Economics of an Award Hawaii Edition
Back in February I wrote about my last minute trip to Kauai. In a post titled “Why I Love Miles/Points – $4,000 Worth of Travel for $23” I talked about the retail cost of my trip and what my out of pocket cost was.
We all know that talking about those two things exclusively doesn’t tell the whole story. Today I thought I would follow up with a little more of an in depth look at the actual costs of the trip including how I acquired the points used to book it.
During my time in Kauai I stayed at the fantastic Grand Hyatt Kauai for 4 nights. The original reservation was for only 3 nights, but I loved it there so much that I decided to extend my stay by a day. The room rate for all four nights was $519 plus taxes and resort fees. All in, the retail cost of the stay was $2,458.76.
Since I am a Diamond Gold Passport member, during my stay I was upgraded to an oceanview room and received access to the club lounge for breakfast and evening hors d’oeuvres. I was also given a free one-day cabana rental worth $50. I see these benefits as icing on the cake and don’t calculate them into the retail value, although they do have monetary value.
Hotel Points Cost:
The Grand Hyatt Kauai is a category 6 property, meaning it costs 25,000 points per night or a total of 100,000 points for my 4 nights stay. Fortunately the stay came during Hyatt’s 20% rebate promotion, meaning my actual cost was 80,000 points.
About 95% of my Hyatt points come from Chase Ultimate Rewards. While I can’t break down my actual cost of those points, I can share with you a few facts about how I acquired them.
- Last year my wife and I acquired 180,000 Ultimate Rewards points through sign-up bonuses.
- We acquired hundreds of thousands of more points from actual spending.
- Our monetary cost for those points was negative thanks to deals from Officemax, Staples and others.
In other words, our actual monetary cost of acquiring those points was less than $0. Of course there was a time factor as well. I don’t have calculations for that, but I average over a $100 return per hour of time spent. Since I value Ultimate Rewards points at 1.7 cents each when making calculations, THE MOST time I spent to acquire those points was 13.6 hours.
To book airfare, we used British Airways Avios, since I have an abundance of them from the recent American Express Membership Rewards transfer bonus.
Since there are no direct flights from LAS-LIH on British Airways partners, we flew on American Airlines from LAS-LAX-LIH on the way there and US Airways LIH-PHX-LAS on the way back.
Airfare Points Cost:
British Airways charges by segment, so the LAS-LAX & PHX-LAS segments were 4,500 Avios each and the LAX-LIH & LIH-PHX segments were 12,500 Avios each for a total of 68,000 Avios roundtrip. Calculating in the transfer bonus, my cost was thus 48,571 American Express Membership Rewards points.
I acquired my Membership Rewards points from last years 75,000 bonus on the Premier Rewards Gold card which required $10,000 in spend to get the bonus. My cost of that spend was $4 per $500 or $80 to achieve the bonus. The portion of that cost that applies to this reward is $51.81.
Since the $10,000 in spend was all done via the same method, I can honestly say my time cost for this one was just under 5 hours total, so I will call it 5 hours.
Car Rentals in Hawaii are not cheap. While I wrote about one way to save money on them, my five day rental still came to $253 total. I had originally booked a car for $151 for 3 days and then I got a second rental for $72 for 2 days when I extended my trip. All of this will be covered by points on my Arrival Plus card. (My review)
So the question then comes to the cost of those points. I actually achieve some spend on the Arrival Plus card for free thanks to Serve online credit card loads (which are ending this month) and other methods, but the normal cost for me is $4 per $500 in spending.
Lets say I purchase a $500 gift card for $504. That ultimately earns $11.09 worth of points on my Arrival Plus card. So I am spending $4 to get $11.09. The way I look at this is I am getting a 63.9% discount on my travel expenses. In this case the $253 redemption cost me $91.25 plus my time.
To generate $253 worth of points (including the 10% rebate) I would need to purchase 23 $500 cards. It takes me on average 5 minutes to purchase and 5 minutes to liquidate each of those cards. That comes to approximately 3.83 hours worth of time. (A very conservative estimation. It was probably less time.)
- Hotel: No monetary cost + 13.6 hours time. (Retail cost: $2,458.76)
- Airfare: $51.81 + $23 fees + 5 hours time. (Retail cost: $1,800)
- Car Rental: $91.25 + 3.83 hours time (Retail cost: $253)
- Total: $166.06 & 22.43 hours. (Retail cost: $4,511.76)
So I achieved $4,511.76 in retail travel for $166.06 & ~22.43 hours of time. If I subtract out the cash, I saved a retail amount of $4,345.70 or a total of $193.74 per hour.
I am not a believer in analyzing this any more then I have. There are many other factors that can come into play like staying in cheaper hotels, booking flights ahead of time and using discount services like Priceline to bid on hotels. Going any further in calculating cost and value is a time suck in my opinion.
You should also note that I tried to be conservative whenever possible to give realistic numbers here. I probably actually spent significantly less time & slightly less money than I described. This is especially true for the Arrival Plus where I achieve at least $1,500 a month in fee-free spend that isn’t accounted for.
The reason I wrote this post up is to show you that traveling for free monetarily is an achievable goal. I was able to book a last minute 5 day trip to Hawaii and only spend $166 out of my pocket. Thanks to this hobby I also have Diamond status so I had food and drinks free at the hotel which provided even more value.
This hobby is fantastic in the value it provides for traveling the world, but this travel does come at a cost. While it is fun to say that I traveled for free, the truth doesn’t quite match up with that narrative. With that said, I certainly traveled for pennies on the dollar and these calculations just reaffirmed why I love this hobby!