Club Carlson Conundrum: Award, Revenue, Or Mix?

Travis is my first new contributor to the blog, who will be writing a post every Wednesday to start. The idea behind adding guest contributors is to add different perspectives to the blog. Travis has a unique approach towards travel, given that he travels almost exclusively with his wife and young children, which is in stark contrast to my travels, which are usually alone.

Ben recently wrote about the Q1 2015 Club Carlson Extend Your Stay (EYS) promotion where you can earn 30,000 bonus points for a 3+ night stay or 15,000 bonus points for a 2-night stay. Some are calling it the best hotel promotion of the first quarter. It caused me to break out the spreadsheet to determine how best to play this.

I usually don’t hesitate to spend Club Carlson points since my family is blessed with six figure balances in the program after having capitalized on some past promotions. My wife and I have the Club Carlson Premier Rewards Visa Signature® Card, so the points effectively go twice as far. But this promotion has the potential to be lucrative enough such that I could choose to spend some money. Scary, I know.

The decision in question involves our upcoming trip to Copenhagen. We considered two Radisson properties, Blu Royal and Blu Scandinavia. We had previously settled on Blu Scandinavia so I will use those numbers for my analysis.

The rest of this post is going to be relatively math intensive. My hope is that it gives you insight into how I evaluate deals and promotions. But it might make your head hurt. You were warned.

These are the facts for the analysis:

• My wife and I both have the Club Carlson Visa so we can book back-to-back stays and get four award nights for the price of two.
• I was targeted to receive an extra 10,000 points for early bird registration in the EYS promotion.
• Our stay is Friday-Tuesday, making us eligible for the 2 for 1 rate, but not the 4 for 2 rate.
• The Radisson Scandinavia costs 44,000 points per night.
• I earn 20 Carlson points / dollar for the stay.
• The rates for Scandinavia for my nights are:
  • Friday:  $144
  • Saturday: $149
  • Sunday: $135
  • Monday: $151

These are my assumptions:

• This will be my only Carlson stay during the promotion period.  (ie. if I don’t claim the 10,000 early bird bonus on this trip, I won’t get it at all).
• I will have the same chances of getting a suite upgrade for free, regardless of whether I book on points or revenue.
• The room type, Gold benefits, etc. will be the same between an award and revenue booking.
• I’m not going to include the benefits of paying with a credit card.
• The Gold member 2 for 1 rate will post as a 2-night stay.  (This is very much uncertain.)  [Added:  1/23/15]

Based on these facts and assumptions, what would you do? (If you want to build a spreadsheet, now would be a good time. We can compare our answers at the end.)

Booking Options

1. Book back-to-back 2-night BOGO award stays at 44,000 points each.  I will consider this the default option for comparison.
2. Book the 2 for 1 rate for the first two nights, then the regular rate for the last two nights.
3. Book the 2 for 1 rate for the first two nights, then book a BOGO award for the last two nights.
4. Book the 2 for 1 rate for first two nights, regular rate for the third night, and then an award night for the last night.

Methodology

In each case, I will explain how I pay for the rooms each night — either revenue or points — and call that the spend. Then I’ll calculate the points that I will earn, both from the stay and the EYS bonuses. Since sometimes I’ll be both spending points and earning points, I’ll calculate the net effect on my points balance (and wallet) and call this the result.

Then I want to compare the result from each option to the result of the default case. This is because the default is what I was planning to do before this promotion was announced. So I want to see how each option impacts my account balance and wallet in relative sense. In general, these options involve spending some money in order to both save and earn some points. That’s essentially the same as Club Carlson giving me the option to buy points, so I’m most interested in the rate at which I’m buying those points.

Finally my convention is to denote anything coming out of my wallet or points account as a negative, and anything going into my account as a positive.

Clear as mud?

Default:  Book 4-Nights With Points

The first case I listed is the default, the “comp”, or the benchmark for comparison in this analysis. That’s because before Carlson announced this promotion, I was planning to book this stay on points. This means we can’t argue with the original decision — it was made exogenous to this analysis.  (But honestly, it is a pretty decent redemption at 0.6 cents per point.) By making this the comp, I can compare the other options to it, both in terms of dollars spent and points (spent) earned.

The Radisson Scandinavia is 44,000 points per night. Since my wife and I each have the Club Carlson Premier Rewards Visa Signature® Card, I can book Friday and Saturday nights and then my wife can book Sunday and Monday nights. Each of us would get a free night on our award reservation meaning we would actually only pay 44,000 × 2 = 88,000 point for the four night stay. I refer to these as BOGO nights, as in you Buy One Get One.

The total spend for this option is $0 and 88,000 points.  It earns 0 points.

