Is Award Travel Really Free?
Last Saturday I kicked off a 4 part series that discusses four of the most hotly debated topics in the travel hacking community. I discussed opportunity cost last week. This week I would like to discuss if award travel is really free.
My goal is to offer up both sides of the argument and then have a civil discussion about it in the comments section. Last week was amazing and I can not thank the readers who commented enough…you guys were great! We had comments that swung on both sides of the argument, everyone was respectful, and everyone brought great points to the table.
The Four Topics
The four hot button topics that we will be discussing over the next month are:
- Opportunity Cost.
- Is Award Travel Really Free?
- The Value of Credit Card Airline and Incidental Credits.
- Should There be a Minimum Redemption for Award Travel?
Definition of Free
We should probably start off by trying to define what free is.
According to Websters the definition of free is:
“Not costing or charging anything”
Now that is not really helpful since it is ambiguous. In my opinion everyone defines cost differently which would mean they have differing views on what is free. Last weeks discussion was a perfect example, if you believe in opportunity cost then nothing is ever really “free”. But, if you believe that opportunity cost is simply a decision making tool, like myself, then that opens up a lot more possibility when it comes to defining free.
Is Award Travel Really Free?
Now that we have looked at the definition of free, where does this divide in the travel hacking community come from?
I know you have read the blog posts that boast about $10,000 trips for FREE. Most people in our community take offense to that. They think that this is click bait fodder to get the inexperienced newcomers hooked so that they can pump the affiliate links. Does this happen sometimes? Sure it does, but it doesn’t mean that free travel is impossible, does it?
It is true that there are hidden costs when you discuss award travel. There are credit card annual fees, award flight taxes, resort fees, parking fees, car rentals etc. the list goes on and on. These numbers are sometimes left out of the blog posts because most people think only of the big ticket items when discussing their trip costs. Even people outside of the “hobby” fall into this trap. They only consider the flights and the hotels and don’t look at the little costs. I guess one question that needs to be answered is should they consider the little costs? That is something I will discuss more in my opinion part of the piece.
I would agree with the majority in the hobby that award travel is not free, at least most of the time. I do think it is possible, with proper planning, to take a totally free vacation. This would limit the amount of trips you could take because of the amount of resources needed to make it work. It would also take more diligence and preparation than a standard award redemption. But, I do think a family could take 1-2 completely free trips per year if they desire.
I attempted to play this out in an article a few weeks ago when I booked a fake trip for a family going to Disney. I used a mixture of airline, hotel, cash back, and travel redemption sign up bonuses to cover all costs involved. At the end of the day the family had their flights, annual fees, taxes, rooms, and park tickets covered with nothing coming out of pocket. They were even left over with a little over $300 to spend on transportation and food.
After posting the article I got into a discussion with another blogger and he said he did not think it could be called free. He claimed that since the family needed to use a $500 cash sign up bonus to cover the cost it was not truly free. He claimed that once you earned the $500 it was like taking $500 out of your pocket for the trip. This is where your personal definition of free comes in as discussed above. My definition of free is that if I didn’t need to really do anything for it, and if it didn’t come from my budget or personal accounts, then it is free. The banks funded that faux trip…nothing came from the family’s checking or savings account. I think that trip could be called free.
Back to the question of should the small costs be included? You may be thinking that a family on vacation is going to buy trinkets and food etc. Or you may think that $300 won’t go very far on vacation. I would argue that not all of the fringe costs should be included in the debate.
I don’t think that food and some of the trip’s transportation costs should be included in a trip’s cost calculations. If you stayed home you would still spend money on food and you would still have transportation expenses. Some of these costs would be incurred whether or not you take the trip. Because of that I don’t think they should not be included in the calculations. This is assuming the vacation costs are in line with your normal budget.
An example: I can go to Las Vegas and take an Uber to and from the airport ($30 total) and walk around the rest of the time. Should I count those Uber rides in my cost calculations? Would the two rides be more expensive than the transportation costs I would have incurred at home? After you take fuel cost, wear and tear, and depreciation into account I think they would be somewhat of a wash.
Now you may argue food is more expensive on vacation and this is usually true. But if you are trying to do a trip for “free” you can bring some food/snacks with you, maximize free breakfast or lounge access, and eat inexpensive lunch options to keep your costs somewhat in line with at home. It can be done even if most people don’t.
I would agree that most award travel is not “free” because of fringe costs incurred accruing points etc. But, I do believe that it is possible to take truly free trips with proper planning.
Whether you agree with me or not mainly comes down to how you define free. Is a cash sign up bonus free money once you earn it? Or is it considered a part of your income once it is earned? Do you think all costs incurred while on vacation should be considered? Or should some costs be considered a part of your normal everyday budget?
I look forward to hearing your take on these questions in the comments section. Remember to keep it civil, these are just opinions. No one has all of the answers here.