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TPG reader Jonathan sent me a message on Facebook to ask about booking hotel awards:
“Do you have to pay taxes and fees on Hyatt Points + Cash stays?”
One of the biggest advantages of redeeming points for hotel rooms is that you typically don’t pay taxes on award stays. That sets hotel loyalty programs apart from airline frequent flyer programs, which routinely add costs like taxes, airport fees and carrier-imposed charges to award tickets. These favorable hotel policies can mean huge savings, especially at more expensive properties. Unfortunately, however, they don’t apply to awards booked with a mix of points and cash.
Hyatt charges taxes on the cash portion of its Points + Cash awards. For example, if you book a Points + Cash award at a Category 4 property like the Park Hyatt Siem Reap, you’ll need to pay tax based on the $100 per night cash rate, but not on the award portion of 7,500 points per night. Sometimes taxes are improperly applied to the full cash rate, so it’s important to look over your bill at checkout and make sure you aren’t being overcharged.
You may also have to pay other charges that aren’t based on the room rate, such as occupancy taxes or resort fees. These are often charged on normal award stays as well as Points + Cash stays, and will be a fixed cost per stay or per night. They should be indicated up front when you make your reservation, but sometimes you’ll need to check the fine print. If you incur additional charges that aren’t mentioned up front, take it up with management or seek a refund through customer service after the fact. Make sure you save any relevant documents that back up your claim.
Despite the fact that you have to pay taxes, Hyatt’s Points + Cash awards offer good value, especially when prices are high. For example, rooms at the Category 5 Hôtel du Louvre in Paris normally start around $400. The Points + Cash rate is 10,000 points and $125, so you’re effectively redeeming 10,000 points to save $275 per night (or a bit less once you factor in taxes). That’s an excellent redemption value, and a great way to stretch both your points and dollars.
Plenty of other major hotel chains offer points + cash programs in some form. In each case, expect the rules to be similar to Hyatt’s Points + Cash awards. Taxes should apply to the cash portion of your bill, and you may be responsible for other fees depending on the property and location.
Starwood’s Cash & Points awards don’t offer quite as much value as Hyatt’s, but can still be worthwhile at properties in the upper categories. IHG’s Points & Cash awards aren’t generally a good deal, but they provide a sneaky way to buy points at a discount if you need them for regular awards. Both Marriott and Wyndham introduced points and cash rates last year, so I think the trend is here to stay.
For more on Hyatt Gold Passport and Points + Cash awards, check out these posts:
- The Award Traveler’s Guide to Hyatt Gold Passport
- Booking a Hyatt Points + Cash Award When There’s No Availability
- When Should I Pay Cash Rather Than Redeem Points?
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards