Club Carlson Conundrum: Award, Revenue, Or Mix?

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Travis is my first new contributor to the blog, who will be writing a post every Wednesday to start. The idea behind adding guest contributors is to add different perspectives to the blog. Travis has a unique approach towards travel, given that he travels almost exclusively with his wife and young children, which is in stark contrast to my travels, which are usually alone.


Ben recently wrote about the Q1 2015 Club Carlson Extend Your Stay (EYS) promotion where you can earn 30,000 bonus points for a 3+ night stay or 15,000 bonus points for a 2-night stay. Some are calling it the best hotel promotion of the first quarter. It caused me to break out the spreadsheet to determine how best to play this.

I usually don’t hesitate to spend Club Carlson points since my family is blessed with six figure balances in the program after having capitalized on some past promotions. My wife and I have the Club Carlson Premier Rewards Visa Signature® Card, so the points effectively go twice as far. But this promotion has the potential to be lucrative enough such that I could choose to spend some money. Scary, I know.

The decision in question involves our upcoming trip to Copenhagen. We considered two Radisson properties, Blu Royal and Blu Scandinavia. We had previously settled on Blu Scandinavia so I will use those numbers for my analysis.

The rest of this post is going to be relatively math intensive. My hope is that it gives you insight into how I evaluate deals and promotions. But it might make your head hurt. You were warned.

Club Carlson Extend Your Stay Promotion
Club Carlson Extend Your Stay Promotion

These are the facts for the analysis:

  • My wife and I both have the Club Carlson Visa so we can book back-to-back stays and get four award nights for the price of two.
  • I was targeted to receive an extra 10,000 points for early bird registration in the EYS promotion.
  • Our stay is Friday-Tuesday, making us eligible for the 2 for 1 rate, but not the 4 for 2 rate.
  • The Radisson Scandinavia costs 44,000 points per night.
  • I earn 20 Carlson points / dollar for the stay.
  • The rates for Scandinavia for my nights are:
    • Friday:  $144
    • Saturday: $149
    • Sunday: $135
    • Monday: $151

These are my assumptions:

  • This will be my only Carlson stay during the promotion period.  (ie. if I don’t claim the 10,000 early bird bonus on this trip, I won’t get it at all).
  • I will have the same chances of getting a suite upgrade for free, regardless of whether I book on points or revenue.
  • The room type, Gold benefits, etc. will be the same between an award and revenue booking.
  • I’m not going to include the benefits of paying with a credit card.
  • The Gold member 2 for 1 rate will post as a 2-night stay.  (This is very much uncertain.)  [Added:  1/23/15]

Based on these facts and assumptions, what would you do? (If you want to build a spreadsheet, now would be a good time. We can compare our answers at the end.)

Booking Options

  1. Book back-to-back 2-night BOGO award stays at 44,000 points each.  I will consider this the default option for comparison.
  2. Book the 2 for 1 rate for the first two nights, then the regular rate for the last two nights.
  3. Book the 2 for 1 rate for the first two nights, then book a BOGO award for the last two nights.
  4. Book the 2 for 1 rate for first two nights, regular rate for the third night, and then an award night for the last night.

Methodology

In each case, I will explain how I pay for the rooms each night — either revenue or points — and call that the spend. Then I’ll calculate the points that I will earn, both from the stay and the EYS bonuses. Since sometimes I’ll be both spending points and earning points, I’ll calculate the net effect on my points balance (and wallet) and call this the result.

Then I want to compare the result from each option to the result of the default case. This is because the default is what I was planning to do before this promotion was announced. So I want to see how each option impacts my account balance and wallet in relative sense. In general, these options involve spending some money in order to both save and earn some points. That’s essentially the same as Club Carlson giving me the option to buy points, so I’m most interested in the rate at which I’m buying those points.

Finally my convention is to denote anything coming out of my wallet or points account as a negative, and anything going into my account as a positive.

Clear as mud?