Spend: –88,000 points  (-44,000, 0, -44,000, 0)

Points Earned: 0

Result: $0; -88,000 points

As an aside, this would be about a 0.6 cent redemption in it’s own right, but that doesn’t really factor into the analysis here.

Option 1:  4 Revenue nights, Including 2 for 1

Club Carlson has a unique 2 for 1 (and 4 for 2) rate available to Gold members staying in Europe, the Middle East, or Africa (EMEA) over a weekend. Loyalty Traveler does a nice job explaining it. For the 2 for 1 rate, you need to be staying either a Friday or Saturday night while the 4 for 2 rate requires either a Wednesday or Thursday night. Since we are staying Friday-Tuesday, we could book the 2 for 1 rate from Friday and Saturday nights, but not the 4 for 2. We also cannot book back-to-back 2 for 1 rates from my account and then my wife’s account. (I tried that.)

I’m assuming that that 2 for 1 rate qualifies for the EYS promotion. The part that I’m unsure of is how to combine a 2 for 1 rate for Friday and Saturday nights with a regular rate for Sunday and Monday nights. The website doesn’t seem to allow this — if I search Friday to Tuesday using the 2 for 1 offer code, it reverts back to the regular rate for all four nights. But for the purposes of this analysis, I’m going to assume that if I were to call, an agent could get me the 2 for 1 rate for Friday and Saturday and then the regular rate for Sunday and Monday, and do so all on the same reservation. I’m also assuming that such a 2 for 1 rate combined with 2 regular nights would qualify for the EYS 30K bonus.

The spend in this case would be $144 + $0 + $135 + $151 = $430. (Note that the terms of the 2 for 1 offer are such that you pay for the first night and get the second free, regardless of which is more expensive. In some cases, that can be beneficial, but for me it is not since Friday is more expensive than Saturday. Oh well.)

The stay earns 20 points per dollar spent (8600points) and then a 35% Gold member bonus (3010) for a total of 11,610 points. The four night stay would then trigger the EYS 30,000 bonus since it is 3+ days, plus the 10,000 early bird bonus for a total of 51,610 points.

Spend: –$430 ($144 + $0 + $135 + $151)

Points Earned: +51,610 (11,610 stay + 30,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$430; +51,610 points

Result Relative to Default: -$430; +139,610 points

The result relative to default is the difference between the result in this option and the default. With this option, I spend $430 out of pocket more than the default (where I spend $0), but I also earn 51,610 points instead of spending 88,000 points. That’s a huge swing of 139,610 points.

With this option, I am effectively buying 139,610 points for $430, or 0.3 cents / point.

Option 2:  2 for 1 Rate, BOGO Award

This option is a hybrid of the first two. I would book a 2 for 1 rate for Friday and Saturday nights, and then use a BOGO award for Sunday and Monday nights.  This should trigger the 15,000 EYS bonus as well as the 10,000 early-bird bonus.

Spend: –$144 – 44,000 points  (-$144 – $0, -44,000 – 0 points)

Points Earn: +28,888 points (3888 stay + 15,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$144; -15,112 points

Result Relative to Default: -$144; +72,888 points

With this option, I am effectively buying 72,888 points for $144, or 0.2 cents / point.

Option 3:  2 for 1 Rate, Regular Rate, Award Night

This option utilizes the 2 for 1 rate for Friday and Saturday nights, a regular revenue rate for Sunday night, and a one night award on Monday night. This should trigger the EYS 30,000 bonus as well as the EYS 10,000 early bird bonus.

Spend: -$279 (-$144 – $0 – $135 – 44,000 points)

Points Earned: +47,533 points (7533 base + 30,000 EYS bonus + 10,000 EYS early-bird bonus)

Result: –$279; +3533 points

Result Relative to Default: -$279; +91,533 points

With this option, I am effectively buying 91,533 points for $279, or 0.3 cents / point.

Conclusion

So what should I do?

Each of the options effectively gives me the opportunity to purchase Club Carlson points. Option 1 allows me to purchase points at 0.3 cents / point.  Option 2 allows me to purchase points at 2.0 cents / point.  And Option 3 allows me to purchase points at 0.3 cents / point. Since Ben values Club Carlson points at 0.4 cents per point, these are all generally good deals.

But Option 2 appears to be the best deal as it allows me to purchase points at 0.2 cents / point.

This analysis shows that through the Club Carlson Extend Your Stay promotion I have the option of buying 72,888 points at 0.2 cents / point. Assuming that I agree with Ben’s valuation of Club Carlson points at 0.4 cents / point, I should be willing to buy Club Carlson points at this rate any day of the week!

From purely rational economic arguments, I should do Option 2 and buy the points. I probably will.

What answer did you come up with in your analysis?