Talking Points Episode 23: Best of Hotels
We're bringing you a Talking Points 'Best Of' this week. Today is all about hotels! Hear a quick breakdown of some favorite Talking Points episodes — from Hilton Honors, the World of Hyatt program, and everything you need to know about timeshares with Wyndham Destinations.
You can find the full version of each of these episodes on our Talking Points page or wherever you get your podcasts.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter here: https://thepointsguy.com/mailing-list//
Brian Kelly: Hey Talking Point listeners, it's your host Brian Kelly, The Points Guy. As you know, Talking Points is a podcast where I sit down with CEOs, top execs, influencers, TPG staff, and more to talk all about travel and having fun along the way. Well, I've been a little bit busy lately with launching TPG UK and this Vlog. So (for) today's episode we are going to dig through our archives and share a Talking Points "Best of." It's all about hotels. We've got breakdowns of the Hilton Honors Program.
Darren Murph: They allow all the way down to Silver, their lowest tier, to take advantage of fifth night free, which I think is pretty cool.
Brian Kelly: World of Hyatt.
Nick Ewen: Well, I think the best thing about the Hyatt Program is ... they have really reasonable redemption rates.
Brian Kelly: And a quick intro into the world of timeshares.
Ed Pizzarello: If you're active in the miles and points community, you're actually very well equipped to get the most out of the timeshare.
Brian Kelly: TPG senior editor Darren Murph is fluent in all things Hilton Honors. He explains how you can find the most value in the program, why the Hilton Aspire card is a no-brainer and if the program is right for you.
Brian Kelly: First off, what do we value Hilton points at and do you agree with it?
Darren Murph: It's on the low end. So it's 6 cents per point which...
Brian Kelly: Six tenths of a cent?
Darren Murph: That's right. Six tenths of a cent...
Brian Kelly: So 100,000 points we value at 600 bucks?
Darren Murph: Yes, that's much lower than some of the transfer points: Amex Membership Rewards, Chase Ultimate Rewards and Citi ThankYou Points. But that's to be expected because those can go in many different places. So the question is: Do I agree with that or not? It's become more difficult now that they have gotten rid of the award chart. So they've moved to this dynamic chart that's not quite revenue based, but they're leaning in that direction. And so I can find redemptions that absolutely line up with that. And then I can find some, like the Hilton Moorea, where they're worth half as much as what we say they are.
Brian Kelly: How much did that cost a night and what would it have cost in points?
Darren Murph: So the base level room there is around $600 a night, 600 US dollars a night. That same room...
Brian Kelly: At our valuation, you should be able to use 100,000 points then?
Darren Murph: That's right.
Brian Kelly: Right.
Darren Murph: That's right. However to buy that same room with points it's 188,000.
Brian Kelly: Wow.
Darren Murph: So this is a situation where you really shouldn't use your points there. You would be much, much better having a co-branded Hilton Amex, buying it with cash, doubling up on the redemptions that you earn from a stay -- an aspirational stay -- like that.
Brian Kelly: And is that because there was no basic rooms available? Is that how ... So let's talk about the Hilton program basics. So if there's a standard room, you should be able to redeem at ... well, there is no standard rate any more because there's no award chart.
Darren Murph: That's the problem. That's the problem. So the upside is whom...
Brian Kelly: So Hilton pulling the rug out from under us?
Darren Murph: They have been, slowly. In this case the upside is Hilton will allow you to book any room they sell with points. That's not the case with other properties.
Brian Kelly: Does Hilton have any really, you know... Marriott used to have the hotel plus air packages, fifth night free. Like, what are some of the sweet spots using Hilton points?
Darren Murph: So Hilton got rid of Axon, which was a little known perk, but it was a co-branded Amex card perk that you could get more for your miles. So they got rid of that a few years ago, for your point, sorry. But fifth night free remains and they allow all the way down to Silver, their lowest tier, to take advantage of fifth night free. Which I think is pretty cool. So you don't have to be a top-tier lead to use fifth night free.
Brian Kelly: But Marriott gives fifth night free to everyone, right?
