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Redeeming Ultimate Rewards Points for a Free Hotel Stay

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Chase offers many different options for redeeming your Ultimate Rewards points, but some are better deals than others. Today, TPG Senior Points & Miles Correspondent Nick Ewen shares his tips for getting the most out of this incredibly valuable currency.

Flexible point currencies such as Chase Ultimate Rewards and American Express Membership Rewards can be a blessing and a curse. On the plus side, they give you a wealth of redemption options through transfer partners. Unfortunately, this can be a very complex endeavor; Membership Rewards’ airline partners, for example, give you almost 100 carriers on which to redeem your points! Today, I want to look specifically at hotel redemptions in the Ultimate Rewards program and answer one seemingly simple question: When should you book a hotel through Ultimate Rewards instead of transferring your points?

Hyatt offers full breakfast to Diamond members and up to three guests in the same room.
Ultimate Rewards gives you two ways to book hotels such as the Park Hyatt Sydney, but when should you use one over the other?

Let’s begin with a quick overview of these redemption methods. As I hint at above, the points you earn on the Chase Sapphire Preferred and Ink Plus Business Card allow you to book hotels in two different ways:

  1. Paying for the revenue rate directly using your Ultimate Rewards Points.
  2. Transferring your points to partner hotel loyalty programs to redeem them directly with the chain.

The first one is relatively straightforward. Ultimate Rewards allows you to redeem your points for travel (including flights, hotels, rental cars and activities) at a rate of 1.25 cents apiece. To do this, simply log into your Chase account, access the “Ultimate Rewards” page, and under the “Use Points” drop-down menu, choose the “Explore & Book Travel” option.

The current Ultimate Rewards balance on my Ink Plus card (46,345 points) would be worth $579.31 toward travel
The current Ultimate Rewards balance on my Ink Plus card (46,345 points) would be worth $579.31 toward travel.

There are several benefits to redeeming your points this way. First, you aren’t limited to specific hotel chains or airlines, as the results will pull up various properties across the city. Additionally, you can choose to pay for the entire stay (or just part of it) with your points. Finally, these stays are treated just like regular paid stays, so you can earn points and elite status credit for them.

For example, let’s say I wanted to book a one-night stay in New York City for Father’s Day weekend. The search results will pull from the major chains as well as unaffiliated properties such as the Smyth, a Thompson Hotel (where TPG Special Contributor Eric Rosen stayed last year after booking through Hotel Tonight). Here’s a comparison of Hyatt and Hilton properties on the results page:

Ultimate Rewards Hotels

If I want to visit the Andaz Wall street again, I add it to my “Trip Cart,” then select a payment option. I can use points, my Chase card or a combination of the two.

I can enter the specific number of points I want to redeem or use the sliding bar to dial in to my "perfect" redemption level
You can enter the specific number of points you want to redeem or use the sliding bar to dial in to the “perfect” redemption level.

Remember that the Ink Plus has a limited-time offer of 60,000 points after you spend $5,000 in the first three months from account opening. The sign-up bonus alone can get you $750 worth of free hotel stays, and you’ll also receive many other terrific card benefits.

The second option for booking hotels using Ultimate Rewards points is more limited, but can often be more valuable: transferring the points to the program’s various hotel partners (at a 1:1 ratio) and booking an award directly with them. Right now, Ultimate Rewards has four hotel partners (but effectively three, since Marriott and Ritz-Carlton points are essentially identical for redemption purposes):

  1. Hyatt Gold Passport
  2. IHG Rewards Club
  3. Marriott Rewards
  4. Ritz-Carlton Rewards

These points can then be redeemed for free nights at any of the program’s worldwide properties. If you need some inspiration, be sure to check out my posts on the top Hyatt, IHG and Marriott redemptions to maximize these transfers.

Which IHG properties offer you the best value for points?
The InterContinental in Bora Bora is a great use of IHG Rewards points, but it may make more sense to book a room directly through Ultimate Rewards.

When Is One Method Better Than the Other?

It’s sometimes challenging to figure out which method of redemption makes the most sense. At first glance, it seems like a relatively straight-forward rule of thumb; when you can transfer points and redeem them at a value greater than 1.25 cents apiece, you should go that route. Otherwise, you’re better off using your Ultimate Rewards points to pay for the room directly, as you’ll get a standard value of 1.25 cents per point.

