Quickest spend to bottom tier

Yesterday, I published “Quickest spend to top tier stays.”  There, I analyzed a number of options for buying gift cards as a way to earn hotel points.  The goal was to see which options would result in top-tier hotel stays for the least effort.  In this post, I recreated my previous analysis, but this time looking only at bottom tier hotels.  These are the hotels classified as “category 1” and which require the fewest points for a free night.

HamptonInnAndSuitesCleburne
Pictured above is a Category 1 Hilton property: Hampton Inn & Suites in Cleburne, Texas.

This time, I made the assumption that $50 is a reasonable cash alternative to paying with points.  Of course, there will be many times where category 1 hotels cost more than that, but $50 seems to me to be a reasonable bottom-end target.  In order to look at everything as points, $50 becomes 5,000 “penny points”, and we get this table:

Hotel Chain Points Required for Category 1 Free Night
Club Carlson 9,000
Hilton 5,000
Hyatt 5,000
IHG 10,000
Marriott 7,500
Pay w Arrival Points 4,500
Pay w Cash 5,000
Starwood 3,000

* Points required (shown above) when paying with BarclayCard Arrival Plus card points is after the automatic 10% rebate.  For example, a $50 hotel night would require 5,000 points, but you would receive an instant 500 point rebate for a net cost of 4,500 points.

Next, I looked at the best credit card to use to buy gift cards to get the required points (or cash):

(If you read yesterday’s post, feel free to skip this section since it is almost identical)

    • Arrival Plus card: This card earns 2 points per dollar on all spend, so there is no restriction on where gift cards are purchased.  I made the assumption that one would buy $500 Visa gift cards each with a $2.95 fee.
    • Club Carlson Premier or Business card: This card earns 5 points per dollar on all spend, so there is no restriction on where gift cards are purchased.  I made the assumption that one would buy $500 Visa gift cards each with a $2.95 fee.
    • Hilton Surpass card: This card earns 6 points per dollar at grocery stores and gas stations.  I made the assumption that one would buy $500 Visa gift cards each with a $5.95 fee.  
    • Ink Plus / Ink Bold / Ink Cash card: This card earns 5 points per dollar at office supply stores.  And, if you have a Visa version of the card, you can get 1% cash back at Staples for purchases of $200 or more by enrolling your card in the Visa Savings Edge program.  I made the assumption that one would buy $200 Visa gift cards at Staples, each with a $6.95 fee.  After the Visa Savings Edge rebate, the total fee would be $4.88.  Of the hotel chains in this analysis, the Ink Plus and Ink Bold cards allow 1 to 1 transfers to Hyatt, IHG, and Marriott.
    • Starwood Preferred Guest (SPG) card: This card earns just 1 point per dollar on all spend (except SPG properties where it earns 2X), so there is no restriction on where gift cards are purchased.  I made the assumption that one would buy $500 Visa gift cards each with a $2.95 fee.
    • 5% Cash Back card: There are several different cards that earn 5% cash back under various conditions (see “Playing 5X everywhere Whack a Mole”).  Most of these cards offer 5% at drugstores (among other locations) where $500 gift cards with $4.95 fees are usually available.

Other assumptions: In addition to the above listed assumptions, I also assumed that there would be no fees involved in cashing out gift cards.  This can be done, for example, by using the cards to load Bluebird or Serve at Walmart, or by paying bills via Evolve Money.  Fees for other approaches (such as buying money orders, etc.) vary a lot, so were not included in this analysis.

Gift card purchase fees shown in this analysis were based on my assumptions of the most usual scenarios.  There are, of course, tricks for spending less (or earning more).  For more details about buying Visa and MasterCard gift cards, please see: “Best options for buying Visa and MasterCard gift cards.”

Method

For each hotel / credit card / gift card scenario, I calculated the number of gift cards needed to get a bottom tier free night, and added up the fees on each gift card.  For simplicity sake, I didn’t count points earned from the fee portion of the gift cards. 

Results

Cash, Hilton, and Club Carlson are the standouts here:

Hotel Chain Points Required for Category 1 Free Night # Cards Req for Free Night Total Fees
Pay w Cash 5,000 2 $9.90
Hilton 5,000 2 $11.90
Club Carlson 9,000 4 $11.80
Pay w Arrival Points 4,500 5 $14.75
Hyatt 5,000 5 $24.40
Starwood 3,000 6 $17.70
Marriott 7,500 8 $39.04
IHG 10,000 10 $48.80

 

Best Options

Whether using a 5% cash back card or a Hilton Surpass card, its possible to earn a free night by simply buying two gift cards!  Similarly, given the fact that the Club Carlson card allows you to get two free nights for the price of one, that card will give you two free nights after buying just 4 gift cards.  So, amazingly, if you can find a $50 hotel room, a category 1 Hilton property, or a category 1 Club Carlson property that you’d actually want to stay in, you could stay for less than $12 in fees per night simply by buying and liquidating 2 gift cards per day.  The Club Carlson option is limited by the fact that you “only” get 50 Bonus Award Nights per year, so you couldn’t really live full time at a Club Carlson property this way, but maybe you could by mixing in cash stays as well.

Next Best

Using Arrival points, Hyatt points, or Starwood points you would have to buy and liquidate 5 or 6 cards for a one night stay.  That’s not terrible, but it is more than twice the effort of the best options shown above.

Worst Options

With Marriott or IHG you would have to expend quite a bit more effort (8 or 10 gift cards, respectively) to get that bottom-tier hotel night.

What it all means

If your goal is to manufacture spend to stay in a crappy bottom-tier hotel, your best bets are cash (i.e. using a 5% cash back card to buy gift cards), Hilton, and Club Carlson.  In some cases, the Hilton and Club Carlson room rates are well above $50 per night, so hotel points would be great options in those cases.  It would be truly cheap and easy to earn enough points for those stays.

Note that you can find Category 1 Club Carlson properties via Travel is Free’s “Complete Map of Club Carlson Hotels.”

And, find Hilton Category 1 properties via Travel is Free’s “Best Hilton Category 1 & 2 Hotels (and Map).”


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Comments

  1. Quickest way to status? Lowest spend.

    Easy: AMEX Platinum (personal) gets you SPG Gold every year for $450. Plus a whole lot of other perks.

  2. …you could stay for less than $12 in fees per night simply by buying and liquidating 2 gift cards per day…

    Wouldn’t that $12 in fees cover both nights in the “2-for-1″ effectively making it $6 per night?

  3. I would probably not stay in a non-chain hotel (in the US) for $50 but would probably stay in a category 1 chain hotel though.

  4. I think the disparity of actual level and quality of tier 1 properties is a pretty big issue here. Hilton or IHG really only have bottom of the barrel hotels that are also in out-of-the-way places in their tier 1. Starwood, on the other hand, has a reasonable number of airport hotels and such in their tier 1 that are great deals. I suspect that the worst hotel in the entire Starwood or Hyatt portfolio would be a HHonors tier 2 or 3 at least.

    • Good point. I don’t have actual experience to validate it, but yes it makes sense to me that the chains vary widely regarding the meaning of tier 1. Same is true at the top end.

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