Default:  Book 4-Nights With Points

The first case I listed is the default, the “comp”, or the benchmark for comparison in this analysis. That’s because before Carlson announced this promotion, I was planning to book this stay on points. This means we can’t argue with the original decision — it was made exogenous to this analysis.  (But honestly, it is a pretty decent redemption at 0.6 cents per point.) By making this the comp, I can compare the other options to it, both in terms of dollars spent and points (spent) earned.

The Radisson Scandinavia is 44,000 points per night. Since my wife and I each have the Club Carlson Premier Rewards Visa Signature® Card, I can book Friday and Saturday nights and then my wife can book Sunday and Monday nights. Each of us would get a free night on our award reservation meaning we would actually only pay 44,000 × 2 = 88,000 point for the four night stay. I refer to these as BOGO nights, as in you Buy One Get One.

The total spend for this option is $0 and 88,000 points.  It earns 0 points.

Spend: –88,000 points  (-44,000, 0, -44,000, 0)

Points Earned: 0

Result: $0; -88,000 points

As an aside, this would be about a 0.6 cent redemption in it’s own right, but that doesn’t really factor into the analysis here.

Option 1:  4 Revenue nights, Including 2 for 1

Club Carlson has a unique 2 for 1 (and 4 for 2) rate available to Gold members staying in Europe, the Middle East, or Africa (EMEA) over a weekend. Loyalty Traveler does a nice job explaining it. For the 2 for 1 rate, you need to be staying either a Friday or Saturday night while the 4 for 2 rate requires either a Wednesday or Thursday night. Since we are staying Friday-Tuesday, we could book the 2 for 1 rate from Friday and Saturday nights, but not the 4 for 2. We also cannot book back-to-back 2 for 1 rates from my account and then my wife’s account. (I tried that.)

I’m assuming that that 2 for 1 rate qualifies for the EYS promotion. The part that I’m unsure of is how to combine a 2 for 1 rate for Friday and Saturday nights with a regular rate for Sunday and Monday nights. The website doesn’t seem to allow this — if I search Friday to Tuesday using the 2 for 1 offer code, it reverts back to the regular rate for all four nights. But for the purposes of this analysis, I’m going to assume that if I were to call, an agent could get me the 2 for 1 rate for Friday and Saturday and then the regular rate for Sunday and Monday, and do so all on the same reservation. I’m also assuming that such a 2 for 1 rate combined with 2 regular nights would qualify for the EYS 30K bonus.

The spend in this case would be $144 + $0 + $135 + $151 = $430. (Note that the terms of the 2 for 1 offer are such that you pay for the first night and get the second free, regardless of which is more expensive. In some cases, that can be beneficial, but for me it is not since Friday is more expensive than Saturday. Oh well.)

The stay earns 20 points per dollar spent (8600points) and then a 35% Gold member bonus (3010) for a total of 11,610 points. The four night stay would then trigger the EYS 30,000 bonus since it is 3+ days, plus the 10,000 early bird bonus for a total of 51,610 points.

Spend: –$430 ($144 + $0 + $135 + $151)

Points Earned: +51,610 (11,610 stay + 30,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$430; +51,610 points

Result Relative to Default: -$430; +139,610 points

The result relative to default is the difference between the result in this option and the default. With this option, I spend $430 out of pocket more than the default (where I spend $0), but I also earn 51,610 points instead of spending 88,000 points. That’s a huge swing of 139,610 points.

With this option, I am effectively buying 139,610 points for $430, or 0.3 cents / point.

Option 2:  2 for 1 Rate, BOGO Award

This option is a hybrid of the first two. I would book a 2 for 1 rate for Friday and Saturday nights, and then use a BOGO award for Sunday and Monday nights.  This should trigger the 15,000 EYS bonus as well as the 10,000 early-bird bonus.

