An OMAAT reader asked me a specific question about the concept of redeeming points and splitting expenses when on a friends trip. While I shared my take on his specific scenario (and he asked to remain anonymous), I thought it would be interesting to address this topic more broadly.
The premise is simple — say you’re taking a trip with family or friends, and you plan to split expenses. If you have hotel points or airline miles and book a portion of the travel for everyone with those (rather than cash), how should that be accounted for when it comes to everyone paying their fair share?
Should that be viewed the same as paying cash for that portion of the travel, or are points just a “free” reward that you should share with friends and family, which shouldn’t otherwise be accounted for?
In this post:
The complicated psychology of points as a currency
Points are a form of currency, plain and simple. Fortunately they’re not taxed if earned as a reward for something, but there’s almost always an opportunity cost to both earning and redeeming points.
For credit card spending, you’re typically forgoing at least 2% cash back if you’re choosing to earn travel rewards. Meanwhile many of us outright purchase points, at a direct cost. For that matter, I pay income taxes by credit card for a fee, as I find it to be a worthwhile rate.
If you’re anything like me, you have a specific valuation for each points currency, and are deliberate with when you’ll redeem points, whether it’s for airline tickets or for hotels. In my household, Ford knows that one of the best ways to get under my skin is to claim that points are “free,” and to ask me to redeem non-saver awards, or at a bad value, because points aren’t a currency (that’s one battle I won’t let him win!).
There’s also no denying that the psychology here is a bit complex, and many people do view points as a “free” reward that they should use whenever possible. Like, I don’t blame those people, because for a lot of folks, miles & points aren’t the center of their world… fair enough. 😉
For example, I always like to treat my family to travel whenever I can, as it’s one of my love languages, and I refuse to let them pay anything. But whenever I traveled with my late mom, I’d always have to lie to her and tell her that I redeemed points for our travel, as it’s the only way she wouldn’t feel guilty. If I said I paid cash, she just refused to take the trip, but if I redeemed points, she was much more okay with it (though she’d also always ask how many points I’m redeeming, without having much context for the relative value of currencies, heh).
I think travel “trading” with points is mostly fair
If you’re taking a trip where you’re splitting expenses, I think it’s totally fair that travel booked with points would count toward someone’s “share” of covering expenses. Now, everyone will take a different approach here, but I do think there are some additional considerations.
For one, you should use a reasonable valuation if you’re redeeming points for travel. In other words, if you’re taking a trip to Europe with a friend and redeem points for you both to fly business class, you shouldn’t expect your friend will then drop $15K on hotels, if that’s the retail value of those business class tickets (because it’s unlikely you would’ve paid that much if cash were the only option).
Meanwhile if you redeem 40,000 Delta SkyMiles for $500 worth of economy tickets for you and a friend, I don’t think it’s unreasonable to have your friend offset that by covering around $500 worth of hotel stays.
I tend to think that if you’re redeeming points, you should be on the generous side when it comes to the approach you take, and perhaps apply some sort of a discount, just so everyone feels good about the situation. Like I said above, the perception people have of points certainly complicates things.
I also think this goes both ways, and if you’re splitting the cash cost of a hotel room and one person earns points and elite nights, it’s not unreasonable that they’d pay a larger share of the cost, since they’re also benefiting from it more.
Like I said, personally when I book travel for people with points (whether they’re traveling with or without me), I always view it as a gift, and it’s the area of my life that I’m most generous with. For family and close friends, it’s the least I can do…
Does this violate airline & hotel loyalty rules, though?
Almost all airline and hotel loyalty programs have rules against buying, selling, or bartering points. So some people might wonder if you’re actually violating rules if you are traveling with a friend and you use your points for flights, while they pay cash for hotels, and vice versa.
I mean, I’d say that technically this constitutes bartering, as you’re exchanging goods or services without using money. That being said, that’s not something I’d personally be too worried about, as there’s not really a trail here that airlines or hotels could follow, and I’m not sure this really violates the spirit of programs.
It’s way different than selling miles or points to a stranger, which is a huge underground industry. Technically, I suppose you’re also bartering if you make an agreement with your child that you’ll take them on a vacation if they get good grades in school, and then redeem points for it. But it’s also something that’s unlikely to get you in trouble.
Bottom line
Nowadays many people fund their travels with miles & points, in order to cover flights and hotel stays. For many friends and family trips, people split costs, so as you’d expect, points add an extra layer of complexity to things.
I absolutely think it’s fair for travel paid with points to be considered similar to cash when it comes to splitting expenses. Points consistently have either a direct cost or opportunity cost.
That being said, I do think it’s important to be reasonable. If you redeem 100,000 points for a first class ticket that would retail for $10,000, don’t expect your friend to be on the hook for $10,000 worth of hotels. Instead, if points are involved, I think it’s worth being on the generous side, or at least, not going over the top with accounting for the value of those rewards, especially if you’re splurging on more luxurious travel than you’d have if paying cash.