Darren Murph: Yeah. Yeah. But it's fairly easy to earn Silver with Hilton. But yeah, that's a fair point. It should go all the way down. Generally speaking, the valuations tend to only make sense when you use a fifth night free, because when you throw that fifth night free in the averages of the point valuations start to make more sense. So that's a good perk. Another thing (is) sporting events are a real strong suit for Hilton.
Brian Kelly: Really?
Darren Murph: Yeah. So what will happen is if it's a baseball game, it's a football game, it's a NASCAR event. Hotels in that area will inflate their rates accordingly because they know a flood of people will come in for this one event. More often than not, the points do not go up in proportion to the dollars. So, if you really want to go to a sporting event and it looks like cash wise all of your options are really, really high, check out Hilton's points. They'll still be up a little from the base, but not as much, proportionally. So you can find some sweet redemptions in there.
Brian Kelly: But when it comes to redeeming points for experiences, can you use Hilton points for sporting events and concerts at a decent rate?
Darren Murph: You can, and I actually do like how they've laid out their experience purchase page. They rank them by points so you can focus what you look at on the experience page based on how many points you have. So it kind of limits what you're looking at. I generally don't find them to be an amazing value, unless it's an exclusive event.
Brian Kelly: Or you can't buy it anyway?
Darren Murph: Or you can't buy it anyway. So if it's something you really want to do or your significant other or someone in your family would love to do and it's an exclusive, it might be a good use of it. If it's just using your points to buy concert tickets that you could buy in cash, generally you're better to pay cash.
Brian Kelly: Let's take a pivot for a second to elite status. Where does Hilton Diamond shine in comparison to others, would you say?
Darren Murph: Hilton definitely likes to surprise and delight. I always feel like I'm getting something extra when I show up as a Diamond, they will always try to upgrade me. I have never ran into a situation where they just refuse to look. They will always try to do it and they seem to take great pleasure in doing that. What I think is unique about Hilton is it actually starts at Gold, where they give free breakfast across the boards at Gold. And this doesn't happen at pretty much any other chain. You have to be top tier and even sometimes top tier doesn't get that included.
Darren Murph: And why that's a big deal, if you stay at aspirational places like the Hilton Moorea, (is) a breakfast buffet there is between $40 and $50 per person. When I checked in as a Diamond, even though I didn't book through hilton.com, they recognized my status for myself and my guests. We got free breakfast every day. Over the course of a multi-day stay that's hundreds of dollars.
Brian Kelly: So Hilton Diamond, would you say, is in the middle of the pack when it comes to top tiers?
Darren Murph: Yeah, I would say that.
Brian Kelly: But Gold is really [crosstalk 00:06:14].
Darren Murph: Yeah, exactly. So their Gold is significantly better than comparable Golds elsewhere. The Diamonds, I would say, middle of the road, not below average by any means. Let's put it this way, it wouldn't break my heart too much to fall from Diamond as long as I caught myself at Gold.
Brian Kelly: Will they give a soft landing?
Darren Murph: I haven't tested that out. They actually introduced a nuanced type of ... they allow Diamonds... if you've had Diamond for three years -- and it doesn't have to be consecutive -- you can actually go on hiatus for a year and then reinstate yourself into Diamond. So if you know you have a year coming up where you're going to take a sabbatical, or you're just not going to be traveling as much, they'll let you put your status on hold and then reinstate it later.
Brian Kelly: Interesting.
Darren Murph: That is interesting.
Brian Kelly: Well Darren, you do know that part of the Centurion Card (is) you get free Diamond status.
Darren Murph: That's right.
Brian Kelly: So all I need to do is spend $2,500 to add you as an additional card holder. Of course never giving you the actual card, because I don't trust you as far as I can throw you. But you would get Diamond, but you also could spend on credit cards. So let's pivot. Let's start with the lower-tier cards. Which cards are for who?
Darren Murph: Yep. So they offer several cards, but I'll just cut to the chase and say, I think the only one worth signing up for is the top-tier Hilton Aspire. The reason is a few-fold. One, the welcome bonus is higher than it's ever been. That's really alluring. But the second is you get guaranteed Diamond status, and if all that mattered to you was Gold status, I'd say you just go get the Amex Platinum. The Amex Platinum is a better all-around card. It can help you in more ways than just Hilton. And you get complimentary Gold status there. So if you want Gold, I'd say sign up for the Amex Platinum and you've got it. If Diamond matters to you, the Aspire card gives you complimentary Diamond status and you don't have to spend anything. You don't have to stay any amount of nights. It's very rare for a card to just give top-tier status unbridled. It...