Spend: –$144 – 44,000 points  (-$144 – $0, -44,000 – 0 points)

Points Earn: +28,888 points (3888 stay + 15,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$144; -15,112 points

Result Relative to Default: -$144; +72,888 points

With this option, I am effectively buying 72,888 points for $144, or 0.2 cents / point.

Option 3:  2 for 1 Rate, Regular Rate, Award Night

This option utilizes the 2 for 1 rate for Friday and Saturday nights, a regular revenue rate for Sunday night, and a one night award on Monday night. This should trigger the EYS 30,000 bonus as well as the EYS 10,000 early bird bonus.

Spend: -$279 (-$144 – $0 – $135 – 44,000 points)

Points Earned: +47,533 points (7533 base + 30,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$279; +3533 points

Result Relative to Default: -$279; +91,533 points

With this option, I am effectively buying 91,533 points for $279, or 0.3 cents / point.

Conclusion

So what should I do?

Each of the options effectively gives me the opportunity to purchase Club Carlson points. Option 1 allows me to purchase points at 0.3 cents / point.  Option 2 allows me to purchase points at 2.0 cents / point.  And Option 3 allows me to purchase points at 0.3 cents / point. Since Ben values Club Carlson points at 0.4 cents per point, these are all generally good deals.

But Option 2 appears to be the best deal as it allows me to purchase points at 0.2 cents / point.


This analysis shows that through the Club Carlson Extend Your Stay promotion I have the option of buying 72,888 points at 0.2 cents / point. Assuming that I agree with Ben’s valuation of Club Carlson points at 0.4 cents / point, I should be willing to buy Club Carlson points at this rate any day of the week!

From purely rational economic arguments, I should do Option 2 and buy the points. I probably will.

What answer did you come up with in your analysis?

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Comments

  1. By the way, my wife and I just took advantage of this offer over last weekend with separate accounts in which she received the targeted email and I didn’t. We both received the extra 10000 points in our individual accounts.

  2. Maury — That’s great to hear. I manage multiple Carlson accounts for family members. Mine was the only one targetted, but I registered them all for the 10,000 bonus anyway just in case. Glad to hear it might post!

  3. Getting EYS on 2-for-1 rate is a huge YMMV. The 2-for-1 rates book as one paid, one free and they will likely count as one-night stay, ineligible for EYS.

  4. Travis, I would go with option 1, unless you have so many Club Carlson points you really don’t need more.

    Here is my reasoning:

    -Option 1: -$430; +139,610 points.
    -Option 2: -$144; +72,888 points.
    -Difference: -$286 + 66,722 points – an effective purchase price of 0.43 cents/point for the extra points you get with Option 1.

    I value CC points at 0.5 cents each, and could easily value them higher, given the enormous value of “last night free” stays in Europe. (Looking at it another way, $10,000 in credit card spend gets you 2 nights in very nice European city hotels, which is unbeatable.) (Even if Club Carlson modifies or drops “last night free”, getting a night for $10,000 in credit card spend is a very reasonable deal.)

  5. Excellent analysis … but should you factor in the 3% foreign transaction fee if you are paying with the Club Carlson VISA?

  6. I use my Chase Sapphire Preferred to pay hotel bills overseas (2 points/$, a 3% return). If you don’t have CSP, I would use Club Carlson Visa and pay the fee (10 points/$ = 5% return, less 3% fee, equals net 2% return).

  7. I’m with you, Phil. I’d use my CSP also – 2X plus 7% dividend for 2015) – but if you use the CC Premier Rewards VISA, there is a 10X CC points bonus which I think is factored into the above analysis. I couldn’t totally follow the math, though.

    So, if the above analysis is done assuming the points bonus, then using any other card would reduce the CC points earned in the analysis.

    I guess the question is … whether or not the analysis factors in the 10X CC VISA bonus or not.

