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?
Went to South America with my two best friends. I got great joy in treating them both to round trip business class with points for their first times. They covered the minimal award taxes and fees, and we split hotel and other cash costs equally.
Would do it again!
I have the mindset of not expecting anything from whoever I travel with. Granted, I have a VERY SHORT list of friends and family members who I will travel with but so far, sharing expenses has not really been a big part of conversations. If I use my miles or points, whoever I am traveling with has always proactively paid for other expenses like meals or transport. From my perspective, the friendship or relationship is...
I have the mindset of not expecting anything from whoever I travel with. Granted, I have a VERY SHORT list of friends and family members who I will travel with but so far, sharing expenses has not really been a big part of conversations. If I use my miles or points, whoever I am traveling with has always proactively paid for other expenses like meals or transport. From my perspective, the friendship or relationship is more important than deciding how much my co-traveler/s should pay for. For me, the beauty of travel is the opportunity to enjoy new experiences with another person or a group of people. I wouldn’t travel with anyone in the first place if I don’t think I will enjoy his/her/their company or who is so inconsiderate that they will not proactively pay for anything.
when splitting hotels and flights with travel companions, you are splitting the "product", not the "cost". if we agreed that i provide flights and they provide hotel stays, then it's irrelevant how i paid for the flights or how they paid for the hotel. the question of "fair" or "method of payment" should've never entered the conversation even once. the best solution is to NOT share at all, we are all responsible for paying our...
when splitting hotels and flights with travel companions, you are splitting the "product", not the "cost". if we agreed that i provide flights and they provide hotel stays, then it's irrelevant how i paid for the flights or how they paid for the hotel. the question of "fair" or "method of payment" should've never entered the conversation even once. the best solution is to NOT share at all, we are all responsible for paying our own flights and hotel, why are you sharing hotel with friends anyways? we are adults not high school toddlers, sharing hotel or living space is not remotely acceptable, for the same reason no one should still live at home with parents and siblings as an adult. grown up people value privacy and personal space over money.
Another simple mindset person.
How do you split the "product" in half?
How do you split different "product" equally?
Not even getting into traveling, but you probably always eat alone.
Otherwise [the question of "fair" or "method of payment" should've never entered the conversation even once.] should ALWAYS enter the conversation at least once.
This is very simple for a guy who taught cost allocation methods. If the trip would be $10K in cash, and I use points/miles to get the cost down to $6K, we still each should "pay" half the $10K, or $5K. You pay $5K, and I pay the missing $1K. If I use enough points/miles to get it down to $2K, you pay $5K, $2K to the "trip" and $3K to me. I have few...
This is very simple for a guy who taught cost allocation methods. If the trip would be $10K in cash, and I use points/miles to get the cost down to $6K, we still each should "pay" half the $10K, or $5K. You pay $5K, and I pay the missing $1K. If I use enough points/miles to get it down to $2K, you pay $5K, $2K to the "trip" and $3K to me. I have few friends, obviously if you'd knew me, but every one of them would agree this is fair. But, human behavior is tricky, so redeeming to get it to $6K and holding on to the points/miles rather than getting it to $2K might be better. A solution where you pay all remaining expenses and give me some would tax most relationships.
This is simple for you because you simply don't get it.
You make teachers look bad, unless you're teaching 5th graders.
Everyone gets what you're saying, the simple version.
The hard part is not the trip would be 10k in cash but because of using points, the trip is now 17k in cash. (You won't get it so here's why, you stay at Ritz instead of Courtyard)
To add insult to injury, how...
This is simple for you because you simply don't get it.
You make teachers look bad, unless you're teaching 5th graders.
Everyone gets what you're saying, the simple version.
The hard part is not the trip would be 10k in cash but because of using points, the trip is now 17k in cash. (You won't get it so here's why, you stay at Ritz instead of Courtyard)
To add insult to injury, how to you split your kickback (i.e. credit card points earned). The now 17k trip now earns your friend 15k Amex points and 20k Citi points. But if you pay you get a straight 1.5% cash back. How do you make it fair.
By the way, these problems were already covered in this post.
Now the advance version for people who gets the complication (i.e. this part is not for you Mr.teacher) that isn't explicitly covered.
How do you value 'expiring' points and at what point that point (no pun intended) becomes 'expiring'.
You'd get credits fir adding complications. But, one always starts with the simplest scenario before complicating it. I had students with the "I know so much more than you," they rarely did well. Plus, we'd have a talk about the insulting attitude. It really isn't necessary here, but I'm sure your fragile ego needs it.
For friends trips we never travel better than cheaply. That makes it very easy, just find the cash price, find the points value from that price, and split it x ways. Hotels, airfare, doesn't matter at that point.
If it's family then I always am more generous. And, with my family at least, they're always happy to pay what I ask of them because they know they're getting a good deal
I have discussed with a good friend of mine doing a European holiday at some point. My flight (Businees class) will definately be an award ticket, and hers will be cash. I have explained many times over the years as simply as possible the world of miles and points, and the steps needed to get to the starting gate,
She glazes over when the 'how to do it' bit starts, and currently is only...
