Posted by: pizzainmotion | October 10, 2012

Free Advice Is Sometimes Worth What You Pay For It

There’s no question that the frequent travel game has changed drastically over the years.  The value of certain perks has diminished based on the lack of availability (such as award seats on more crowded planes).  But, all in all, I still think it’s a very lucrative game to play.

That’s why I (mostly) disagree with Joe Brancatelli on one of his recent articles, even though I regard Joe as a pretty smart guy.
He wrote this article about purchasing your benefits instead of flying to earn them.  And I disagree with most of it.

He starts with generalizations like:

If you carry the right credit card or lay out enough cash, program managers will happily waive their published travel requirements and usher you into their elite levels, which are almost always named after a gem or a precious metal. In exchange for the appropriate form of baksheesh, you’ll be showered with status benefits: car upgrades, free airport club access, free breakfasts and WiFi, room upgrades, and, of course, a bonanza of bonus miles and points.”

I think he’d be mostly correct here if he changed this to say that “some program managers will happily waive their published requirements”, since, for the most part, you can’t buy elite status with the airlines.  There are a few exceptions and Joe touches on some:

“You can score Gold status for just $95 a year if you take the new Citi Hilton Reserve credit card“.

He’s absolutely right.  Some pretty smart travel writers have covered this, and I agree.  If you don’t have any status with a hotel company, $95 is a pretty good entry point to achieve a reasonable (if not great) status level with Hilton.  However, try this with Starwood or Hyatt, my two go-to hotel programs?  Not going to happen.  Marriott?  Nope.  So, as far as top-tier hotel programs go, there is NO option to buy status for a reasonable sum.  I wrote about charging a large fortune on your Hyatt Visa card to get a headstart on Platinum or Diamond status, but I don’t think it’s worth it.  $40,000 to get yourself 20% of the way to Diamond (or 1/3 of the way to Platinum) is probably not in most people’s reach.

Next quote:

“The American Express Platinum Card offers a fabulous bundle of elite status and tangible travel benefits for business travelers. Yes, the $450 annual fee is high, but the payoff is equally substantial….The card also comes with free admission to Delta (NYSE: DAL), US Airways, American Airlines (NYSE: AMR) airport clubs and 600 other airport lounges around the world.”

I guess it depends on how you interpret the first sentence where he says “the payoff is equally substantial”.  If he means you can get $450 in value for paying $450 to have the Platinum card, I would agree.  But, I think he means there’s tons of upside to this card.  And, I would disagree.  As far as lounge access, Delta and AA will only let you into their club if you’re flying on that airline that day (US Airways will allow access without a ticket, thanks for the correction to jetsetr).  That’s an important distinction, as every airport is not going to have a club for every airline.  Take Dulles, my home airport.  AA closed their club.  So, if you’re flying out of the B concourse, you can’t access any of the above-named lounges.

Now, AMEX will give you access to Priority Pass for lounges, which would get you into the British Airways lounge at Dulles.  But, then you’d have to pay $27 per guest (yes, that includes spouses and kids) you want to bring in to the club.  So, the fees add up pretty quickly.  Don’t get me wrong, Priority Pass is a good benefit to have.  But, you could also buy it directly from Priority Pass and potentially spend less than the $450 AMEX is charging you for Platinum.  So, let’s figure out how we can get some additional value out of the AMEX Platinum card:

“The card also gets you Gold level status in Starwood Preferred Guest. That means room upgrades, free Internet access, and 4 p.m. checkout at 1,100 Westin, W, Sheraton, and St. Regis hotels.”

Gold status with SPG beats a sharp stick in the eye.  However, meaningful room upgrades at this level are, in my experience, very hard to come by.  The 4pm late checkout is a decent benefit and free internet can contribute to the $450 you’re paying AMEX.  This card will also grant you a $100 credit towards your Global Entry fee, essentially making it free.  If you’re traveling internationally, I highly recommend Global Entry.  It also gives you access to TSA Pre-Check, which I’m a big fan of.

ETA: jetsetr also notes that AMEX will reimburse up to $200 in incidental airline fees each year.  I’d be curious to see how many AMEX Plat holders actually redeem for this fee and how easy AMEX makes it to do so.  Anyone have experience?

I think a lot of people get the AMEX Platinum card with intentions to get good value out of it.  And, Membership Rewards is a decent currency.  In the end, though, I think you could go with a cheaper AMEX product and forego the benefits above unless it happens to perfectly fit your scenario.  If you’re a frequent traveler, you can probably get some of the hotel and rental car perks on your own, so it comes down to lounge access and Global Entry to make this card worth $450.  At any rate, I don’t see any permutation where you could get outsize value from having the AMEX Platinum card.  If you combine the discounts, you can definitely get $450 in value, and may even be able to get to double that with some work.  But, there’s more risk here that you won’t do enough each year to justify the fee.

