost to a general member. The greatest discounts were provided to members of Starwood Preferred Guest and Club Carlson who stayed 75 nights or more each year, which makes some sense.

I then took a look at how the cost of an award changes when a co-branded credit card bonus is included. These numbers combine the elite status bonus (if any) and the credit card bonus.

Award Cost with Card

Further disclaimers in addition to those mentioned above: (1) I assumed the highest credit card bonus if there is more than one card available. (2) If a credit card would provide elite status greater than what is listed here, then I replaced it with a less rewarding card or no card at all; this affected Hyatt, Hilton, IHG, and Carlson.

These numbers really amazed me. While you could normally obtain 20-30% faster earning in most programs with top-tier status, adding a credit card could save close to 50%. So I created one final figure. What happens if we make a single choice: get a co-branded credit card or obtain top-tier status? I included the status that comes with the credit card, if any, but I assumed the top-tier elite member was not using a card.

Award Cost - Status vs Card

With some programs, the effect is the same: Starwood and Marriott offer identical bonuses if you have their credit card or top-tier elite status. But for all the other programs, holding a co-branded credit card offers a greater discount on award nights than holding status. This effect was most noticeable for Hyatt Gold Passport and Hilton HHonors.

What surprised me the most? Hilton has some of the cheapest award nights of any hotel loyalty program considered here! It’s on par with Club Carlson. Obviously Hilton has a lot of mid-range properties that bring down its average, so this isn’t the same as saying it’s inexpensive to book a free night at the Conrad Hong Kong. But I still find it shocking.

Some readers also asked that I look at this from a different perspective: What if you get all your points from credit cards and manufactured spend? Then you probably don’t care about elite status or earning rates at all. You just want to know what’s the best card to put your spend on to earn a free night. I’m still working on that analysis and hope to have it later this week or early next week.

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  • Ven

    SPG always looks really bad in these comparison because it doesn’t usually take into account some of the bonuses you can get with SPG. 500 point welcome gift (Hyatt 1000point is the only one that is comparable), make a green choice, 4th point at 75 nights. Usually I walk away with about $500 in hotel spend over 4 days will net you 4000 SPG points per week with all this factored in. Add another 1,000 for the CC and a Cat 7 night is $3000 in spend instead of $18K. I know not every hotel offers GC, but I just wanted to point out the vast flexibility in SPG earning rates.

    • Scottrick

      Correct, SPG has a good bonus at check-in, but Hyatt’s is higher and doesn’t require you to give up breakfast. For the three figures at the end (in color) I did include the extra point for Platinum 75+.

      At some point I’ll include welcome bonuses and Green Choice, etc., but not yet. SPG continues to improve as I include more of these factors.

  • beachfan

    Nice analysis.
    I like the graphs by category much better than the “average” graph as I don’t care about low level hotels, and that makes higher class chains look worse.
    Maybe do a comparison of top category (or second to top category) non-suite rooms based solely on cc spend? I don’t have to put my cc spend on the hotel where I put my status earning stays. For example, the Maldives’ best options isn’t with SPG (although they have properties there).
    I’d be interested in Cat 7 SPG vs. Cat 7 Hyatt vs. top category Marriott vs. top category Hilton based solely on credit card spend.

    Thanks again!

    • Scottrick

      That may be the solution if I’m not able to get a breakdown of how many properties in each category. I could stratify the results and provide averages for the top, middle, and bottom categories for each program instead of a single average. Or I could use a median instead of a mean value.

      • Darrin Earl

        I love me some nerdy graphs!

        That said, I’d second the call for looking just at the top couple categories for each chain… or possibly a few test cases, like Paris, NYC, Hawaii, Maldives, Tokyo, Sydney… as these are always the “pimping/pumping” examples used to justify getting a credit card – and should provide some apples-to-apples comparisons among chains.

        More importantly, I think it’s fair to say that the use most of us put points to (on average) are either these aspirational awards, or simply nights where the points deals are good enough to displace using cash (bottom end SPG properties for example). A true weighted average across a chain would be interesting, but doesn’t really match up with my own use of hotel points.

        Again, great work, I love to see some true value add like this! Thanks!

        • Scottrick

          Good points. That’s why I make incremental updates to these analyses.

  • Mark

    This is geeky awesome

  • Locke42

    Hilton is just obscene with its bonus points. I mean, You basically get 30 points per dollar for staying at a Hilton when you use the Amex Hilton Surpass (10 base points + 5 bonus points for “Points & Points” + 12 points from the card + 2.5 bonus points for Gold status). That’s insane. And that doesn’t even include the “2X Base Points” promos they run (although those usually come with a higher nightly rate). So it really shouldn’t be so surprising that they’re one of the cheapest to redeem with.

    • Scottrick

      I find it surprising given how upset everyone has been since last year’s devaluation.

      But if a credit card gets you 29.5 points per dollar, then that means you only need ~$3,200 in expenditures to get a free night for 95,000 points — an award category that applies to only 10 hotels out of 10,000+ and only during peak demand. By comparison, a SPG Plat with 75 nights and a card gets 6 points per dollar and would need to spend ~$5,800 for a peak rate room in Category 7 (35,000 points). Yet conventional wisdom says SPG is the better value.

      • disqust101

        Conventional wisdom in this hobby has long been wrong. You still have dinosaurs suggesting mileage and mattress runs make sense. You have people saying they are leaving Delta, despite Delta having the easiest to obtain status and very generous points-earning CCs. You have people suggesting 2% cashback cards are best. And you hear it from people who should know better.

        But I could care less about points earned with paid stays at hotels. No self-respecting points hound should ever be paying when they can use points at far less net cost with the right programs (like HH). I can get a CAT 10 Hilton for 95K HH peak season ($190 out of pocket via Surpass 6x). If I stay 5 nights, then I pay 76K peak ($152). Equivalent rates for CAT 10 peak season are ~$400-$1K depending on property. Best case, if I rec’d 30x at $400, I’d get a paltry 12K HH (which would cost me $24 via MS). So $400 less $24 value in points = $376 net. Makes no sense to ever use paid rates when one could get the same room for $190/$152 via MS.

        • SgFm

          I should have done the math. I just had a stay @ a Hilton Cat. 10 hotel where I thought 95K points/nt. was a little rich, but then I paid $460 instead!!!! I have the Hilton Surpass, so no excuses.

  • disqust101

    Chart is misleading. Carlson has almost no true top tier properties. At best you can say they are upper middle. They have no St Regis/Conrad/Park Hyatt equivalents.

    And what a surprise, even after the devaluation (that still has clueless nitwits complaining), Hilton is still one of the best programs – and if that’s “shocked” anyone, they simply haven’t paid attention…

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