Brian Kelly: Forever?
Darren Murph: Yeah, as long as you hold the card.
Brian Kelly: So you get Diamond just for having the card? Now, don't you think that's going to dilute Diamond for the people like you who in the past have actually stayed in the hotels?
Darren Murph: I wondered that. But you know how I think they can pull it off is that they have so many brands, and so many properties, that their Hilton loyalists are spread so far that I don't actually worry it about it being hyper-concentrated. Because even if you go to a Doubletree, a middle of the road property, or an Embassy Suites, you can look for upgrades there. And there are a lot of Hilton loyalists that don't necessarily stay in the major urban centers where you're going to get the Conrads. They appreciate it too, and there are perks that they can enjoy, especially with families. That free breakfast really adds up.
Brian Kelly: So, how much is the annual fee and how do you calculate the perks to make it worth it?
Darren Murph: Yeah, so it's $450 right now. It's easy to earn back. You get $250 back on a Hilton resort anywhere in the world and that includes the room rates and not just incidentals. So if you spend two nights at any Hilton resort, you automatically get the $250 back. Then there is an airline incidental for $250 as well.
Brian Kelly: So that's more than annual fee right there?
Darren Murph: It's already more than the annual fee. And there's five or 10 other perks that of course we've written about, there's seven huge perks and that's just two of them. And you already make $500 back for spending $450. It's a no-brainer. Oh and you come away with Diamond.
Brian Kelly: Any final hacks or tips for someone who's starting to stay more at Hilton and has no idea about the program? Or any good redemptions that you've had specifically?
Darren Murph: So this is, might sound a little crazy, but one of the best ways to use the Hilton Honors points program right now is to not use it on the most aspirational of places. Instead, pay cash at the aspirational places, use a Hilton co-branded card to earn a lot of points back. And then when you're on road trips or you're with your family, you're visiting grandma in a non-urban center, the Hampton Inns and the Doubletrees of the world are everywhere that the Conrads aren't. And the redemption rates there are a lot more solid. So it's not as sexy to redeem for a Hampton Inn, but the value is very, very high. And so if you tend to spend time in places that aren't major urban centers, you can get a lot from the program.
Brian Kelly: If you enjoyed that quick look into Hilton Honors, find the full episode where I interview Mark Weinstein, their Senior Vice President and Global Head of Customer Engagement Loyalty and Partnerships, in the Talking Points feed. It's episode #4. Mark shares how the program's evolving and stacking up against its competitors.
Brian Kelly: Next up, we've got our very own TPG editor, Nick Ewen. His love for the World of Hyatt program is contagious. He explains why it has the best elite status out there and shares his expert tips you don't want to miss.
Brian Kelly: Let's just talk about high level Hyatt points. I think Marriott and Starwood and Ritz have gotten all the attention this past year, but there've been a lot of changes to the Hyatt program. Why do you still love your Hyatt points?
Nick Ewen: Well, I think the best thing about the Hyatt program is really two-fold. Number one, they have really reasonable redemption rates. So their top-tier Hyatt branded properties like the Park Hyatt in New York or the Park Hyatt in Beaver Creek for any of our skiers out there only require 30,000 points for a free night, whereas other programs gets up to 60,000, 85,000, 95,000. The other great thing about Hyatt is that they have a no blackout dates policy that really has teeth, and if there is a standard room available for sale, that properties under the Hyatt umbrella, have to make that room available using points. So it's really a win, win where you have reasonable rates, but then any standard room that's available on a paid rate, you can use your points for it.
Brian Kelly: And cash in points, do you use that when possible or you an all points reservation kind of guy?
Nick Ewen: So I typically like to use all points. I will tell you that, under the new points and cash redemptions scheme, I don't really see myself utilizing that. It used to be a flat copay along with half of the points required for a full free night and they've since changed it to where it's now ... it requires half of the points plus half of the paid rates. So it's not as much of a valuable tool to use anymore. That being said, if someone isn't earning a ton of Hyatt points and they want to just defray some of the costs of a stay, it can still be a decent option under the right circumstances. It's just not something that can get you outsized value like it did before.
