Frequent Miler on the Air - Debate: 30% Amex to Hilton Transfer Bonus. Should we do it? | Coffee Break Ep26 | 9-17-24

Episode Date: September 17, 2024

There's a 30% transfer bonus through September 30th from American Express to Hilton. This means during the transfer bonus, 1,000 points would. become 2,600 Hilton points. Is this a good transfer bonus? Greg and Nick debate that point in today's Coffee Break. (00:26) - Quick facts about the transfer bonus... (01:28) - Past bonuses (02:10) - Nick says "No" to the 30% Hilton bonus (07:55) - Greg says "Yes" to the 30% Hilton transfer bonus (12:23) - But what about the "joy of free"? Read our post about "the joy or myth of free travel" here. (14:24) - Conclusion Visit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media. Music Credit – Beach Walk by Unicorn Heads

Here we go. This is not your typical Frequent Miler on the Air episode. This is a standalone segment we're calling Coffee Break. Each Coffee Break segment will cover a single topic related to miles and points. And each Coffee Break is limited to 20 minutes or your money back. Enjoy. For today's coffee break, Nick and I are going to debate the 30% Amex to Hilton transfer bonus. Should we do it? There's a 30% transfer bonus through September 30th from your Amex membership rewards points to Hilton. And normally, when you transfer Amex points to Hilton,

they transfer one to two, meaning 1,000 Amex points become 2,000 Hilton points. But during the transfer bonus, because it's 30% more, 1,000 Amex points become 2,600 Hilton points. Now, when you look at the fact that Hilton points are often on sale for half a cent each, that brings the, you know, if you think of it as you're getting half a cent value per point from your Hilton points, then that brings this redemption, the transfer of points to, it's like getting 1.3 cents per point value from your Amex points. Most most years historically there have been around two transfer bonuses per year to Hilton and I looked at some of the you know past ones the last several years 30% which which we have

right now is the most common that's that's what we see a lot. There was, though, a targeted 40% bonus in May of this year. And during the pandemic, we had a 50% bonus at one point. And back in 2019, we had a targeted situation where you either got a 40% or 50% bonus. So we have seen better than this, but still 30% is the most common. So we're going to debate this. Nick is not sold on this transfer bonus. What do you think, Nick?

No, I'm not. Yeah. So, and you know, you said we're going to talk about whether or not we should do it. And more importantly, whether or not you, the listener should do it. And I'm going to tell you, no, don't do it. And there's a few reasons why.

The first reason why is because if we accept Greg's math, as he laid it out here, which is the math that we always do. I say Greg's math, really, it's our math. We always have agreed on that sort of way of looking at this. I'm going to argue it in a second. But let's for a second say, okay, the 1.3 cents that Greg said is about what you're getting in value for your Amex points. That's a low value use of Amex points. You can do much better if you transfer to airline partners and book flights. Even in economy class, you can generally do better than 1.3 cents per point, certainly on international redemptions. And certainly in business class, you can do far better yet. A number of different options to get to Europe for anywhere from around 35,000, 50,000, 60,000

points, 70,000 points one way for flights that would ordinarily cost a couple thousand dollars. So you could do much better than 1.3 cents per Amex point when you're booking flights, particularly premium cabin international flights. So I have a really hard time accepting only 1.3 cents per Amex point. And again, to pull out an example or two, if you take something like Avianca LifeMiles, which is not the best option, but 70,000 points one way for Star Alliance business class to Europe with no surcharges. So that's easily a two cent per point redemption that you can pick up very frequently. It's not terribly difficult to find

some sort of Star Alliance availability to Europe. Obviously, it'll vary time of year, but easy to get more than two cents per point in value with a redemption like that. And that's not a best deal to Europe with Amex points. If I were cherry picking, I'd pick something like the 35,000 or 34,000 Iberia Avios one-way in business class between East coast cities in Europe or in Spain anyway, during off peak dates. So, I mean, there are certainly better options I could pick out of a hat here, but, but anyway, so you can do much better than 1.3 cents per point. And that's one example. If you look at lots of other examples too, if, I mean, if you transferred to ANA, you could fly all the way around the world in business class, starting from around one hundred and fifteen thousand or so MX points.