    Is that as clear … as mud? haha

  8. I would use points straight-up. Straight-up MS spend with nothing special, no CB Portals, double dips, etc.. will generate 88,000 points for $150.50 including fees to liquidate. Throw in lower priced GCs, or CB portals and you could easily push your cost to near zero. This is one of the sweetest deals out there currently with the BOGO and a second card. Easy to string stays together. My wife and I have used this all over Europe, Asia and the Caribbean for amazing redemption and still have balances in the 7 figures.

  9. Nice analysis!
    Since the extra night on awards seems like something that can’t last, how would your analysis change if you thought it was being eliminated in 2016? Or 2017?

    I think this partially depends on your current point balance. If you have enough points for your 2015 and 2016 stays, then don’t value the extra points at today’s value; factor in the likely evaluation. Given our low inflation, cash is not being devalued anytime soon.

  10. I didn’t do the calculation assuming I would pay with the Club Carlson Visa because I don’t like foreign exchange fees. I didn’t assume any credit card earning actually.

    So I would earn 20 points / dollar for the stay, and then a 35% bonus. I *could* use the Club Carlson Visa and earn an extra 10 points / dollar, but then I would incur foreign exchange fees.

    [This comment has been edited for accuracy. This is what happens when I respond to comments after flying all day! Thanks everyone for peer reviewing my work. Really appreciate it.]

  11. LuckyWinner —

    If the EMEA 2 for 1 rate doesn’t post as a 2-night stay…. well, that’s not good! The FlyerTalk thread seems to indicate that nobody really knows. I’m not sure I want to be the guinea pig. Thanks for pointing this out.

    Might just pay with points straight up and be done with it.

  12. BeachFan —

    If you think the BOGO award night is going to disappear, then you are bearish on Carlson points and should be paying with points. That move could whack half the value of these overnight.

    I know there is a lot of pessimism out there, but I’m cautiously optimistic (or at least neutral) it’ll stick around for a while. Carlson has been very aggressive the past few years in terms of building their brand and following. They’re on the radar now, but still have to offer a compelling value proposition to compete, and this is definitely a differentiator.

    But like I say, I have a lot of Carlson points as it is, so I probably shouldn’t be looking to add more.

  13. Travis – Rite Aid is running a Buy & Earn in February; earn five codes and get a free domestic ticket. Will you be covering that topic soon? Thanks.

  14. Mangoceviche —

    Are you serious? Wow. I’ve already got a 2-year supply of toilet paper after this promo — I don’t need anymore for a while! 😉

    Interestingly, back in 2007 there was a flight promotion followed by a hotel promotion. I only talked about the flight version in the blog post because I remembered more about it, and because it was more lucrative. I guess TRCo really is following the same template. Oh right, this time they are doing them in reverse…. creative!

    Thanks for the update.

  15. Travis, you actually earn 20 points per dollar for the stay (plus a 35% Gold bonus brings it to 27 points/dollar), plus another 10 points/dollar if you pay with the Club Carlson VISA card.

  16. UAPhil — So basically I was right before I was wrong…. story of my life, or something like that!

    And maybe I should stop trying to respond to comments after flying all day, LOL, cause I just make it worse.

    So I’ve re-edited the post to say that I am not assuming any credit card earnings, and that I earn 20 points / dollar + 35% Gold bonus. I also edited my comment above to try to eliminate confusion.

    I really appreciate the peer review from you and everyone else. Thanks!!!

  17. Thank you for taking the time to make this analysis and sharing it for our benefit, Travis! As a result, I canceled a two-night award stay in February and made a reservation for a paid stay. If all works as described, I should come out 40,000 points ahead at a cost of about $90, as long as the 2-for-1 Club Carlson card factor doesn’t mess up the EYS bonus.

  18. Nightreader —

    Please be aware of the uncertainty as to whether the 2-for-1 rate will post as a 2-night stay. Obviously the is less lucrative (possibly a lot less lucrative) if it doesn’t.

    I decided that I didn’t want to risk it, particularly since I already have a lot of Carlson points anyway.

    Hopefully the analysis technique is still useful, even if you revise the cost of the stay.

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