Should I Pay Cash or Points for Hotel Stay?

Since the summer is fast approaching, I have been busy reserving lots of hotel rooms for our various trips. We had our Finger Lakes trip in April, which amassed us a ton of points because of the Crack the Case Priority Club promotion. Now we are trying to wrap up details for our pending Cape Cod trip.

We already had our major portion of the trip, in Cape Cod, reserved as I previous discussed in my post Cape Cod Hyannis Harbor Hotel Booked. We have been throwing around what to do before and after the trip since we built into the schedule a couple days to slowly travel to and from the Cape Cod region. By taking our time traveling, we thus needed lots of hotel rooms for stays the various nights we will be in different regions of the country.

Our major goal in accumulating miles and points is to eventually go to Hawaii for pretty much free, both with airline miles and hotel rewards. So we are not interested at this point in actually redeeming miles/points towards rewards. So the question then comes down to should we pay a premium towards earning points for our stay, or take a reduced rate through various avenues that do not earn rewards?

On the way to Cape Cod, we are planning on stopping at the Crayola Factory in Pennsylvania (more on that in a future post), and then have two different hotels reserved in Connecticut. The first night we are staying in the Hampton Inn Milford, CT. The room was amazingly cheap at $73.42 (after taxes and fees) for a King Bed with our AAA discount. We will earn rewards for this stay.

The next night we will be traveling towards the Mystic Seaport and Margaritaville at the Mohegan Sun. Due to various things we want to see and do, we wanted to end up near the casinos at night, and found the Holiday Inn Norwich, CT. Since we were only staying a single night, we opted for a Friends and Family rate of $95.73 (after taxes and fees). Our AAA rate would have been $135.46, so a savings of $40/room, but no rewards.

After we leave the Cape Cod area, we decided we would stay in Philadelphia since we have never seen the City. We also decided we wanted to stay 3 nights. So now I have something to work with when it comes to choosing a hotel, and whether we are better off earning rewards or taking the cheaper rate.

Initially I searched for all available Hilton or Intercontinental branded hotels within the City. I quickly ruled out Hilton because the rates were not competitive. There were four (4) Intercontinental hotels within the City, and fit more within our budget. Upon closer inspection, I realized the rates I was seeing was not necessarily the price when you factored in parking fees of $25-40/night. That can quickly add quite a bit of money to the bottom line. Luckily one of the hotels, the PHILADELPHIA-STADIUM Holiday Inn, allowed complimentary parking, and the rates were reasonable.

For the three nights we were looking to book, the total rate is $537.94 with our AAA discount. (Note, the AAA rate in this case is $4 more per night than the advance reservation rate. The difference though is that the AAA is fully refundable and can be cancelled, so the incremental cost is worth it in my opinion should something better come along.) The same stay through the Friends and Family program is $415.58 (again after all taxes and fees). So the question becomes, am I better off paying a premium to earn rewards, or take the purchase discount?

The difference in cost would be $122.36, so a substantial savings. If we were to book the rate that earns rewards, we would earn 7,005 Priority Club reward points ($466.97 base rate * 10 points + 50% Platinum Status points). Therefore, the premium I would be paying would cost me $0.017/point ($122.36/7,005 points).

As a comparison, to purchase 7,000 points directly from Priority Club, it would cost us $13.50/1,000 miles ($0.0135/point), or $94.50. So in other words, I would be paying a premium over and above what it would cost to just purchase the points from Priority Club. In this instance, we will be better off taking the cash savings, as the $122.36 saved could buy an equivalent 9,000 points for $121.50 ($13.50 per 1,000 points) with change to spare.

This calculation also assumes no other bonuses would be accumulated should we go the points route.

So what did we do?
Well I just so happen to get lucky with a new promotion through Intercontinental, offering a $75 Mastercard for every two weekend nights. Therefore, the standard AAA rate of $537.94, which will give us 7,005 Priority Club points, will only cost us $0.0068/point after the $75 rebate. So with a couple hoops to jump through, going the route of points was the better alternative.