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Wanting to travel but not sure where to start? Vacation packages may seem like an appealing option, especially since they can bundle together multiple bookings at once. But are travel packages a good deal?
Let’s take a look at the costs of booking travel packages, how they compare with separate bookings and how much you could save by redeeming rewards points.
Costs of booking vacation packages
There are a lot of moving parts when booking a vacation, especially when it comes to your travel itinerary. Plenty of websites offer the ability to book travel packages, but one of the more popular options is Costco Travel. Costco Travel vacation packages are available exclusively to members, though members can book them for others without the need to travel.
Costco’s travel packages can include flights, cars, hotels, theme park tickets and additional activities.
Here’s an example of a weeklong vacation for two adults to Walt Disney World in Orlando, Florida, including flights, a hotel and theme park tickets:
Your total out-of-pocket cost is $2,113.11, which isn’t bad for a vacation that includes Disney World admission. Keep in mind, however, that you’ll also be on the hook for Costco’s annual membership fee, which starts at $60 per year.
Other options for travel packages include airline websites such as Delta Vacations, American Airlines Vacations and United Vacations. However, not all travel packages are created equal.
Here’s the same vacation through the Delta Vacations website, though this package doesn’t include theme park tickets. (Note that the cost listed is per person.)
Since theme park tickets aren’t included, you’ll need to purchase them separately.
In this case, booking through Delta Vacations will cost you a total of $2,463.94 — a full $350 more than the identical package Costco Travel is offering. Those wondering "Is Costco Travel a good deal?" can answer a resounding yes in this scenario.
» Learn more: Costco Travel vacations pack luxury and value
Costs when booking separately
So we’ve seen the difference in price for varying vacation packages, but what about when you book each item separately?
Here’s the same flight featured in those travel packages, which will run you $374.40 for two people.
Note that these tickets are main cabin fares, not basic economy, which means you’ll get seat assignments and standard boarding. Basic economy tickets are cheaper but lack these features, among other restrictions.
A seven-night stay at the Holiday Inn & Suites across from Universal Orlando will cost $993.41.
Finally, you’ll want to add in those Disney World tickets for $1,225.10.
All told, your Orlando vacation would run you $2,592.91, which is more than either travel package offered by Costco Travel or Delta.
As you can see, booking a travel package can save you money — and in some cases the difference is significant — so when does it make sense to book separately? Short answer: when you care about elite status at a travel loyalty program.
Frequent travelers will be aware of hotel loyalty programs, which reward repeating guests with amenities such as complimentary breakfast, room upgrades, early check-in and late checkout. However, these loyalty program member benefits don’t apply to stays booked through third parties, which generally include those within travel packages.
If you have top-tier elite status, you could be missing out on hundreds of dollars' worth of perks by booking through a third party.
» Learn more: A beginner’s guide to hotel elite status
Costs when redeeming travel rewards points
There’s another option for value-seekers looking to save money, and it comes in the form of travel rewards. Points and miles can be redeemed for flights, hotels and even theme park tickets, drastically dropping the cost of your vacation.
In keeping with the above example, here’s the cost of that flight in miles when booked with Delta SkyMiles.
You’ll be paying 24,000 miles round-trip for two passengers, plus $22.40 in taxes and fees.
IHG has dropped its award chart in favor of dynamic pricing, which means you pay variable figures depending on the night. For our example trip, your total would be 121,000 IHG points — though if you're an IHG® Rewards Premier Credit Card holder, you could expect to save some points because of the card's Fourth Reward Night Free discount.
And although you can’t use your rewards points to directly purchase Disney tickets, you can take advantage of a purchase eraser card, such as the Bank of America® Premium Rewards® credit card, to apply your points as a statement credit toward the purchase.
In this case, you’d be redeeming 122,510 points at a rate of 1 cent each to pay for your tickets.
All in, you can build this Disney vacation for around 267,510 points and $22.40 in taxes and fees. Even better, elite members would be eligible for all the benefits and credits they’d normally receive.
There’s a cost associated with earning rewards points, but travelers can take advantage of credit card welcome offers to earn large lump-sum amounts of points. For this example, acquiring three different credit cards would almost entirely cover the cost of your vacation:
Delta SkyMiles® Gold American Express Card: Earn 40,000 bonus miles after you spend $1,000 in purchases on your new Card in your first 3 months. Terms Apply.
IHG® Rewards Premier Credit Card: Earn 140,000 bonus points after spending $3,000 on purchases within the first three months of account opening.
Capital One Venture X Rewards Credit Card: Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel.
» Learn more: A beginner’s guide to traveling on points and miles
If you want to get good deals on vacation packages
Planning a vacation can get overwhelming very quickly, which can make travel packages a particularly compelling option. These packages can provide a great deal — and convenience — compared with separate bookings. Even so, those pursuing elite status with their preferred travel loyalty programs should stick with booking directly to get credit for their purchases and access to the perks.
Those looking to save as much money as possible can plan well in advance to get the right credit cards — at least six months ahead of your trip is recommended. Then, you can redeem points and miles for deeply discounted vacations, no matter where you're traveling.
To view rates and fees of the Delta SkyMiles® Gold American Express Card, see this page.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2022, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card