Warning
I will warn you right at the beginning of this post that we are going to be exploring some advanced topics and will be going deep into the rabbit hole but this article is the essence of Travel Hacking. If you can wrap your head around this post and understand why it’s valuable, you will be well on your way to becoming a Travel Hacking expert.
Preface
Travel Hacking requires a different mindset. The easiest way to think about it is that as a Travel Hacker, you are attempting to exploit loopholes or weakness in the system. This requires attention to detail and reading the terms and conditions of offers. It also means taking advantage of something called “arbitrage”.
Arbitrage is defined as the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
Okay but what does that mean in English and how do I take advantage of it as a travel hacker? Well, that’s what we are going to explore.
Background
Marriott is a hotel chain that has been known for mid-range hotels with lots and lots of locations worldwide and a middle-of-the-pack rewards program. One bright spot in the Marriott reward chart was something referred to as their Rewards Plus Program whereby you could redeem Marriott points for a package that included 7 nights at a hotel + airline points. The chart below is for Aeroplan but if you look at the fine print, there are other points programs you can transfer to. There are other airline programs you can transfer to and if you would like to explore transferring to programs outside the example in this post you can refer to Marriott’s official page for the Rewards Plus Program.
Now back in the day, this offer was a pretty good one but I personally never paid much attention to it because of the large amount of Marriott point that were required and there was only one credit card that you could apply for that earned you Marriott points. I’m also not a huge fan of their hotels but that’s just me.
Now keep this reward chart handy because we’re going to refer back to it shortly.
As you may know, Marriott purchased SPG Hotels back in November of 2015 but the merger has only recently been approved by all regulators.
Now that the programs merged, effective September 23rd, 2016, you can link your Marriott and SPG accounts together and transfer points between accounts … and this is where things get interesting.
With the SPG Program, there were many airline programs that would allow you to transfer from SPG to their program at a 1:1 ratio. You would also receive a bonus of 5,000 points if you transferred in batches of 20,000. So for example, if you transfer 20,000 SPG points to Aeroplan, you would receive 25,000 Aeroplan (20,000 for the original transfer PLUS a 5,000 point bonus). This could be done multiple times so if you transferred 60,000 SPG to Aeroplan, you would receive the 60,000 PLUS 15,000 bonus points. This makes SPG a VERY powerful program and because SPG is a better program than Marriott, the predefined transfer ratio is 1 SPG to 3 Marriott Reward Points.
Arbitrage Opportunity
Remember that chart I told you we would be referring to above? Well, let’s convert that into the required SPG points (based on 1 SPG point to 3 Marriott points) to redeem in the Rewards Plus program.
What I have done here is converted the original chart into SPG Points required by dividing the Marriott points by 3. Now at first blush, it looks like if you transferred over SPG to Marriott points, in some instances you could get more points than the standard 1:1 ratio offered by SPG.
For example, if we look at the top right cell, it looks like if we transferred 90,000 SPG points, we would get back 120,000 Aeroplan (or any other points as listed in the original chart).
But aren’t we forgetting something? Oh right. The bonus 5,000 points when you transfer in increments of 20,000. So maybe it’s not that lucrative …
This second chart now shows the number of points (in brackets) you would actually get back if you transferred SPG points to Aeroplan.
Again, let’s focus on the 7 Nights + 120,000 points in a Category 1-5 hotel. It looks like even if you take into account the bonus points from a traditional transfer, you still come out ahead using the Rewards Plus Program … and that’s not even taking into account that you get 7 Nights Free in a Category 1-5 Marriott hotel.
In this particular example, if you transferred 90,000 SPG to Marriott, you would get 270,000 Marriott points, which would be enough to redeem for 7 Nights in a Category 1-5 hotel PLUS 120,000 Aeroplan points.
If we transferred 90,000 SPG to Aeroplan, we would get 110,000 Aeroplan back (90,000 + 20,000 bonus).
So not only do we get a bonus of 10,000 Aeroplan points, we also get a certificate for 7 nights in a Category 1-5 Marriott hotel. If we use the conservative estimate of $150 USD/night at a Category 5 hotel, we basically get 10,000 free Aeroplan points and $1,050 in hotel value. Not a bad little deal there.
An Even Better Opportunity?
If you ask me, 7 nights in one city at the same hotel is a bit on the long side. I’ve done it before but I tend to like seeing a lot of cities on my trips. If you are like me, there’s a secret redemption chart that allows for a 5-night stay rather than the 7 nights we noted above. This chart isn’t published anywhere but Marriott representatives have access to it and have disclosed the redemption values in the past. This redemption option was originally intended as a perk for Marriott Timeshare holders but stories have cropped up online that if you ask for the 5-night redemption, the Marriott representative will allow you to book it.
So what does the chart look like? Well, I’ll provide the Marriott points required and then the SPG equivalent.
As you can see, the 5 night redemption is logically less Marriott points than the 7 night redemption but are there more arbitrage opportunities in this chart? The answer is a resounding YES! It’s WAY better!
For simplicity’s sake, let’s stick to the top right cell again. Here, if we transferred 78,333 SPG points, we would get 235,000 Marriott Reward Points (well, actually 234,999 but you get my drift).
With those points, we could redeem for 5 Nights in a Category 1-5 Marriott Hotel PLUS 120,000 airline points.
If we had done a straight SPG –> Aeroplan transfer, our 78,333 SPG Points would have turned into 93,333 Aeroplan Points.
So if we use the Rewards Plus redemption, we get an additional 26,667 Aeroplan AND 5 Nights at a Category 1-5 Marriott Hotel. If we again use the conservative estimate of $150 USD/night in a Category 5 hotel, we get $750 USD of hotel value as well.
So for the same amount of points, we get FOR FREE an additional 26,667 Airline Miles … that’s a roundtrip anywhere in North America (in economy) PLUS $750 USD in hotel value.
If you can’t see the value understanding this then Travel Hacking isn’t your cup of tea.
I don’t know if you noticed but Alaska Airlines is one of the airlines you can transfer your points to and you can extract EXTREME value out of those points. I’ll link you to Travel is Free and Drew Macomber’s post on Alaska Miles but again … it’s a very deep rabbit hole.
Conclusion
This was a very long post and it took me a lot of time to write it but I warned you at the beginning that this was an advanced topic that goes deep into the rabbit hole but I hope you can see the value of looking at points redemption through this lens.
With the Marriott SPG merger being very recent, I expect that this loophole will be closed soon so if this redemption is something you are interested in, I would encourage you to make the leap before they close the loop.
I know that many of you may find this idea intimidating so please feel free to leave your comments below and I will do my best to answer any and all questions.