Brian Kelly: Got It. And Hyatt did make the change about earning elite status now based on cash and points and points days.
Nick Ewen: That was actually a really nice addition after they raised the requirements for earning the different tiers of elite status, when they shifted from Hyatt Gold Passport to World of Hyatt. It was nice for them to kind of catch up to the rest of the programs that already did count award nights towards elite status. So that was definitely a nice addition. So yeah, as long as you are booking an eligible rate, you're not going through a third party, like the Chase portal or Expedia or hotels.com, you will earn elite credit for that night.
Brian Kelly: And you said you commended Hyatt because it's only 30,000 points for a top tier versus double triple that in other programs. But, let's talk about their earnings. So earning on base days with Hyatt, you're not earning as many points as you are staying at Hilton or Marriott, right? So is Hyatt truly more generous because they offer lower redemptions, or are they just giving you less points on the earned side as well?
Nick Ewen: So, that's a great point. And it absolutely is true that they are ... you do earn fewer points per dollar spent when you visit Hyatt properties. I think that one of the big things that I personally love about Hyatt is the fact that they partner with Chase Ultimate Rewards for 1:1 transfers and that's a great way to quickly boost your account. I have several Ultimate Rewards earning credit cards, they're some of our favorites here at The Points Guy. So it's interesting to note that yes, Merriott points, you earn more of them on stays, but you also transfer Chase points to Marriott at a 1:1 rate. So it's really an easy way to boost your Hyatt balance. And the other nice thing is that Hyatt also does allow you to earn points on other things outside of Hyatt stays. So dining experiences, and some of their new partnerships.
Brian Kelly: Let's get into credit cards before we get into redemption. So, earning points. You mentioned, Chase Sapphire Reserve, you earn 3x points on travel and dining and then transferring those points to Hyatt. I know I transferred them to Park Hyatt Maldives, it's only 25,000 points for a $1,000 room. You're easily getting 4 cents a point and when you're earning three points per dollar, it's a nice 12% rebate by using the Sapphire Reserve and transferring to Hyatt for those luxury stays. But does it make sense to get the new World of Hyatt credit cards and are they as lucrative as the Inks and the Sapphires of the world?
Nick Ewen: So I think the World of Hyatt credit card, the new version that launched in the earlier part of 2018, I think, is great for a couple of different groups of individuals. The first are those who are trying to close elite status gaps. I know when I was loyal to Hyatt, I wasn't able to stay in Hyatts 80, 90, 100 nights a year because of their limited footprint. And the nice thing is that the World of Hyatt credit card allows you, through spending, to close some of those gaps, where you get five elite nights just for having the card, and then for every $5,000 you spend on the card in a calendar year, you get another two nights of elite status credits. So that can really help if you're close to Explorist or close to Globalist, to put you over the top.
Nick Ewen: The other thing that I love about the Hyatt credit card, both the old version as well as the new World of Hyatt credit card, are the free night certificates. Those are valid in Category 1 through 4 properties. Every time I've redeemed one of those certificates, I've always gotten at least $200 worth of value. You get one of those every year; another one after spending $15,000 on the card. So I think those alone make the card a really great option. The other thing I really like about it, if you don't currently have a Sapphire Preferred or a Sapphire Reserve, but you still want to earn Hyatt points, the card has the most extensive bonus categories of any hotel credit card out there...
Brian Kelly: They've just added fitness, too, which I thought was really clever.
Nick Ewen: Yeah, that's actually very unique in the credit card market, which is really nice. But then you get in addition to 4 points per $1 spent at Hyatt, you get double points at restaurants, on airline tickets, on transit commuting and on fitness club and gym memberships. So I'm a Crossfitter. It's a great option for me when I'm swiping that card every month for my monthly membership fee there. SoulCycle, any of those clubs or memberships, it's a great option for that.
Brian Kelly: Cool. So let's go into the redemption side. So you've got a boatload of Chase points burning a hole in your pocket, or Hyatt. Bring us to how to redeem, get the most value. Are there fifth night awards? Are there any of these weird hotel and air packages that other brands have had? Kind of give us the lay of the land when it comes time to redeem.