However, this oversimplification ignores one fact crucial to the calculus: You earn points on stays paid for with Ultimate Rewards points. When you transfer points, you are giving up that earning possibility, so you need to factor in the opportunity cost. As a result, the break-even point for each chain is found by looking at the net points redeemed using each method.

The Grand Hyatt in Bali is a terrific Category 3 property, but if revenue rates are low, you're better off booking a room directly with Ultimate Rewards.
The Grand Hyatt in Bali is a terrific Category 3 property, but if revenue rates are low, you’re better off booking a room directly with Ultimate Rewards.

For example, let’s say that you are a regular Hyatt Gold Passport member and you want to book a room at a Category 3 property. The base rate is $135, and taxes and fees are 15%, so the total stay is $155.25. Your two booking options are:

  • Transfer 12,000 points to Hyatt and make a Gold Passport award reservation.
  • Use 12,420 Ultimate Rewards points to book the room directly.

At first glance, it seems like transferring points is the better option. However, you’re eligible to earn points on the base rate when you book with Ultimate Rewards. In this case, $135 x 5 points per dollar = 675 points. As a result, the net point cost of booking with Ultimate Rewards is 12,420 – 675 = 11,745 points, thus making the direct booking a better bet. If you are an elite member with Hyatt (remember that the Hyatt Credit Card offers complimentary Platinum Status), you’d earn even more points for the “paid” stay, bringing the net point cost down even further.

If you’re confused, don’t worry! To make it a bit easier, I have crunched the numbers and found the break-even base rate for each chain, taking into account not only the category/tier of the property but also any elite status you may have. These numbers (rounded to the nearest cent) indicate the base rate where transferring points and redeeming points directly will result in the exact same net point cost (assuming taxes & fees of 15%).

The basic rules for this calculation are as follows:

If the base rate for your stay is below the break-even point, book the room directly with Ultimate Rewards points.

If the base rate for your stay is above the break-even point, transfer Ultimate Rewards points and book an award stay with the given program.

Here’s the chart for Hyatt:

Category

Points Required

Regular Member Break-Even Base Rate

Platinum Member Break-Even Base Rate

Diamond Member Break-Even Base Rate

1

5,000

$57.47

$57.97

$58.48

2

8,000

$91.95

$92.75

$93.57

3

12,000

$137.93

$139.13

$140.35

4

15,000

$172.41

$173.91

$175.44

5

20,000

$229.89

$231.88

$233.92

6

25,000

$287.36

$289.86

$292.40

7

30,000

$344.83

$347.83

$350.88

Here’s the chart for IHG Rewards:

Category

Points Required

Regular Member Break-Even Base Rate

Gold Member Break-Even Base Rate

Platinum Member Break-Even Base Rate

1

10,000

$121.95

$123.46

$129.87

2

15,000

$182.93

$185.19

$194.81

3

20,000

$243.90

$246.91

$259.74

4

25,000

$304.88

$308.64

$324.68

5

30,000

$365.85

$370.37

$389.61

6

35,000

$426.83

$432.10

$454.55

7

40,000

$487.80

$493.83

$519.48

8

45,000

$548.78

$555.56

$584.42

9

50,000

$609.76

$617.28

$649.35

Here’s the chart for Marriott properties:

Category

Points Required

Regular Member Break-Even Base Rate

Silver Member Break-Even Base Rate

Gold Member Break-Even Base Rate

Platinum Member Break-Even Base Rate

Category 1 (PointSaver)

6,000

$73.17

$75.00

$75.47

$77.92

Category 1 (Regular)

7,500

$91.46

$93.75

$94.34

$97.40

Category 2 (PointSaver)

Category 2 (Regular)

10,000

$121.95

$125.00

$125.79

$129.87

Category 3 (PointSaver)

Category 3 (Regular)

15,000

$182.93

$187.50

$188.68

$194.81

Category 4 (PointSaver)

Category 4 (Regular)

20,000

$243.90

$250.00

$251.57

$259.74

Category 5 (PointSaver)

Category 5 (Regular)

25,000

$304.88

$312.50

$314.47

$324.68

Category 6 (PointSaver)

Category 6 (Regular)

30,000

$365.85

$375.00

$377.36

$389.61

Category 7 (PointSaver)

Category 7 (Regular)

35,000

$426.83

$437.50

$440.25

$454.55

Category 8 (PointSaver)

