You’re Doing It Wrong: Buying Hotel Certificates

This is really a warning against 90% of the Daily Getaways promotions that are coming up. Most are deals that are opportunities to spend more money than it would be retail for something you can’t use.

Especially the Omni one, which I’ll talk about.

But daily getaways isn’t the only one selling hotel certificates (with vague blackout dates) as bad deals.

Even Hyatt has been sending me an opportunity to buy a two night package in Cancun for the same cost as retail, but knowing a large percent of the population will let it expire. Actually, hotels all over Mexico and the Caribbean are willing to sell you “free nights” that expire soon, are impossible to use, may have a fee to use, and require you to sit through a painful timeshare presentation.

But even assuming best case scenario, buying free night certificates is generally a bad idea.

This post is an analytical look at why it’s a bad idea and how to do better, as well as teaching the principles in why I try to remember not to get sucked into thinking any hotel cert is a “deal”. I’ve learned the hard way, many times.

 

I love the annual free nights you get from credit cards

First, I want to clarify between certificates that are designed to be usable and ones that are not.

1) Those certificates are usable at a ton of hotels. The Marriott category 5 certificate can be used at over 6,500 hotels! Even the much smaller chain, Hyatt, has over 750 hotels bookable with their annual free night certificate.

2) They are easily usable online, and you can search for availability ahead of time, and not get surprised by it after booking.

3) They last at least a year.

 

I’m wary of hotel certificates that have expirations shorter than a year, are only bookable at a few hotels, you can’t book online, and you can’t see availability ahead of time.

 

But the other thing is that it usually has a very clear value above the costs. In my post on Best Use of Marriott Cat 5 Certificate, I lay out a long list of Ritz-Carlton and St. Regis hotels.

There are many examples of hotels that would otherwise cost $250 or $300+ a night.

All these things increase the likelihood that I’ll get a valuable use.

 

Time increases my chance of use, the number of hotels increases my chance of use, and ease of booking increases my chance of use.

 

The Opposite Of Usable

I think it was two years ago that I bought an Omni free night certificate assuming that it lasted one year, when in fact it expires at the end of the calendar year – barely 7 months to use it.

Omni has a very limited number of hotels at which you can use each cert as well.

 

Blackout Days?

My second favorite example from the current offering on DailyGetaways is Loews Hotels certificate with the following disclaimer: “Reservations are based on availability and/or blackout dates.”

Okay… So I went to the Terms & Conditions to look up the blackout dates…

There was nothing in the terms about finding availability nor blackout dates, at all!

The only thing it says they will send a letter with booking instructions!

 

An Obvious Increase In Value

Now, my absolute favorite example of a terrible “deal” is anything involving “free nights” in Vegas.

Let’s look at this offer:

$1,400 for 3 nights at Caesar’s Palace.

 

Just as a side note, we recently stayed here and I even booked a room for my father-in-law as well… for free. Not and points. Just free. There was a promotion to reward TotalRewards members, or possibly they automated giving “comps” out to gamblers… And even though my account accurately reflected that I haven’t gambled a dime, I still got free nights at a Caesar’s Palace.

 

How much is this offering worth?

First, I decided to check that weekends are more valuable on average, and then decided to look up the price for every single first 3 day weekend of the month (Thur – Sun).

Here were the prices for the lowest level suite:

• July 4: $249
• Aug: $226
• Sept: $287
• Oct: $298
• Nov: $335
• Dec: $253
• Jan: $204
• Feb: $307
• Mar: $274
• Apr: $307

That is an average of $274 a night, and a maximum value of $335 (assuming the best weekends aren’t “blackout dates”).

Most likely, your 3 nights would be worth a total of $822 (and a maximum value of $1,005).

 

Plus, you get $200 in dining, which I have a hard time counting at full value, because you didn’t have to eat there. But they have good restaurants and I’ve no doubt someone would get the full value.

 

Think about this.

You could buy a certificate for $1,400 that will expire, has unknown blackout dates, and booking is still unclear.

OR, you can book the same hotel anytime you want as you need it… until you die! And you can check prices and availability ahead of time. Or you could check someplace way nicer, like the Mandarin Oriental, which would likely be cheaper.

