Frequent flier miles and hotel loyalty points have been around since the 1980s. But the hard-core hobbyists — people spending hours a day trying to game the system — that’s exploding.
Before we dive in, full disclosure, I’ve become a bit, shall we say, obsessed with hotel rewards programs recently. I think about my points a lot.
The guy I blame for sucking me into this world: Remy Hathaway.
“For me, it’s a game,” says Hathaway. “There’s an element of fun to it, to figuring this out.”
It’s math, it’s marketing, it’s currency volatility — huge fun for a guy like Hathaway who studied economics at Caltech. He loves to talk about the real-world value of miles and points.
“The points themselves range from probably 40 percent of a penny up to maybe two-and-a-half cents for some of the more valuable ones, but it also depends on how you use them,” he says.
If you don’t have personal access to Hathaway, there’s no shortage of blogs devoted to exploring these equations.
This hobby, obsessing about points, is on the rise, in large part because credit cards are offering huge sign-up bonuses. Take out a new Visa, get two nights, gratis, at a five-star hotel anywhere in the world.
That’s free money for those who are good at controlling their credit card spending. Hathaway currently has 16 open credit cards. He also opened the same ones for his reluctant wife, Joanna Silber Hathaway.
“I don’t sign up for any of them, I don’t manage any of them. So if you want to interpret that as ‘thrust upon,’ you’re welcome to,” says Silber Hathaway.
Besides credit cards, Hathaway scours the Web for long, cheap flights to accrue miles. But airlines have wised up to these tricks — many now award miles based on money spent as well as distance travelled. Still, Hathaway continues to take to the sky to maintain his elite status.
“I actually took a flight to Long Island from San Francisco and literally turned around the same day and came home [to San Francisco],” he says.
That trip, and his elite status, help him keep his priority boarding, seat upgrades and a better ranking on a flight’s standby list.
For so-called international “status runs,” Hathaway says he prefers to get off the plane for a few days.
To maintain his hotel status, Hathaway recently checked into a hotel in Oklahoma City for a couple of nights, then turned right around and left.
In the world of loyalty program hobbyists, Hathaway insists, he’s pretty tame. He doesn’t do what’s called “manufactured spending.”
“It’s basically when you buy gift cards and then you liquidate them for miles,” says Ariana Arghandewal, who focuses on manufactured spending on her blog, Point Chaser. “I can’t talk about in detail, it’s kind of something that people get a little upset about."
There’s a code of secrecy and clubbiness around this. I’m not in that club though, so, here’s the basics of how manufactured spending works.
You use your United or Delta credit card to buy a pre-paid Visa or American Express gift card. You earn miles. Then you go to an airline’s online shopping portal and use your new gift card to buy a different gift card. You earn more miles. Eventually you liquidate that gift card by doing something like selling the gift card for slightly less on EBay. Repeat process until resting your head on a pillow in a luxury hotel in Italy for free.
There’s nothing illegal about all of this, it’s just a lot of work.
“For some people this is like a part-time job,” says Arghandewal who puts in about 10 hours a week to manufacture $50,000 in monthly “spending.”
After a year, she took her family of five to Hong Kong, Singapore, and Bali.
“It was a first-class trip, we stayed at really great hotels in some of their best suites. I think our out-of-pocket cost was something like $1000 for a trip that would’ve cost $95,000,” she says.
That’s a uniquely American tale.
“Credit quality standards are higher here, if you don’t have much income, if you’ve not been in the UK for a number of years, you won’t get one.”
He says Brits are jealous of all the credit card bonuses offered to Americans.
“I get a lot of comments on my site saying, ‘Have you seen that a credit card in the US is giving away 100,000 miles as a sign-up bonus? And the equivalent card in the UK gives away 20,000 miles,’” says Burgess.
Still, Burgess says the UK is the second-best country to play the miles game. And when the opportunity arises to get more miles, Brits get serious. The supermarket Tesco’s loyalty points are convertible into British Airways or Virgin Atlantic rewards. Burgess says, last year, the supermarket offered a bonus for buying cabbage.
“You can just pick up the smallest handful of cabbage, a little cabbage fragment as long as it was weighable by the tills, put it through and you’ve got your 25 points,” says Burgess.
Burgess didn’t pick up any cabbage for himself. He’s sitting on 8 million miles. That’s actually cause for concern, because airlines and hotels routinely devalue their points. So, experts advise: Earn and burn your points/miles.
Hathaway agrees and adds: It’s getting harder to game the system.
“It’s this sort of arms race between the people playing the game saying, ‘Oh, here’s a way around this thing,’ vs. the actual company saying, ‘Wait a minute, we’re giving away a little too much for free,’” says Hathaway
But hey, if you love to play the miles game, the new challenges make it all the more exciting.