Nick Ewen: The nice thing about Hyatt again is that they have very reasonable redemption rates. Their top-tier Park Hyatt properties (are) 30,000 points a night. I've done that at the Park Hyatt in Zurich when room rates were 700 euros per night. One of the best values, though, I have found is actually at some of the lower-tier properties. So Category 1 is only 5,000 points per night. Category 2 is only 8,000 points per night. If you find some of those Hyatt Place or Hyatt House locations, if you're traveling with families, oftentimes you can get a full apartment for 5- or 8,000 points per night. If the revenue rates are $200 or $300, that's a phenomenal value for your Hyatt points. So, you know, really a lot of times we talk about those aspirational ones, but yeah, those lower ones are great.
Brian Kelly: Are there any fifth night free or wonky sort of package awards that people should know about?
Nick Ewen: So the Hyatt, unfortunately, doesn't do any type of a fifth night free option. But one of the things that a lot of people don't know is Hyatt does allow you to actually transfer points freely to any other member in the program. You can only do it once every 30 days and the official restrictions are that it must be for a specific redemption. So you can't just say, "I'm going to transfer 100,000 points" and then leave them sitting in that other account for the next two years. It does specifically say it must be for a redemption, but that's very unique. There are a couple of their programs that do allow, kind of that pooling. But the real nice thing this allows you to do is if you are friends with a Globalist member.
Nick Ewen: So one of our top contributors, Richard Kerr, huge Hyatt fan, he's been Globalist since the new World of Hyatt program launched. I could call him up and say, "Listen Richard, I want to take my wife on an anniversary trip. Can I transfer some Hyatt points to you and have you book it for me? Because then that invokes what Hyatt calls the "Guest of Honor" benefit and then I get all of Richard's Globalist perks even though I'm actually the one staying and he's not doing the stay.
Brian Kelly: Oh, wow.S o this is in a gray area where you're going to get ... Hyatt isn't going to shut down your account if you do this too many times. This is totally within the rules?
Nick Ewen: Yeah. This is within the rules. It's once every 30 days. You also do -- and this is surprises people -- you have to actually submit a paper form so you have to manually write it out, scan it, email it or even fax it. It does take, I think, six to eight weeks for it to actually process. But no this is...
Brian Kelly: Wow, six to eight weeks. Have you done this before?
Nick Ewen: I have not actually taken advantage of it. I am looking ahead, though, towards my wife's 40th birthday, thinking about trying to plan one of those, and Richard will definitely be getting a call from me. So Richard, if you're listening, definitely get ready for that.
Brian Kelly: You know, you can also transfer Hyatt points to airlines. Do you recommend doing that?
Nick Ewen: I generally don't. The rates that you'll get when you transfer them are generally not worth it. You're going to sacrifice a lot of value. We peg Hyatt points at 1.7 cents apiece. You're not transferring them at a 1:1 ratio. So I would definitely not recommend using them in that way. You generally get much more value using them for free nights or for upgrades as well. Another often overlooked option is if you are looking for an upgrade to a club room or to a suite or to a premium suite. You can actually do those on paid stays. So that's another great option. It's only 3,000 points to go from paying for a regular room to getting club access at some of their Regency Club locations around the world. So that's another great option. So I definitely recommend that as opposed to transferring to airline partners.
Brian Kelly: Got It. What's your overall take on Hyatt's elite status. Is it worth going for and why would you think that Hyatt Globalist ... Would you make the case Hyatt Globalist is the best top tier hotel elite status out there.
Nick Ewen: I certainly would. I think there are a couple of really nice benefits that set it apart. The suite upgrade awards are really fantastic. More valuable than any other similar awards in the hotel space or you can actually get four of those for reaching the qualification level for Globalists. They've actually, starting March 1st 2019, they are going to be adjusting it to where you actually get two of those at 50 nights, so even before you reached the Globalist threshold, and then another two when you get to 60 nights. And those are valid on stays up to seven nights in length. So if you have four week-long vacations at a Hyatt property as a Globalist member, you can book a regular room and then use those suite upgrade awards to [crosstalk 00:21:26] on this week.