I have discussed with a good friend of mine doing a European holiday at some point. My flight (Businees class) will definately be an award ticket, and hers will be cash. I have explained many times over the years as simply as possible the world of miles and points, and the steps needed to get to the starting gate,
She glazes over when the 'how to do it' bit starts, and currently is only signed up to one FF program (Thai, where she has a smattering of miles earned from Y flights in the past). They are marooned miles, and will eventually expire.
In the meanwhile we will not travel together; it's all too hard, and risks creating bad blood, something I want to avoid.
I often travel with one friend or family member and we split expenses. When it comes to spending points for hotel stays, I never seek reimbursement for that. Most of the time, it would cost about the same number of points if I were traveling by myself anyway. I will occasionally spend airline miles for both of us if the "price" is right but mostly, we pay cash for flights and look for reasonable upgrade...
I often travel with one friend or family member and we split expenses. When it comes to spending points for hotel stays, I never seek reimbursement for that. Most of the time, it would cost about the same number of points if I were traveling by myself anyway. I will occasionally spend airline miles for both of us if the "price" is right but mostly, we pay cash for flights and look for reasonable upgrade options where we each pay our own way (unless I can find upgrades for a reasonable number of points, in which case I just do it, no reimbursement required). Since the people I travel with generally have no hotel or airline status, they gain perks by traveling with me. So, I have no compunction about taking as many credit card points as I can on shared cash expenses and being reimbursed--and my travel companions never object.
I do the same. Keep things simple. I have a very short list of travel companions so that really helps.
It hasn't been an issue for our large family / group.
1. Hotels aren't good for a group of 8, so we always Airbnb when traveling together. No points involved.
2. Flights - we're often on separate flights to reach the destination, because some of us leave on day 1 to visit another place before converging on day 4 at the common destination (for example). So we book our own flight in whatever class using...
It hasn't been an issue for our large family / group.
1. Hotels aren't good for a group of 8, so we always Airbnb when traveling together. No points involved.
2. Flights - we're often on separate flights to reach the destination, because some of us leave on day 1 to visit another place before converging on day 4 at the common destination (for example). So we book our own flight in whatever class using whatever means separately.
That said, the group operates on a "help each other out in whatever way each person is good at" mentality without worrying about exact amounts too much, and I quite like it (so far).
So how do the 8 of you split the Airbnb on day 1-4 if some of you converge earlier.
A similar situation: a friend regularly picks up large dinner checks & expenses for our group when travelling “for simplicity”- then tells us what we owe. She racks up 5x on dining (Amex) etc., and it feels petty to mention it. Recently a $3000 dinner earned her 15,000 points and it’s been a regular thing over the years. I’m not sure if/how to bring it up without seeming like a petty miser as she usually makes the reservations etc.
As a points obsesser, I would have no concern unless it's a large expense AND I need it for an important SUB/deal.
Go eat alone with your 5x.
By the way, you don't get 5x with Amex.
You're a petty miser who isn't wiser.
Currently in this situation with my wife and I in one room and traveling with her mother in another. I booked two $500+/night Hyatt rooms in London for 5 nights for 100K points each. I had my MIL book two $300/night Hyatt Prive rooms in Berlin for 5 nights. I'm calling it even. Had we purchased our own rooms, her total would have been $4000 instead of $3000 and my point spending would have been...
Currently in this situation with my wife and I in one room and traveling with her mother in another. I booked two $500+/night Hyatt rooms in London for 5 nights for 100K points each. I had my MIL book two $300/night Hyatt Prive rooms in Berlin for 5 nights. I'm calling it even. Had we purchased our own rooms, her total would have been $4000 instead of $3000 and my point spending would have been 175K instead of 200K. So I guess I agree with landing a little on the generous side. I also got $100 in hotel mad money in Berlin from the Prive booking and I gifted her lounge access in Berlin and GOH in London. We each bought our own airline tickets.
You should have booked a single room for 3 just to piss off MIL. ;)
When splitting with friends the way I think about it’s first coming up with a reasonable framework to value the points:
1. How easily do I earn them (road warrior, lots of business spend on cards, etc)
2. What would we realistically pay if paying cash
For longer trips I usually try to find a way of splitting the nights for who pays (eg 3 nights this city, 3 nights that city) but...
When splitting with friends the way I think about it’s first coming up with a reasonable framework to value the points:
1. How easily do I earn them (road warrior, lots of business spend on cards, etc)
2. What would we realistically pay if paying cash
For longer trips I usually try to find a way of splitting the nights for who pays (eg 3 nights this city, 3 nights that city) but not every city costs the same
Shorter trips sometimes I say you cover the dinners
I think my point #2 above is where it can be a little more complicated. If we want to splurge on a €2k/night hotel in Greece in summer using points that doesn’t mean I’d actually spend that much to go there.
