Twitter user @Howardisthebest points to an interesting question in the Social Q’s section of the New York Times, which tries to provide “lighthearted advice about awkward social situations.” The Twitter user asks for my take (and the take of some other bloggers). I find this question to be interesting, so wanted to address it in a post, and see how you guys feel.
Splitting Travel Expenses When Redeeming Points
Someone asks the following question:
Splitting Hairs Over Points
My brother travels for work, so he racks up hotel points. We are going on vacation together, and he wants to pay for our hotel rooms (using points), and he wants me to pay for the flights. But since he’s not using cash to pay the hotel, I feel like I’m being cheated in paying for his flights. He disagrees. What’s your take?
My initial take is that this sounds like a really awkward start to a trip?
Personally I think there’s a right and wrong answer here, but the problem is that I think this may more come down to perception than logic.
Points Are A Form Of 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.
I totally think it’s fair to look at the retail value of things, and for costs to be split. Her brother might earn those points through work, but that also means he’s rarely home, missing out on a lot of family and friends, and in some way this may even be factored into his overall compensation package.
…But Consumer Psychology Suggests Otherwise
While I absolutely think points are a currency and have value, the reality is that a vast majority of people don’t feel that way. They think of points as being “free” rewards. I think they’re wrong, but there’s no doubt that a vast majority of people feel that way, which is why this is a problem to begin with.
I have millions of points across programs, but I still often choose to pay cash rather than redeeming points, since I’ll only redeem if the value of a redemption exceeds my valuation of the points.
This is actually something I lie to my mom about all the time. When I travel with my mom I always pay for hotels and flights. But my mom feels so guilty if I’m paying cash for anything. So what I do is that I just lie to her and tell her that I booked something with points, because then she has no guilt.
How This Goes Both Ways
I think points are a currency, and I also think that goes both ways. In other words, if I’m traveling with friends and we’re splitting costs for a hotel room (paying cash), I don’t mind them paying less than half if I’m earning the elite qualifying nights, points, credit card rewards, etc.
Those have a significant value, and at most I want to split the cost fairly, and not have them subsidize my points addiction. That’s only fair.
Shouldn’t It Be Different For Family?
In addition to people generally thinking of points as being “free,” I think the other part that makes this awkward is that we’re talking about family here. While I do consider points to be a currency, I also feel like we all do nice things for family members sometimes.
My point is that while I believe all of the above, I also believe covering hotels with points is a gesture that is viewed differently than if you were paying cash.
Let me give an example — say you’re a professional who usually charges $100 per hour for some service or another. If a family member asked for help with something that is your expertise, you’re unlikely to bill them for it… because they’re family.
So I think a similar perception exists when redeeming points.
Careful Not To Violate Any Rules
Almost all airline and hotel loyalty programs have rules against buying, selling, or bartering points.
While this is unlikely to become an issue when traveling with friends or family, it does raise another point. Say you’re traveling with someone and you pay for the hotel with points and they pay for flights with cash, are you actually violating loyalty program rules?
- I’d say technically you are violating the rules if you redeem points for a hotel and the person pays you cash for a portion of the room rate
- It’s more of a grey area if you redeem points for a hotel and a friend or family member pays for flights
In most cases the rules aren’t defined that explicitly, but you are potentially flirting with some issues here, should you be caught.
Coming at this from the perspective of a points expert, I absolutely think what the brother is suggesting is fair, assuming the costs (in cash) are comparable. Points have an opportunity cost, and even if he earned them mostly through business travel, he probably made a lot of sacrifices to earn them.
That being said, the reality is that most consumers view points as something that’s “free,” so I totally get why this is a point of contention.
I think the brother is being reasonable, and I would side with him. However, I also totally get why the sister feels the way she does, given the common perception out there about points.
Where do you stand on this?