Brian Kelly: And is that on paid stays or award as well paid?
Nick Ewen: On paid and award stays as well as points in cash. And you can confirm them in advance. So with no waiting until a week before, five days before, you can actually confirm them. If you booked six months in advance, you can call as soon as you have that reservation and lock in those sweet stays.
Brian Kelly: You know, you're kind of selling me here, Nick.
Nick Ewen: I was going to say...
Brian Kelly: If I wantedto... if I got Marriott Platinum the hard way, for over 100 nights a year... Marriott has made some changes that have made me a little upset, like not being able to get multiple room night credits for elite status. Does Hyatt allow you if there's multiple ... If I'm going to pay for three of my friends' rooms, do I get those points and elite credit?
Nick Ewen: Unfortunately, no, you do only get the one night of elite credit. You can earn points on up to three rooms, but it is just one night worth of elite credit. And before you go jumping into Hyatt, the biggest thing, the biggest drawback, they are taking steps to address this... but it's their limited geographic coverage. There's still less than 1,000 properties. Marriott is over 6,800. Hilton has, I think at last count, over 6,000. Again Hyatt...
Brian Kelly: Hyatt has under 1,000.
Nick Ewen: Yeah. Now adding the small luxury hotels, they're gradually integrating those into the program. There are, I think, just over 50; right now there are over 500 of those. So still a lot to come there. The Two Roads, Hospitality. I think they are going to address some of the those concerns. But it's challenging. When you're looking at that limited geographic coverage to reach those 60 nights or to reach those 30 nights to get Explorer status -- not everyone's going to be able to do that.
Brian Kelly: And, in general, the Hyatt portfolio skews more luxury hotels whereas, yes, Marriott's over 6,000 but so many are more, you know, what what they call their select service brands. So would you say in general if people want to go for that Hyatt elite status it's going to cost more than at other brands because most of the hotels are on the higher end of the spectrum.
Nick Ewen: Yes. Partly that. And then I think the other thing is just the general geographic reach. Hyatt does have a large number of Hyatt Place properties in kind of ... I don't want to say less desirable, but not the biggest cities that are out there. But they don't come close to the reach of say, a Hampton Inn or a Fairfield Inn, where you can find those properties on the side of an interstate in the middle of Nebraska. Whereas the only Hyatt Place in the area might be in a larger city. So I think that's the other thing is if you are someone, a business traveler, who isn't always going to the same locations where you can count on a Hyatt location or Hyatt property to stay at, it may be challenging to reach those elite status qualification thresholds.
Brian Kelly: Check out the World of Hyatt episode with Nick and hear my full interview with Amy Weinberg, VP of the World of Hyatt program, on episode #8 in the Talking Points feed. Now we're going to take a quick break to hear from our sponsors.
Brian Kelly: Coming up next, TPG contributor Ed Pizzarello explains why a timeshare might be a valuable option depending on your travel goals, and breaks down the fees.
Ed Pizzarello: I think the timeshare companies, especially the ones associated with a major chain, are trying to find ways to make it look more sexy for new buyers. Wyndham has a suite of benefits for folks who buy more points: VIP Service. You get preference to nicer rooms, you can book sooner or you get more housekeeping. So, for folks that like the timeshare world, some of those things can be appealing, but they come at a pretty hefty price. And you're buying a significant chunk of points directly from -- pick any of these major hotel chains that run timeshare companies -- to get those benefits. It's a way for them to try and get you to keep buying from them as opposed to using the resale market.
Brian Kelly: That's interesting. So I've always been thinking of timeshares as a waste. They get you in on big buildup, that emotional high during that pitch, and you're locked in and then, timeshare owners I always feel are very defensive. Like, "No, I didn't get swindled and it is a good deal." But it actually can be a good deal is what you're saying, because you're a smart guy...
Ed Pizzarello: It can be. This gets back to like if you looked at... We posted in the TPG Lounge and we asked for our members to tell us what they thought. And it was the full mixed bag, which I would expect. There are some folks that said, "It was a complete scam, I didn't get what I expected," all the way to, "We love it. It worked perfectly for us." So a good cross-section of folks, and I'd guess that the ones that are happy with it probably did the research before they bought it.