If you're a progressive left wing socialist liberal, you need framework #3.
3. How much income you make and your wealth relative to your friends.
Your lazy unemployed friends should stay in your "€2k/night hotel in Greece in summer" for free on your money.
Cut the crap, most people even of the most extreme socialist view would disagree with you there. That train of thought applies to housing and groceries, not to luxury holidays.
The point of socialism is to ensure everyone has the essentials no matter what their circumstances, NOT to give everyone free luxury holidays just because some people can afford to have those.
Really?
Are you that brainwashed?
The point of socialism is also everyone contributing to society not free loaders staying unemployed and get FREE "housing and groceries".
By the way, the government agrees with me. And most people accepted it. The progressive tax brackets is already doing exactly what I said.
And "the most extreme socialist view would disagree with" YOU.
If some people can afford to have those luxury holidays then everyone should...
Really?
Are you that brainwashed?
The point of socialism is also everyone contributing to society not free loaders staying unemployed and get FREE "housing and groceries".
By the way, the government agrees with me. And most people accepted it. The progressive tax brackets is already doing exactly what I said.
And "the most extreme socialist view would disagree with" YOU.
If some people can afford to have those luxury holidays then everyone should have those. Not what you described.
What you describe is pure Capitalism.
‘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.
This is actually (almost) the best answer.
It's not "ideally" in advance but "always" in advance.
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.
Your only problem is how to get her to pay for the first night in a one night stand.
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.
It's a more common problem than you think.
Can't really stay at Four Seasons when your friends can only afford Best Western.
The best solution is foot the bill and tell (lie) them you can get reimbursed.
Your smart friends will get it.
@Eskimo , this really isn't a problem at all. I sometimes travel with two friends who have different preferences for hotels and about half the time we end up staying in different places. One is happy to pay a massive premium for staying in the most central location possible, the other just wants the cheapest (clean, en-suite) room for the night and I tend to look for the best deal on a 4*.
@Throwawayname
It's still a affordability problem.
If money isn't the issue.
One would always pay a massive premium for the most luxurious experience money can buy in the most desirable location. One room each.
The problem is only and always the Four Seasons is already full.
While not a really big problem for you anymore because you value inconvenience of staying separated minimally, you still have money problems.
@Eskimo it really doesn't work like that. Luxury hotels just don't do it for me, I prefer being anonymous and I dislike staff addressing me by name, asking about my plans, moving my luggage about (indeed I'm borderline paranoid about people touching my stuff) etc. I'll also not stay in Airbnbs etc, no matter how good the facilities are, and I enjoy staying in the suburbs, mixing with the locals in the supermarket etc. The...
@Eskimo it really doesn't work like that. Luxury hotels just don't do it for me, I prefer being anonymous and I dislike staff addressing me by name, asking about my plans, moving my luggage about (indeed I'm borderline paranoid about people touching my stuff) etc. I'll also not stay in Airbnbs etc, no matter how good the facilities are, and I enjoy staying in the suburbs, mixing with the locals in the supermarket etc. The other guy doesn't care about room sizes or anything- he's actually pretty wealthy and will pay nearly unlimited amounts of money just in order to be able to get up a bit later before meeting us...and he certainly doesn't want to go anywhere near a supermarket when travelling.
Equally I know of someone who stays in hostels for the social aspect and often doesn't seem to pay anything less than the price of a proper hotel.
@Throwawayname
Tell them that. And they will pay extra attention to ignore you.
Tip them nicely and tell them you and your stuff wanted to be left alone.
But in seriousness, your requirements are contradicting.
You want to be anonymous yet want to mix with the locals (hotel staff are not locals?)
You're better off with Airbnb left alone privacy yet you refuse it.
It's like you're telling me you're...
@Throwawayname
Tell them that. And they will pay extra attention to ignore you.
Tip them nicely and tell them you and your stuff wanted to be left alone.
But in seriousness, your requirements are contradicting.
You want to be anonymous yet want to mix with the locals (hotel staff are not locals?)
You're better off with Airbnb left alone privacy yet you refuse it.
It's like you're telling me you're a vegetarian but you like the taste of fatty tender Wagyu steak.
And hostels charging hotel prices?
Social aspect? Unless you're under 22, they likely don't want to socialize with someone that isn't a sugar daddy.
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.
The free night certificate is not "free" to your friend because he/she paid the annual fee for the credit card.
The free night certificate did not cost anywhere near the annual fee of the credit card, as that was just one of the multiple benefits. So, the question still stands, at what $ should it be valued?
That is up to you and your friend to figure out.
If the hotel was $200 in cash, then personally speaking, I would treat my friend to meals up to $100.
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
Spending time with family during holiday seasons is priceless.
Any price any valuation would be reasonable.
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”
Drank too much cocktails. I missed the flights.
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 :)