Should You Buy Hyatt Gold Passport Points? When Does It Make Sense - If Ever?
February 2016
You see the email hit your inbox – Hyatt is offering a discount or bonus on Gold Passport points for purchase or to give to someone else. It’s a sale - it must be a good deal! Hmm… or is it?
Hyatt allows you to purchase and give points anytime. Within each calendar year, Hyatt members can buy or receive as a gift a maximum of 55,000 Gold Passport points sold in increments of 1,000 points.
It only makes good economic sense to purchase Gold Passport points if you plan to redeem those points for a hotel stay where the cash value of each point required is more than the price you pay to buy the points.
Let’s look a bit deeper into how we value those points, what your redemption options are and what we ultimately recommend.
The Valuations:
As you know from prior trvlvip Perks and Tips, we value Hyatt Gold Passport points at 1.8 cents per point, which is the value we would be willing to pay for Gold Passport points if we could buy them for cash. It is also the minimum value we feel you should expect before redeeming your points.
The cost of each Gold Passport point without a bonus is 2.4 cents - and that is more expensive than we believe the points are worth. But, occasionally Hyatt will offer bonuses on points purchases. They are typically 30% to 40% and usually require a minimum purchase (i.e. 10,000 points). With a 40% bonus the cost of each point is reduced from 2.4 cents to 1.7 cents per point - and that is a good value.
So now we know you will pay 2.4 cents per point without a bonus and 1.7 cents per point if you qualify for a 40% bonus when offered. But here is a calculation you can use to determine the cost of each point when there is a bonus offer of any size:
Multiply the total required cash outlay for the Hyatt Gold Passport points purchase.
Divide that amount by the total number of points offered to determine your cost per point.
Voila! You’ll have your effective price per point!
The Choice:
So, does it ever make good financial sense to buy or give Gold Passport points? Maybe – but the best value comes into play when purchasing points during a bonus offer to secure a specific award. Why is that?
In order for the points purchase to make good economic sense, you will need to use your points to book an award stay where the value of each point is worth more than what you paid for it.
Let’s walk through a Hyatt Free Night Award example (assuming you received a 40% bonus and bought the points for 1.7 cents per point):
You find a Free Night Award for 20,000 Gold Passport points.
You paid $340 to acquire the points (20,000 x 1.7 cents).
In order to make good economic sense, you need to redeem those points for an award night with a cash price (including tax) of more than $340 per night.
And let’s also walk through a Points + Cash Award example:
You find a Points + Cash Award night for 10,000 points plus $100 cash; let’s assume the tax due on the cash portion of the award night is $20.
You paid $170 to acquire the points (10,000 x 1.7 cents).
In order to make good economic sense, you need to redeem those points for a Points + Cash Award night with a cash price (including tax) of more than $290 ($170 + $100 + $20 in taxes) if you were to pay all cash instead of Points + Cash.
The Wrap-Up:
It rarely makes sense to buy or give Hyatt points speculatively - as in, without a very specific travel scenario in mind. Once you’ve picked a location and your dates and have taken the steps to ensure award availability, make the small effort to crunch the numbers to determine if the points purchase makes good economic sense. You will be very happy you did!
So keep an eye out for those Gold Passport points sales (don’t worry, we’ll help with that part) and keep your calculator handy. The good values are out there!
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