Paid Vacation Rentals Vs. Rooms Bookable on Points, Plus Opportunity Cost

Last week, I wrote a post on some hotel points options for a family of 6. In it, I suggested getting a room with bunk beds for 4,500 SPG points per night on weekends. I got an interesting comment from Erik, and wanted to share an excerpt. He’s provided a lot of valuable insights before, and I think you’ll find this advice useful as well:

“Family of 6 to Orlando? I would totally recommend one of the timeshare resorts because they will have more space (1, 2, or 3 bedroom units available) plus laundry and a kitchen, which is great for saving some dough. There are two Starwood properties, Sheraton Vistana Resort and Sheraton Vistana Villages. You can use Starpoints, but I would check the special “without daily housekeeping” rates at http://allears.net/acc/faq_hot.htm because you can get some great bargains, especially in the slower months.”

I actually agree with this advice completely. It is SO much better to have a rental with a separate bedroom space. I really don’t like shoving all 4 of us in one hotel room. So, why I did I suggest this SPG property? So that the family can save cash. They already have the points, and are on a tight budget. IMO it makes sense to go this route, and represents a good  redemption. SPG points aren’t as valuable to a family of 6 as they would be to a single individual or a couple. Why? They don’t transfer to Southwest or any other revenue-based airline program. It seems like “bird in a hand” approach makes sense in this particular situation.

That said, I am absolutely not opposed to paying cash for rentals. In fact, I’ve even put together a list of some sites you may want to follow  The other day, I got an email from my reader Audrey who sent a link to  amazing Florida bargains on Sky Auction. Some you have to bid on, and others you can  purchase outright. This could be a terrific option for those who can commit to specific dates. It’s not unheard of to find a 2-bedroom rental in Orlando for only $200 per week. Even if you stay  4 nights, it’s quite a deal.  In return, you forego flexibility/ option to cancel, a fair tradeoff, in my opinion.

Update: Audrey has added some additional advice on Sky Auction in the comments section:

“While people may be leery of skyauction, I have used them many many times and gotten amazing value. You have to read fine print however! It’s worth noting that if you buy an auction with an expiration date (good through a certain date) that is flexible (not valid only one particular day/week) and your dates aren’t available, they will refund the auction.

At least that has been my experience, though their policies can always change. Also it’s worth calling if time is short as you can actually get a person to help, and sometimes override the minimum booking time frames. I know the deal mommy also is a fan of skyauction, they are really worth checking out.”

Talking about opportunity cost…again

I always encourage readers to explore various options and not get hung up on only using miles and points. It’s very easy to get trapped in “I got that Hyatt for free after  using only 25,000 Ultimate Rewards!” mentality. At the risk of sounding like a broken record, this isn’t free, never was free, and cost you at least $250. The fact that you may have obtained those points via sign-up bonus is irrelevant.

By definition: “In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. Assuming the best choice is made, it is the “cost” incurred by not enjoying the benefit that would be had by taking the second best choice available.” So, when you “take” Hyatt points via transfer from Ultimate Rewards, you are foregoing real cash.

I’m an opportunist, and I’m darn proud of it!

When it comes to this hobby, I’m very much an opportunist. I’m not loyal to any hotel chain or airline. Based on my posts, someone may wrongly conclude that I am anti-Hyatt. Far from it! In fact, I just got Chase Hyatt Visa and will probably keep it for its renewal perk. Why? I’m all for staying at a  category 4 Hyatt for $75 per night (taxes included) in high season. It’s transferring 15,000 Ultimate Rewards points that is too rich for my blood.

My favorite hotel chain is Marriott, but we rarely stay in one.  To me, the value just isn’t there most of the time, so I compromise and  stick to wacky IHG program. We were  able to collect a good amount of IHG currency via various lucrative promos, and their annual renewal certificates are good at any property.

Yay or Nay to Marriott card?

Speaking of Marriott, while most of their promos are usually “weak sauce,” the sign-up bonus  on Chase Marriott Rewards Premier credit card (pays me referral) is certainly worth considering if you have specific plans to stay in their lowest category properties (see chart here) For a limited time, you can get 80,000 points after spending $3,000 in 3 months. Annual fee of $85 is not waived. This offer is actually worse than it used to be, as in the past, this card came with a free category 1-4   certificate, and annual fee was waived.

The sign-up offer was  70,000 points, but 10,000 extra points are not worth $85+ free night. Is the old bonus ever going to come back? Who knows? I certainly don’t. But 80,000 points can go far if you play your cards/points right. Let’s say you’ll redeem them for category 2 hotel (10,000 points per night). Since you get every 5th night free, the bonus alone could be good  for 10 nights. That is nothing to sneeze at. Of course, it depends on your vacation plans, budget and how much you love Marriott.

Value of hotel points is probably the most subjective territory there is. It’s not like Chase Sapphire Preferred. Pretty much everyone agrees that its sign-up bonus is “da bomb.” Especially those of us who make commission on it.  Heck, even cats seem to dig it!

All joking aside, the reason it’s universally recommended is because points are flexible and you don’t have to commit to one specific currency at the time of application. Plus, since Chase has tightened  approval criteria for its own branded cards (including CSP), it’s just one more compelling reason for freshly recruited hobbyists to consider it. But email me when the renewal time comes so I can  talk you out of it!

The pursuit of value

When it comes to travel, what I do is try to look for value and reduce my out-of-pocket expenses as much as possible. It’s a  tricky balance, as you want to buy low, sell high. But how high? Only you can answer that question.

I’ve written how we redeemed hotel points for 3 rooms before when taking a vacation in St. Simmons island, GA. It made sense to do it that way and to me, represented decent value. Of course, your definition of value is probably different from mine. This hobby is highly subjective, and there is no “one size fits all.” How do you value privacy? The amount will be different for everyone. Now, having a kitchen probably does have a tangible value, but only if you will be there enough to use it.

There are many factors to consider here, the most important one being how much you currently have in your savings account. If you look at sign-up bonuses, there are very few that offer decent amount in cash. In contrast, there is a plethora of miles and hotel points bonuses. I view it as an issue of supply vs. demand. Currently we have a limited amount in savings (supply) and lots of travel plans (demand). When I have a chance to replenish my supply  by signing up for credit card bonuses, I take it. To me, flexibility is very important, so hotel points are my first choice when looking for lodging.

Additionally, there are many sites that cover paid budget  options. I’ve said before that I’m not a “travel,” but “miles and points” blogger.  I’m absolutely not ashamed of it, and travel is why I collect miles and points in the first place.  I think it’s important to present readers with various options and let them make their own choices. Oh, and to encourage them to always take into account opportunity cost.

Click here to view various credit cards and available sign-up bonuses