November 26, 2013

Recently, Hyatt introduced their new Points + Cash option that will be available beginning January 7th, 2014. The redemption table is as follows:

The general idea is that, subject to availability, you can pay half as many points as usual for a room if you supplement the points with a cash component. This can be seen as either using cash to get a discount off the usual points rate, or as using points to get a discount off of a paid rate. Let’s look at each:

### Points rate discount

A number of blogs have pointed out that Hyatt’s Points + Cash option is like buying points at a fixed rate that depends upon the hotel category. When thought of this way, the math works out as follows:

So, for example, when you pay with Cash+Points instead of paying entirely with points for a Category 6 hotel, it is equivalent to paying 1.2 cents per point for the points you saved. Some have pointed out that it’s even better than that because Cash+Points nights earn points for the stay whereas rooms booked entirely with points do not. On the other hand, rooms booked with Points + Cash will be charged taxes unlike rooms booked entirely with points.

Ignoring the complications of points earned and room taxes, when the Points + Cash option is viewed as a points rate discount, it is arguably like buying points for between 1.2 and 2 cents each (depending on the hotel category).

### Room rate discount

Another way to think of the Points + Cash option is that it’s a way to save money on a paid stay by kicking in some points. This makes a lot of sense because Points + Cash stays are like paid stays in virtually every way: they earn points, they earn elite stay credit, they are eligible for suite upgrades, etc.

When viewed in this way, the value you get from your points when booking Points + Cash depends entirely upon the rate you would otherwise pay if you were paying entirely with cash. In order to show what this looks like, I picked a random date and a somewhat random property from each Hyatt category and calculated the savings and value per point as follows:

Other than the category 7 hotel, I stuck with hotels in Florida during a slow pre-holiday period (December 11). I recorded the Hyatt Daily Rate in each case, which is probably a bit higher than you would actually pay if you used AAA or other discounts. For the category 7 hotel, I used the Park Hyatt Sydney. I looked at a few dates to try to account for seasonality and found that most hovered around $800 USD.

As you can see from the table above, when rates are low anyway, you won’t get great value from your Hyatt points with Points + Cash except with Category 1 and 2 hotels. At the other extreme, if you can afford to pay $300 per night for a Category 7 hotel, you can get terrific value from your points with Points + Cash: 3.3 cents per point in this example.

The point here isn’t to say that you shouldn’t use Points + Cash for category 3 through 6 hotels, but rather that it is essential that you figure out the amount you would pay otherwise and then calculate whether it is worth kicking in some points to save money. In some cases, the answer will definitely be “no”. For example, one hotel that will soon be category 7 is the Park Hyatt Beaver Creek Resort and Spa in Colorado. On December 11th, the Hyatt Daily Rate is only $199. So, paying $300 per night *plus* points would be a really bad idea! [Yes, I know that Points + Cash won't be available until January 7th – this was just an example]

### Two conflicting stories. Which is right?

There’s a strange irony here that with the first analysis one would recommend using Points + Cash for category 2 through 6 hotels, but not for categories 1 and 7. Conversely, with the numbers I plugged into the second analysis, one would recommend using Points + Cash for categories 1, 2 and 7, but not for category 3 through 6 hotels! In other words, the conclusions are almost completely opposite! What’s going on here?

The first analysis compares Points + Cash to booking a room entirely with points. In general, the only time you’ll get good value from Hyatt points is when the room rate is otherwise pretty high. Meanwhile, in my second analysis, I happened to pick many hotels and dates in which paying by points wouldn’t make much sense. For example, here is a chart with the same room rates, but with the assumption that one would pay entirely with points using the new award chart that takes effect early next year:

Based on the room rates in this analysis, you can get good value from your points with the Category 1, 2, and 7 hotels, but not with the others (where “good value” is greater than 1.5 cents per point). So, the two conclusions are not really as different as they appear: It’s fine to think of Points + Cash as a way to buy points *as long as you’ve determined that it makes sense to pay with points at all*. In situations where it doesn’t make sense to pay with points (because the point value you’d get is too low), you’ll find that it also does not make sense to pay with Points + Cash.

### Wading through the morass:

I realize that the above analyses are complicated, so here’s a reasonable way to think about all of this: When preparing to book a Hyatt stay, first decide whether you want to pay with points or cash. Generally you should pay with points when the room rate is very high compared to the points-rate, or pay with cash when the room rate is low compared to the points rate. Once you’ve made that decision, then decide about Points + Cash as follows:

If you decided to book a room with points, then think of the Points + Cash rate as a way to buy points for 2 cents each, or less. If you are low on points, or want to preserve your existing points for future uses, or want to earn elite stay credit, then buying points in this way makes sense.

If, instead, you decided to book a room with cash, then think of the Points + Cash rate as a way to potentially lower your cost through the use of points. Calculate the cash savings you would achieve and then divide that amount by the number of points required for Points + Cash. This will tell you the value you’ll get from your points. If the resulting point value is high (let’s say 1.5 cents per point or higher), then Points + Cash makes sense.

In either case, keep in mind that Points + Cash stays are not available until January 7th, they’re subject to availability, and they can only be booked by calling Hyatt’s reservation center.

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The conclusions are completely opposite because it’s an over/under. The only question is whether you have greater need to buy or sell points and what your threshold is for an appropriate value.

I’m like C&P to burn up Diamond Suite upgrades!

Keep in mind that 55% of all Hyatt properties are in category 1 and 2. At the $50 and $55 copay for Cash & Points, there will be plenty of hotels where the overall savings of cash using 2,500 or 4,000 points will be a good deal.

Here is a Loyalty traveler post with a table showing hotel award category distribution for Hyatt and Starwood.

http://boardingarea.com/loyaltytraveler/2013/11/12/hyatt-vs-spg-hotel-award-category-distribution/#sthash.fXqN3j77.dpbs

I guess it might also depend if you’re cash rich/poor or points rich/poor…

I tend to agree with farbster. All of these analyses are fine for some, but don’t mean anything to me. I basically have no money. So the only possible way I can travel is with points. I generally don’t even consider paying cash for a hotel room, because I just can’t afford it. So the value of airline and hotel points to me is way higher than most bloggers give, because without them, I can’t travel at all. It’s the difference between going to Paris or Thailand or wherever and staying home.

This is another excellent analysis on an area that can easily give you cold headaches if not approached in stages…….I think the additional caveat from DeltaDude to use the suite upgrades seem to make a great deal of sense on the Cateogory 7 properties……under that scenario you could tell your mind you are paying $300 for the suite upgrade and also are getting a discount on the old redemption rates! More options are better than less……….

Quick question regarding the Hyatt Points + Cash.

Is this option similar to points+cash with IHG? Meaning, do you get points added to your account if you cancel a reservation, or are the points returned and no $’s charged. If it is like IHG, it might not be a bad way of buying some points if you are little short.

Yes, this is exactly right. The blogs that talk about how much you’re buying your own points for all start with the premise that you’ve already decided points make sense based on the best cash rate you could obtain.

I think this is really the only way to analyze a cash and points option. Question 1: Do I use points or cash? If the former, question 2 becomes, do I use points or points and cash?

The wildcard in all this will be availability. Not all hotels will participate and those that do can put on capacity controls. My uneducated guess is that those looking to do cash and points at the Park Hyatt Paris or Sydney are going to be very disappointed as will those looking to use cash and points when the going rate is very high.

I found a list of category=1 Hyatt hotels. Might be useful to some:

http://www.hyatt.com/gp/en/awards/hyatt_category_display.jsp?category=1