Just as I mentioned on my last You’re Doing It Wrong on Hotel Loyalty, you lose optionality, which almost certainly means you pay more.

There are always deals in Vegas. In fact, there is a FlyerTalk thread on Vegas Deals.

 

You’re losing optionality in every way. For example, you lose the option to book two nights and then go to Zion National Park and then come back for another night.

 

This is one of the many reasons I need flexibility and an increase in value.

So very often I find hotel deals before my stay and I cancel my original hotel, or more likely, I just didn’t book a hotel until I see a deal. (Also, most certs aren’t cancelable).

If I couldn’t use my Marriott cert at the Marriott I intended in Hong Kong because a crazy deal came up, I could later use it at thousands of other hotels.

Here, I lose that and lock myself into a deal. And I never do “prepaid” rates unless it’s a killer deal. Why would I do it for a mediocre to a bad deal?

 

Designed to Expire

The reality is that the example above is so bad that I think DailyGetaways should be ashamed to promote. That’s just my personal opinion, that they should care they their clients aren’t getting completely ripped off.

However, getting ripped off is the nature of these certificates.

There are now laws around buying a gift card in not letting it expire in 5 years. The government determined that this is otherwise a racket that deceives customers.

 

Yet, if you make it a “free night certificate” instead of a “gift card”, suddenly you’re allowed to have it expire in 7 months or a year. I truly believe this too is unethical and likely designed with ill-intent.

I truly don’t know how the laws around “gift certificates” work.

 

Similar to gift cards, I’m guessing a lot of these certificates are partially used. For example, many find they can only use two nights instead of three and still book it because otherwise, it will expire.

The percent of gift cards that expire with value is very high, and the percent of “lost” cards is still high at near double digits… and those expire at 5 years and you can use them as easily as cash.

 

If you’re going to factor the money you’d “save” with a certificate (assuming you’d save any in theory), you should also factor in the odds of using it. Most night certificates I see have way fewer hotels to redeem at than the big chains.

 

Why Buying Points Is Better (not that you should)

Loews is one of the few certs for sale that actually has hotels you can redeem with a nightly value double the cost of the cert. Meaning, there are Loews hotels over $300 a night listed on the certificate that is $275 for two nights. That, in theory, is a great value.

You can also buy points where values are double, but you can mostly indefinitely keep the points from expiring.

You can use them at thousands of hotels instead of a few, or even a single hotel!

 

As I wrote recently, you can still earn a ton of IHG points with IHG promotions.

I also recently wrote 9 Ideas For Getting Hotel Deals. I mentioned that post the other day when talking about our Switzerland trip because we got a suite in Interlaken, Switzerland for $58 because it was otherwise going unused.

 

Why I don’t mind the fact that credit card nights expire.

As I’ve already mentioned, you are way more likely to use big chain certificates with thousands of options… because there are more options (plus the expiration isn’t 7 months, and it’s clear how to book).

But I’d also like to contrast this to the annual “free nights” you get from the credit cards because you also keep the card for access to the deal or deals.

Many cards have status that come with some passive benefits like the Hilton card allows you to book the 5th night free. The card could allow you to keep your points from ever expiring, just by using it once a year. And also you can continue to get the free night certs.

 

Conclusion

There are plenty of ways to get hotel deals. Why in the world would you buy a certificate that can only be used at one hotel and will expire soon when you can just book a hotel for cheap?

 

The obvious reason would be if you had a specific use in mind on a date you can check is available and isn’t a blackout date, and has a good value.

If you haven’t picked out your hotel and date and verified availability, then you certainly shouldn’t get something that may expire soon.

 

But overall I think the pros and cons are clear.

Pros:

• You may save money.

Cons:

• You lose the ability to jump on a better deal (therefore costing you more money).
• It may expire (total waste of money).
• Your dates may be blacked out (total waste of money).
• You lose optionality in general.
• The hotel might not be cheaper on those dates anyway.

It seems clear to me that these certificates are in general a very bad deal.

 

In the end, this is a passionate and experienced plea to you and to remind myself: be very slow to buy limited and expiring certificates. It works out less often than it doesn’t.