I’ll be the first to admit that at times loyalty programs can cause us to act irrationally. While there are huge benefits to be had, it’s important to always crunch the numbers and understand what you’re getting yourself into. Points are rarely “free” — there’s almost always an opportunity cost to earning them.
For example, I think a vast majority of Americans would be best off with a 2% cash back credit card, rather than earning miles which they don’t know how to redeem.
But at times we make decisions which seem irrational but actually do make sense… I think.
In mid-December I shared the details of my 2016 IHG Rewards Club Accelerate promo, which was extremely generous. This is IHG’s global promotion, where different members are targeted for different offers depending on their stay patterns.
This targeted promotion has various “tasks” you have to complete in order to maximize the bonus. In my case I was given the following tasks:
- January Bonus Offer — 5,000 bonus points (stay once in January)
- Stay Once Get 5,000 — 5,000 bonus points (stay once during the promotion period)
- Stay More, Earn More — 10,000 bonus points (stay five nights during the promotion period)
- Earn More, Faster — 2,000 bonus points (book a bonus points package during the promotion period)
- Spend On Your IHG Rewards Club Credit Card — 1,500 bonus points (pay for a stay with your co-branded credit card)
- Your Achievement Bonus — 31,500 bonus points (complete three of the four offers — excluding the January Bonus Offer — and earn this bonus)
In other words, if I make a stay using a bonus points package in January and pay with my IHG Rewards Club credit card, I’ll earn 45,000 bonus IHG Rewards Club points. Assuming you value those at ~0.6 cents each, those are worth ~$270.
I haven’t had a chance to stay at an IHG property so far this year. But next week I’ll be spending a night in Helsinki (after flying the Finnair A350), and was planning on just staying at the airport. Perfect, there’s a Holiday Inn there!
At first the rate showed as being 83.60EUR, which isn’t half bad. But then I noticed that in order to book a bonus points package I actually have to book the flexible rate. The flexible rate with 1,000 bonus points costs 120EUR. Okay, I’m still coming out way ahead.
But there’s a Hilton which is connected directly to the terminal, which I could book for just 107EUR. It’s much more convenient, much nicer, and Hilton Diamond status will go further there than Platinum status will go at the Holiday Inn.
The funny thing is that if I wanted to stay at the Holiday Inn, I could have stayed for “free.” I have an IHG free night certificate I have to use in the next couple of months, which I have no other plans for as of now. But instead I’ll pay for this stay at a higher rate so I earn more points.
As much as my IHG Accelerate offer is extremely generous, it’s sometimes fun to step back and consider what these programs make us do. I have a free night certificate I could redeem, but I’m not using it. Instead I’m paying. I’m paying a rate which is almost 40EUR higher than the base rate. But I assume it’ll be worth it, since I’ll pick up 45,000+ IHG Rewards Club points for the stay. Points I don’t have an immediate use for, which I’ll add to my existing balance which I have no immediate use for.
So as much as it feels wrong to pay an inflated price for something I could get for “free,” it also feels right… I think?