If you're willing to spend one hundred and forty five ish or one hundred and sixty or so, you can really build an incredible itinerary all the way around the world in business class. Again, worth far more than one point three cents per point in value. So lots of easy ways to do that. And then if you get a business platinum card, you can pay with points on your chosen airline or with any airline in business and first and get a little bit better than one and a half cents per point in value. So again, just not excited about, there's an annual limit. You can only buy X number of points per year. And that's true. So you might say, oh, well, I can't buy as many Hilton points as I need. So I should take advantage of the transfer bonus because I can only buy X number of Hilton points per year. But keep in mind that you can pull points with up to 10 people. So that limit is effectively 10 times the individual limit because my sister's cousin's best friend could buy points and then pool them with me. And so I might give that person an authorized user card on one of my cards so that they can pay for points and then pool them with me. It'd be very

easy for me to buy 10 times whatever the annual limit is with Hilton. I can't remember off the top of my head. But at any rate, you can buy into the millions of points per year with Hilton, which is going to be enough for a lot of people. Now, there's another piece. And my last piece as to why I say it's not worth it is because the math gets a little bit more complicated. And I don't want to get too mathy on a podcast show. But we've been talking about the price at which Hilton sells points and determining how much value you're getting from your Amex points because you could alternatively buy Hilton points. So again, you're getting about 1.3 cents in value for what you could buy if you were buying points. I'm going to look at it from a slightly different angle. Our reasonable redemption

value for Hilton points is just under half a cent per point. And the math that goes behind that, if you look at Greg's post, so if you go to our reasonable redemption values, and then you click and see the post that Greg wrote about where those values come from, Hilton points are 50th percentile is 0.48 cents, 60th, 0.51, 70th, 0.54. You're generally not going to get much better than about half a cent per point in value towards paid stays. And Hilton offers a decent return on paid stays in terms of the number of points that you can earn if you're paying for a stay. So unless you're really booking an outlier example, really, you're getting even less than half a cent per point in value, I would say, because if you just look at the 15 or 16% back that you can get by

paying with an Aspire or Surpass card at a Hilton property with the status that you get from that particular card, that's what you're going to get in a return in terms of number of points. And then you look at all of Hilton's promos, the number of points you could earn by paying for a stay, to me, makes the value of transferring to Hilton even lower. Because in a lot of cases, you would be better off just paying for the Hilton property that you want to go to and earning points on it, rather than using points that you've either purchased or that you're getting from a transfer point. So I say no, don't do it. Those are some pretty compelling arguments, actually. Should I just go home now?

You should. You should just pack it in, Greg. It's done. It's over. 10 minutes early. All right. Let's address this. So first of all, Nick brought up the reasonable redemption value thing, and that's all true,

what he said. But what he failed to mention is that most of the airlines where we have reasonable redemption values are at about 1.3 cents per point. So if you sort of follow that logic, he's kind of saying don't ever transfer to airlines either. But I think that his real point is that you have a better chance of getting far outsized value, way above the reasonable redemption value from airlines, and that's fair. Now let's talk about the buying part. You'd be getting 1.3 cents per point value if you count the value of each Hilton point as half a cent each. Another thing that Nick didn't mention is that things

like LifeMiles often go on sale for 1.3 cents each. And he's never complained about the idea of transferring because, oh, wait, I could have bought the points for only 1.3, so I'm getting poor value for my Amex points. So both of those sort of counter those arguments, I think. And finally, I believe Nick has talked in the past about his Schwab Platinum card, which you can cash out points for 1.1 cents per point. And he's pointed out that if you're flush with Amex membership rewards points, you have way more than you need. It can make sense to cash out at 1.1. And I don't dispute that. What my argument here is, if you're flush with Amex points and you know you're going to be

staying at high-end Hiltons where you can get outsized value, then that's an alternative to cashing out because you're then going to get the points in a format where you're going to get way more value. So we've seen with SLH, small luxury hotels that Hilton partners with, that at least at the high end of those hotels, it's easy to get one cent per point value or more. And at one cent per point, you're talking about with this transfer bonus, you would have averaged 2.6 cents per point value with your Amex points, which is excellent. Right. And I think you'd find the same pattern with very high-end Hilton hotels as well, like the Hilton and the Maldives and so on. And so if your plan is to use these points at high-end hotels where the value is much more than 0.5 cents per point, I totally think it can make sense to do this.

The other thing I like about this is that it provides an alternative to Hyatt. We both love using our chase points, transferring those chase points to Hyatt and redeem purpose of booking high end hotels. 40,000 points standard for a Category 8 hotel, 65,000 points standard for an all-inclusive, and 50K, no, sorry, 65K standard for a Miraval, and 50K standard for an all-inclusive. So it ranges from 40K to 65K for standard rates, whereas Hilton, so they're very, very top tier 150K points for when a standard room's available. A lot of them, a lot of the high-end hotels go for 95K, and then there's a bunch more that are 120K. So the range I'm actually seeing when you convert that range, 95K to 120K to 150K per night for Hilton, translates when you divide those numbers by 2.6. It translates to 36K Amex points, 46K Amex points, 58k Amex points at the top end. So the range is actually slightly less than the Chase point range. So that's pretty exciting to me, that idea that we have another