Even when being reasonable, this does sometimes lead to “bad blood” between people, especially for those who insist that points are in fact a “free” currency.
Where do you stand on splitting travel expenses when points are involved?
‘Fair’ is whatever you negotiate, ideally, in-advance. Some prefer 50/50. Others like to ‘barter’… never trust an I.O.U. unless you want to become an amateur bounty hunter.
Best approach is to just book the travel separately. So I redeem points for my ticket, they use cash for their ticket. Quite often that means I go on vacations with friends where I'm in J and they're in Y. Same applies for hotel rooms. Obviously coordinating to make sure we're on the same flight itinerary and staying at the same hotels. That just leaves things like car rental which is usually a cash affair anyway.
I pay for one hotel night, she pays for one. Simple.
Trying to find an EXACT value extracted from the loyalty points is going to be tricky-to-impossible. I just do a heavily discounted "your share of the _____ is _____". Otherwise just do a bartering system, like "I cover this, you cover that."
Also the intention and the audience matters: Is the other person heavily invested into the same game? Is the redemption mainly to save money or to have an amazing experience or to like...
Trying to find an EXACT value extracted from the loyalty points is going to be tricky-to-impossible. I just do a heavily discounted "your share of the _____ is _____". Otherwise just do a bartering system, like "I cover this, you cover that."
Also the intention and the audience matters: Is the other person heavily invested into the same game? Is the redemption mainly to save money or to have an amazing experience or to like return a favor?
Every one of these "deals" is different, it requires nuance and negotiation.
I do this a fair amount when traveling to support our local soccer club for away matches. I typically get the hotel/economy flights (but not always, depending on points cost, availability, timing, ext). They typically pay for rental cars, gas, food. It probably doesn't even out but I don't really care. The experiences are worth it.
It can get awkward quickly if your travel habits a different. If I like business class and my friend always travels in economy, it’s unlikely that he or she would be happy to pay anything near or even half the business class retail ticket price. On the other hand it will be strange to travel in different classes.
I usually ask my friends to cover one part of the expenses (let’s say meals or some hotel) for which I know it’s within their financial means.
I traveled and shared a room with a friend who redeemed one of those hotel free night stay coupons that you get with the annual credit card membership fee. Now, I know there are different feelings about whether this was "free" to him or had some value that he was cashing in (or even whether he would've used the coupon at all and gone to waste otherwise).
In exchange he seemed to expect...
I traveled and shared a room with a friend who redeemed one of those hotel free night stay coupons that you get with the annual credit card membership fee. Now, I know there are different feelings about whether this was "free" to him or had some value that he was cashing in (or even whether he would've used the coupon at all and gone to waste otherwise).
In exchange he seemed to expect that I cover all the rest of the stuff like restaurant meal, etc. I thought that was a little bit one-sided since the coupon hadn't really costed him anything. But I wasn't going to make a big deal out of it either way.
So I asked him, you propose how we split the actual costs and the valuation of your coupon, i.e. how much I would pay towards the overall trip cost. And that will be the principle we apply to future such endeavors. (i.e. how we'll plan or value the next one)
That seemed to be a sufficient approach to have him "fairly" decide.
Just got back from a visit to German Christmas markets. Bought her a one connection flight with points (and upgraded her) and she paid me what she would have paid for her 3 connection flight. I paid for the first four nights for everyone with points, she paid for the last three nights for everyone. Seemed like a reasonable compromise
This was for my sister
I understand not $10k for hotel but what about $5 because I would pay $5k for said ticket. When valuing points, I would nearly always pay at least 60% of retail first.
Say you book a 2-night stay at a luxury hotel on the Chase Travel portal for $750 and plan on sharing the room with a sibling or a friend. But you received a $300 travel credit and a $250 Edit credit since you used your Sapphire Reserve card. How would you split the cost? Or would you?
Does your sibling or a friend spilt the cost of your CSR annual fee?
The question is would the two of you booked this hotel or a hotel in the similar price range if there weren’t on the list qualifying for the credits?
If not, the credits should not be valued at face value.
“I’ll get the flights, you pay for the cocktails”
If I'm in a situation where splitting the cost of a room or whatever is expected, I just try to be generous with the valuation. As an example, I'd charge someone 1cpp for their half of a room if they were going to pay me for half of a Hyatt room that I booked with points. If it's appropriate to treat it as a gift that is fine too, but most people seem more comfortable paying something.
It doesn't really matter whether points redemption are "free" or not. You're still giving something of a value to the other person so it's okay for them to pay for it. This may be whatever the cash rate would be, if it's something we'd book anyway and I'm just using a different currency, or some made up lower price if it's a treat we wouldn't otherwise pay for. The key is to always agree on the terms before booking :)