By Basil K

“Optionality” is one of those words that people who push paper for a living (like me) use to describe something that could be just as easily described as “the value of having choices.”  If you are in the commodity business, it’s the value Exxon has to be able to either refine the crude oil that they extract out of the ground and sell as gasoline, or to sell it to someone else as crude for them to refine, depending on where they get the higher value.  For the frequent flyer, optionality means the very same thing – just in a different context.  Many times in the blog, Rick has talked about the value of having point balances in multiple airline and hotel programs so that you can take advantage of the ability to book a trip using the fewest amount of points necessary for a particular itinerary for airlines or destination in the case of hotels.  Having points in many programs affords you those choices and reduces your probability of being “shut out” of an award trip.

I want to take that concept one step further.  I’ve learned that there is additional optionality afforded to many of us with elite status in airline programs.  For example, I can book an award ticket on United, and since I am 1K, if it turns out there is a fare sale between now and my departure date, I can cancel the award itinerary without penalty and book the low cost revenue ticket.  That has tremendous value, especially if you are booking multiple people on the same reservation.  I can book my entire family on an award itinerary, and then if the cash fare drops a lot, I can cancel the award itinerary without penalty and book with cash at the low fare (as long as I am using my miles which gives the entire travelling party quasi-1K status).  This is especially important if you’re looking to utilize upgrades, which need to be attached to revenue tickets.

Hotel programs offer even better optionality, since most of them allow you to cancel an award between 12 and 72 hours before your arrival time.  You can wait and see if a hotel decides to run a last minute sale, or if another hotel springs a promotion that you don’t want to miss.  You don’t even need to have elite status in the program to be able to do that.  Because of the way they are structured differently from airline programs, hotel programs also offer three different types of optionality:

1. You can reserve a revenue room to pay with cash and then wait until you accrue enough points to book with points (or points and cash)
2. You can reserve with points and cash and then wait until you have enough points to book with all points. (Not so with Priority Club since the points purchase is irrevocable)
3. You can reserve with points (or points and cash) and wait and see if either
   1. There is  a sale on the hotel room
   2. There is a promotion (a la Radisson/Country Inn/Park Plaza) that induces you to pay for the night with cash and earn the promo

So, the next time you are looking to book a flight or hotel stay, keep some of these things in mind – you may very well be able to squeeze out some additional value.