program, especially because I find Amex points so much easier to earn in big quantities. There's so many huge signup bonuses and things. Finally, the other reason I like this is what I call the joy of free. And this goes against sort of logical argument. This is more about how it feels to use your points, right? I find that the more flexible points are when you have Chase Ultimate Rewards points, Amex Membership Rewards points that can be used in a lot of different ways, like Nick was talking about. Like you, if you have a business platinum card, you could use your points for 1.55 cents per point each to book paid flights, things like that. You could transfer to

a lot of different programs. Um, when a point program has lots of different uses like that, then it feels more like money. And when you go to spend that feels like money, it doesn't feel like free to me. And I don't know if everybody feels it this way, but that's how it is to me. But when you have something that can only really be spent in one specific way, like Hilton points, the only good way to use them is to book a Hilton or SLH or Auto Camp stay, then it feels more like free when I spend them. And, and, and again, like there's no, you, you can't argue that logically. It's just how it feels. And so it's more fun to, to, to get those awards for me. So, yeah, so, so I think that kind of sums up my argument for the transfer bonus. Did I convince you, Nick? You made a very good argument. Did you convince me? I'm going to say no, and I'm going to tell you why, but I think you made a very good argument. So I think really, at the end of the day,

we're going to say that it depends on your situation. And that seems like a cop-out, but it really does here. I'm going to tell you why you didn't convince me per se. It's because the examples you provided were Hyatt properties, a comparison between Hyatt and Hilton, where Hyatt properties cost 40 to 65,000 points. But for me, I rarely ever stay at a Hyatt that costs 40 to 65,000 points. Usually the high end of a Hyatt for me is about 25, 29,000 points. I don't very often stay at a category eight. There just aren't very many of them. And even though there are, I would never pay the 65K for a Mir ball. It's not me. So, so I'm looking at more of a comparison point of like 25 29,000 for a really nice Hyatt that does get you a pretty nice Hyatt in a lot of places. And and then when I look at

Amex points, and I say, well, especially the second couple of levels, you mentioned there 46k 58k, I'm looking at a business class ticket to Europe, can I pay a business class ticket to Europe for a Hilton property, like one night at a Hilton property and the same cost that it would cost me to get to Europe in business class. I have a hard time parting with the same number of points that I could get a great flight redemption like that for. And I can see some people saying I'm nuts because I'm only going to be on the flight for a few hours. I'm going to be at the hotel an entire day. So I think that that's why I say it probably depends on your perspective. The one thing I really totally agree with Greg on is that it is really easy to amass lots of Amex points. And so that does put, I think,

a lot of people in a position where if you've got a ton of Amex points, this is not an unreasonable value. Just myself, just the other day, I was in my Amex account and I was looking at all the available business cards and I had an offer for 250,000 point welcome bonus on a business platinum card. And I already have a couple of business platinum cards, but it was there in my offers. So I said, well, let me just see, let me hit it. I hit accept offer and it went through and I got approved for the card. So very easy. And I'm going to be able to hit the spend on that because I had some large expenses coming up. So if I took that 250,000 point welcome bonus and I transferred it to Hilton, if I were to get the points in time and transfer with this transfer bonus,

I'd be talking 650,000 Hilton points. Uh, that's a pretty amazing bonus for, for, you know, a single car that blows the aspire card out of the water, which has a slightly less annual fee than the business platinum card, but not that much less, not enough less for the difference in price or difference in welcome bonus size. So I mean, that would be a massive, there was a Hilton card that offered a 650,000 point welcome bonus, like the internet would break, right? Everybody would be like, oh my goodness, this is incredible. We've never seen anything remotely like this. So when I look at it that way, I say, yeah, maybe Greg's right. Anyway, I think, Nick, I think you had great points too about my examples are based on the top end of

the scale and Hilton doesn't seem to do as well as far as the point pricing being good as you come down a bit in the luxury level of the hotel. then all of a sudden that's when you start seeing those, you're only getting half a cent per point value for your stays. And then it's not as attractive. I think maybe, you know, maybe at the very bottom end you might get value against, but there's not a lot of that, at least in the United States with Hilton, whereas Hyatt has a lot of those category ones. So yeah, that's all good. And I absolutely believe what Nick said that there's no one answer for everybody. I think we both make good arguments. I'm actually not going to do this transfer bonus. The reason is that we do see them come by, come around about twice a year.

And I have enough points for a luxury five-night stay if I encounter a need for that. And so I think I have enough Hilton points right now for what I need. And I'm willing to wait and see if maybe a 40% transfer bonus or even 50% might come around again. And then I would definitely jump on it with either of those.