Brian Kelly: Buying a resale timeshare, is there... are there really those big downsides like you're never going to get the full perks or whatever... Would you...
Ed Pizzarello: I think it depends on... so Disney has done a pretty good of segregating the perks. But in the other companies, so it... using Wyndham as our example as noted, the biggest thing you're going to lose there are if you buy those points on the secondary market, those wouldn't count towards any VIP status that you might earn. But, you need at least 400,000 points in the Wyndham program to have VIP service. And to put that in context from a financial standpoint, that's an initial investment of $60,000 or $70,000. That's a pretty big financial commitment for a lot of folks. So... and then you've got the maintenance fees on top of that. So I think you've got to be really into timeshares to invest that kind of money. If you're just going to buy enough to have a vacation for a week every year, you're never going to get to the level of being a VIP with Wyndham at 400,000 points. So it probably doesn't matter to most smart folks that are going to buy timeshares.
Brian Kelly: Let's talk about the financials. So what are the key traunches of timeshare, the initial investment and then the other key things people have to take into account if they're looking at it?
Ed Pizzarello: Yeah, so and I've got some Wyndham examples. And so as a general rule of thumb, we can say that timeshare maintenance fees are going to go up about 3% a year. The typical Wyndham first-time buyer is going to spend somewhere between, call it $20,000 and $30,000 and, depending on where they spend those points, that gets them a one week vacation somewhere across Wyndham's map, which is a huge map that is the benefit in buying from Wyndham. And that can be a one bedroom unit in a much nicer property or it could be a two bedroom unit in maybe a property is not quite as aspirational, if you will.
Ed Pizzarello: But if you wanted to stay at Whistler or one of the nicer properties in Hawaii or things like that, that's probably going to be more like a one bedroom room that you're buying. Whereas if you want to stay in Tennessee, the Smoky Mountains you get a two bedroom unit and the flexibility that members have with these programs is they can decide to. They have a system called banking and borrowing where essentially you have a bucket of points every year. You can roll your points forward, you can roll your points back, to give yourself a bigger pool if you want to have a big family reunion or you want a nicer room with a better suite, all that stuff.
Brian Kelly: So you can forego vacation one year to do a much nicer one the next.
Ed Pizzarello: You can. You can also split up into much smaller trips. You can just do long weekends. This gets back to making sure you know how you're going to use the unit. One of our TPG Lounge members actually said that they bought from Wyndham, and when they got home and started to go through the math of it, they realized that they normally do travel on long weekends. And when they looked at the charts, the places that they wanted to go, the numbers just didn't make sense for them to do those short trips. They were...
Brian Kelly: And is it mostly, do you have to, I know I hate traveling a certain destination where it's Saturday to Saturday.
Ed Pizzarello: Yeah.
Brian Kelly: So is that the case with timeshares or does it depend?
Ed Pizzarello: It's not necessarily that, but if you think about it, as no one noted, a lot of the reason why millennials are thinking about this, it's because they're having kids and you don't necessarily go Saturday to Saturday, but, as you start to fold into the school schedules, everybody's traveling the same time.
Brian Kelly: Right.
Ed Pizzarello: And so that can be some of the trouble with these resorts. And the big mistake we made when we first bought our timeshare was understanding that we bought because we want... that gave us our longer booking windows. Normally the way timeshares work, wherever your quote unquote "home resort" is, you get to book there sooner than everybody else. It's like, "Oh well that's really great," but I'm never going to book a vacation 13 months out. I just don't do it. So from that standpoint...
Brian Kelly: So you get like the last slim pickings, I guess.
Ed Pizzarello: This is what some people don't realize, you need to think about how you're going to use it. If you're not going...
Brian Kelly: I'm starting to get stressed out already.
Ed Pizzarello: If you're not going to book 13 months ahead of time, then where you buy your home resort doesn't really matter. If you're never going to book that far ahead, having the advantage of booking that far ahead is useless to you. You don't have any value. You don't have any value for it. Another thing too...
Brian Kelly: And then in that case that then does it just make sense to buy points off of the secondary market if...