Next:

US Airways status for sale…..The carrier’s Buy Up program allows you to purchase anything from silver status (free checked bags and limited first-class upgrades) to Chairman’s Preferred status, Dividend Miles’ most exclusive tier, which normally requires 100,000 miles of flying a year. Prices range from $249 to $3,999. Is the Buy Up program a good value? There’s no definite answer. But since US Airways is the only carrier that offers elite buy-up on an ongoing basis, it’s worth keeping in mind for a tactical purchase.”

This is one point Joe and I are in agreement on.  US Airways is the only domestic US carrier to openly allow purchasing their top tier (United used to give people Global Services if they pre-bought a large chunk of travel, $50K or greater).  I don’t think most people will get good value out of the purchase, but if anything hits at the heart of Joe’s point (buying status instead of earning it), this fits the bill.

Joe’s last point covers Priority Club:

“Chase’s PriorityClub Select Visa card is bundled with Platinum Elite PriorityClub status, which normally requires 50 nights. (Platinum Elite customers receive room upgrades and early check-in and checkout.) The card is free for the first year and just $49 annually after that. In the first year, cardholders also receive enough points for as many as four free nights and then a free night each year they carry the card.”

Again here, he has something of a point.  You can get their credit card and have Platinum status with PriorityClub.  But, as Joe says, “Priority Club Rewards, the frequency program of InterContinental Hotel (NYSE: IHG), isn’t as rich in perks as Starwood Preferred or Hyatt Gold Passport”.  While I do like their Royal Ambassador program, I don’t think there’s a ton of value in PriorityClub.  You won’t be able to get great value transferring these points to an airline so that means you’re staying in Holiday Inns (or the occasional nice Intercontinental, mostly in Europe).  For me, I prefer stocking up points for those once-in-a-lifetime stays.  But, for that road warrior, or those who get into a car to take family vacations, there’s some value to be had here.  I’d just go in a different direction if I was going to spend $50.

I’d go ahead and get the card for the first year (which is free) and enjoy the Platinum perks.  I’d consider whether I was definitely going to use the free night upon renewal of the card (which would most likely be worth $50).  But, I’d put any spending on a card like the Starwood Preferred American Express or the Hyatt Visa Card so I could redeem at truly great properties with much more regularity.

In summary, I think Joe offers some good opportunities here for niche situations.  But, I don’t think the article stands up to the title of, “Why it’s better to buy your frequent-traveler perks than earn them.”  Because, after all, if I buy Priority Club status, then I kinda have to stay at their properties to get any benefit.

And, all free rooms are not created equal.


Responses

  1. A few clarifications and corrections on the AX Plat: 1) For access to the US Airways Clubs, one does NOT need to be flying on US that day (though arguably, this is of limited benefit unless a US club were located relatively near gates where other airlines were also flying). 2) The Priority Pass benefit does NOT require payment of $27 per club entry UNLESS the cardholder is traveling with other guests (and even then, some clubs admit one’s children without additional charge). 3) Don’t forget about the $200 annual airline incidental fee reimbursement with the AX Plat.

    • jetseter,

      1. You’re correct, my mistake. I thought that was the case and read the T&C originally that it was for all 3 airlines, but there is a line for US Airways stating you can gain access without at ticket.

      2. I did note that the $27 is only for guests, but it’s for all guests traveling with the cardholder, including guests. And, yes, I know they sometimes make exceptions.

      3. Joe does note the $200 fee. I didn’t include it in my post for brevity. I am curious how many people actually go through the redemption process for a checked bag fee.

      • 2) Sorry, you did say per guest. I missed that.

        3) Ah, got it. Brevity good, wordiness bad 🙂 Re: redemption process – it’s automatic, but only for the airline which one must pre-designate in December prior to the year in which benefits accrue. So in Dec. 2012, I make my one and only one airline selection on which I want my $200 benefit for all of 2013.

        • So, you can only redeem for one airline? That kinda sucks.

          • Yes, only one airline, but the airline can change each year. But even then, it’s a selection of a handful of US-based airlines from which you can choose (AA, DL, US, UA, B6, WN, maybe VX and maybe F9). And a correction to my earlier statement, the choice of airline is now made in January of the SAME year, NOT December of the previous year.

            The benefit was first introduced when it was announced that CO was leaving Membership Rewards (and with it, the ability to access CO’s President’s Clubs). This was a threat to AX, because it had at the time also lost WN as a partner. So the thought was that the $200 reimbursement could go toward things like the annual membership fee for CO (now UA) club access.

            I have found that when traveling with children, and especially when we travel in Y, that I can run through the $200 benefit after just a few trips. But this is definitely a YMMV situation.

  2. I used up all of my $200 benefit. I chose Delta and the benefit went toward onboard food purchases, a couple of economy comfort seats, and even toward a low-priced one-way fare I just purchased. I agree that it is annoying to have to commit to one airline, but it turned out it worked anyway for my 2012 travel.

    • Thanks, sundink. Sounds like the $200 benefit is a viable one.


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