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TPG reader Everett sent me an email to ask about flight and hotel packages:
“A lot of airlines offer vacation packages online; are these good buys, and do they earn rewards like normal?”
Even though I book a lot of my travel with points and miles, I’m always interested in paid airfare when a particularly sweet deal pops up. Vacation packages offered by airlines and online travel agencies have their pluses and minuses, but they can offer a significant discount when you’re booking flights, hotels and rental cars together. In some cases, you may end up paying less for a package deal than you would for airfare alone.
As an example, I looked at a few itineraries on American Airlines Vacations, which you can access either through that link or by selecting the “Round trip + Hotel” option on AA.com. For an economy flight from Dallas to Madrid on November 5-12, the best price available for airfare alone (on any airline) was $1,098 round-trip. However, American Airlines Vacations turned up packages starting at $931 for the same nonstop flights and six nights in a hotel. You read that correctly: You’d actually save $167 by adding a hotel room.
There are some pretty undesirable hotels in the mix, but you can get a good deal on nicer ones too. For example, that same itinerary with a single guest room at the Radisson Blu Prado priced out at $1,422. Essentially, you’d be paying $324 for six nights at a nice hotel in central Madrid, which is an excellent rate. That room would normally go for over $150 per night, so you’d be saving about 65% on the hotel.
The potential savings is even more dramatic when you fly in a premium cabin. For that same itinerary, a business-class ticket alone priced out at $3,850, while packages with a hotel started at $2,796 (for the same flights). A flight with six nights at the Radisson priced out at $3,272, so you’d be getting a discount of almost $600 off the regular price by adding the hotel.
There are a few strategies you can use to improve these deals even further. For starters, your hotel dates don’t have to match your flight; I was able to get the economy package down to $840 by booking a room for only three nights instead of six. Second, you don’t actually have to stay at the hotel you select — in the example above, you could just book the cheapest option to get a discounted flight to Madrid, and then redeem points for your hotel or move on to another destination.
Not every deal will be a winner — for example, I’ve noticed that domestic itineraries don’t seem to offer much of a discount. However, there are enough worthwhile opportunities that it’s worth checking these options out when you’re buying airfare.
Also, there is a downside to these vacation packages. Most importantly, the change and cancellation policies aren’t very friendly, and any fee waivers you have thanks to elite status probably won’t apply. The rules are complicated and vary from one program to another, so make sure you read them carefully before you buy.
As for Everett’s other question, you’ll generally earn miles for your flight as you would normally, and in some cases you’ll get a small bonus for money spent on hotels and cars. However, you shouldn’t expect to earn hotel rewards for your stay.
Featured image courtesy of Grand Lucayan Resort.
The Points Guy Assessment:
The Chase Sapphire Preferred is a great pick for the beginner and the frequent traveler. The CSP has superb travel benefits, double points on certain purchases, and a 50,000 point sign up bonus. The $95 annual fee is waived the first year so this puts it as one of the less expensive cards, while still allowing you to earn one of the most valuable point currencies.
- 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®
- Chase Sapphire Preferred® named a 'Best Travel Credit Card' by MONEY® Magazine, 2016-2017
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- 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