Ed Pizzarello: Yeah, Wyndham actually has an interesting thing, too. They have a program that I believe they call Access where you don't necessarily have a quote unquote home resort. You're sort of like spread out a bunch of months with a bunch of home resorts. So that could also be another path for folks if they don't specifically want to get into one place. And I think if you're going down the timeshare path in today's world, I think it should be to use the entire suite of properties they offer, as opposed to always going to the same place. I mean, I don't think it makes sense to buy in and go to the same place every year. You're paying a premium to get that variety, I think.
Brian Kelly: All right, so let's get back to it. So you paid the upfront, let's call it $25,000, or you know, what your model has, and then, what are the yearly fees? You know, no one made it sound great. Oh ... no resort fees, we're flying high, but then there's actually are quite a bit of fees. So you pay this big chunk up front?
Ed Pizzarello: Yeah. And so using those numbers, at around 25 grand, you'd be paying about in today's dollars, you'd be paying about $800 a year in fees. And if we say that that's going to go up 3% a year, over the course of 20 years you're going to spend about $20,000 in maintenance fees. Over the course of those first 20 years, you spent $25,000 to buy in. So you're all in for about 45 grand. And under that scenario, you say if you took one weeklong vacation a year, you'd be spending, $2,500 bucks a year or $2,250 a year, for that vacation, which isn't horrible. Because if we knew we were getting a one bedroom or two bedroom unit, we'd say that's a great value. If we were staying at some of the more aspirational destinations and getting the smaller units at 300 bucks a night, I think our TPG members can do much better than that using their miles and points. So, again, I think it's knowing what you're getting yourself into and making sure that you can get the value out of it.
Brian Kelly: Timeshares should be more compared to Airbnbs and vacation rentals than they should hotels, right? Like full-service hotels when you're looking at pricing? So really what I think is, could you get a similar property at $300 a night on Airbnb? But what... what's the difference? Do you stay in Airbnb often, and how would you describe the difference?
Ed Pizzarello: Yeah, I don't stay in Airbnbs often. I'm one of the few folks out there who still nervous about, am I going to show up and is there actually going to be a room? Did they put a camera in my bedroom? And all that stuff. So actually I think the Airbnbs of the world have actually helped timeshares. Timeshares sit in between hotels and Airbnb. They're a more structured version of an Airbnb. You've got a front desk, you've got security, you've got a bunch of things that you don't necessarily have with an Airbnb. Doesn't mean Airbnb is a bad thing, but for somebody like me who says, "I don't really want to leave it to chance. Is the house going to be there when I show up?" All that stuff. Timeshares eliminate those elements. You've got a dedicated room, you've got a reservation. You know, as Noah said, the Bonnet Creek property that I went to down at Disney World, which is on Disney's property -- they've got free parking, there's a front desk that's manned 24 hours a day. So you know, you obviously don't have...
Brian Kelly: You might be able to get cheaper in Airbnb, but you're getting a lot more in terms of like, mitigating risk a lot more, by staying at a timeshare.
Ed Pizzarello: You're mitigating risk and then, depending on where you're going, you're using that example down at Bonnet Creek, the property has three or four pools, there's a lazy river, there's three or four restaurants. So there are other amenities that you wouldn't necessarily expect to get at an Airbnb.
Brian Kelly: So when we strip it all down: So you're paying $2,500 a week, did we say? So can you, and is that really a great price? Can you get it cheaper, through other means, that similar property on the secondhand market every year? Like, why lock yourself in, give up a bunch of capital that you could invest elsewhere?
Ed Pizzarello: Yeah, from a cash standpoint, I think buying on the resale market can be a very smart path. Especially because there's a lot of legislation around how resale timeshares need to be sold. So those companies are regulated. It's deeded timeshare, which means you're buying real estate. So it's governed by both timeshare law and retail real estate law. So you have protections and the companies that do this, the most reputable companies, have great reputations.
Brian Kelly: The full timeshare episode with Ed and Noah Brodsky, the chief brand officer at Wyndham Destinations, is #12 in our feed. Thanks to Caroline, Margaret, Ryan and everyone at TPG Check out all of our past episodes at thepointsguy.com/podcasts and make sure you subscribe for free for all of the new ones that are about to drop. For now, I'm Brian Kelly, The Points Guy, safe travels.
Featured Image by Isabelle Raphael/TPG