Category 8 (Regular)

40,000

$487.80

$500.00

$503.14

$519.48

Category 9 (PointSaver)

Category 9 (Regular)

45,000

$548.78

$562.50

$566.04

$584.42

Here’s the chart for Ritz-Carlton properties:

Tier

Points Required

Regular Member Break-Even Base Rate

Silver Member Break-Even Base Rate

Gold Member Break-Even Base Rate

Platinum Member Break-Even Base Rate

Tier 1 (PointSaver)

20,000

$243.90

$250.00

$251.57

$259.74

Tier 1 (Regular)

30,000

$365.85

$375.00

$377.36

$389.61

Tier 2 (PointSaver)

Tier 2 (Regular)

40,000

$487.80

$500.00

$503.14

$519.48

Tier 3 (PointSaver)

Tier 3 (Regular)

50,000

$609.76

$625.00

$628.93

$649.35

Tier 4 (PointSaver)

Tier 4 (Regular)

60,000

$731.71

$750.00

$754.72

$779.22

Tier 5 (PointSaver)

Tier 5 (Regular)

70,000

$853.66

$875.00

$880.50

$909.09

Remember that these numbers just factor in the points you’d earn on the base rate and the “standard” redemption rates. As a result, they don’t consider any bonuses in effect at the time of your stay (like Hyatt’s 20% points refund). In addition, they don’t consider Marriott’s fifth night free benefit on award stays, which lowers the number of points you’d need to transfer. Finally, since everyone values elite status differently, they don’t include the “value” of earning night and/or stay credit toward elite status qualification.

Which Ultimate Rewards hotel transfer partner is most valuable?
Which Ultimate Rewards hotel transfer partner is most valuable?

Which Program Offers the Best Value?

Comparing redemption rates across programs can be a bit difficult, given the wide variation in properties and point requirements for a free night. Still, these calculations hint at which Ultimate Rewards hotel transfer partner gives you the best bang for your buck (or payoff for your points, in this case). Not surprisingly, these numbers correlate directly with TPG’s most recent valuations:

  1. Hyatt Gold Passport: TPG currently pegs Hyatt points at 1.8 cents apiece, and this makes sense given the terrific aspirational redemptions as well as some very valuable low-tier awards. As a result, you’ll see that the break-even rates with Hyatt tend to be quite low, indicating that transferring Ultimate Rewards points is frequently a better deal than booking directly. Even a Diamond member wanting to book a top-tier Category 7 property would only need a base rate above $350 to transfer (rather than book directly).
  2. Marriott Rewards/Ritz-Carlton Rewards: Since these programs are essentially identical when it comes to earning points, redeeming points and utilizing elite benefits, TPG values them equally (0.7 cents apiece). If you are looking to redeem points for lower-tier properties or are fortunate enough to find PointSaver availability, transferring points from Ultimate Rewards to these programs may be a better bet. You may also want to follow TPG’s lead and transfer points to take advantage of Marriott’s flight and hotel packages and (potentially) earn a Southwest Companion Pass. However, given the high break-even rates, you’re usually better off using your Ultimate Rewards points to book rooms rather than transferring them to Marriott or Ritz-Carlton Rewards.
  3. IHG Rewards: TPG currently values IHG Rewards points at the same 0.7 cents apiece. However, I rank this transfer partner just behind Marriott due to the lack of consistent redemption discounts such as a free fifth night and PointSaver rooms. Sure, the program does have rotating PointBreaks properties every few months, but that promotion is limited in scope and duration. Remember that there are a lot of pending and rumored changes coming to the IHG Rewards program, including a new elite level, changing point requirements at roughly 10% of the program’s properties, the chain’s acquisition of Kimpton Hotels to improve its boutique portfolio and even a possible merger with Starwood Preferred Guest.
Some cards allow you to spend your way to top tier status, giving you valuable benefits at properties like the Kaua'i Marriott Resort
A free stay at the Kaua’i Marriott Resort is within reach through the Ultimate Rewards program. Just make sure you figure out which redemption option makes the most sense!

Bottom Line

At the end of the day, redeeming your points for a free hotel room means less money out of pocket, so any way you can make that happen is a win in my book. However, be sure to crunch the numbers to make sure that you are truly getting the maximum value out of your Ultimate Rewards points.

How do you typically use Ultimate Rewards Points for hotel stays?