Erik Paquet started travel hacking while studying at the University of Michigan almost 10 years ago. He developed expertise as a travel hacker, finding ways to travel for free by strategically redeeming rewards points and frequent flyer miles. To date, Erik has earned and redeemed over 2.5 million frequent flyer miles, making him a leading authority in travel loyalty programs. Wishing to share this knowledge, Erik co-founded Abroaders, a company whose mission is to democratize travel. Before establishing Abroaders, Erik was a partner at Green Growth Media.
1) What is travel hacking? And how did the practice of travel hacking inspire Abroaders?
So, I think first off, we describe travel hacking as getting maximum value from rewards programs. There is a lot of different types of content around travel hacking out there — our core mission and focus at Abroaders is really to help people find a sustainable way to get a lot of travel savings year after year doing things they are doing every day, anyway. Some talk about travel hacking as churning through one rewards card after another or creating manufactured spending systems. Some of these tactics might work for short-term goals, but for us it’s really about trying to minimize the amount of effort to get rewarded by travel loyalty programs.
AJ Dunn and I started Abroaders. AJ’s one of my best friends from childhood. Before Abroaders, we were working as web marketers, and we took a round-the-world trip together that included Oktoberfest in Munich, then we were able to make a couple of other stops in Germany and Prague. After that, we flew to a conference in Bangkok. After the conference, we really just needed a break and so we went over to Bali, Indonesia. While relaxing in Bali, we were talking about the way that we had booked our tickets — the whole thing was basically about $100 ($50 in taxes and fees per person) to book this round-the-world trip. The bulk of our trip was made possible with points.
At the time, United Airlines had this really generous rule set that allowed you to stop in Europe on the way to Asia, then do an open jaw and visit another city before flying home. During this trip, we kept talking about how many people probably had no idea that they could add Asia to an itinerary for the exact same price as it would cost to simply go to Europe.
Our first effort was a podcast. This enabled us to start discussing the topic and share travel hacking information. From there, the project grew organically. Through the podcast, we learned people’s biggest travel-hacking challenges.
- Which types of points do I want to get?
- How should I get started?
- How do I book reward travel?
- Where do I look for the best reward flights?
It can get confusing; the airline’s websites often do not get you the information you need. We stepped in to help people figure out how to make their travel goals a reality.
2) In the half-decade you have been operating Abroaders, how have you seen the power of travel and experiential pursuits change people’s lives?
That’s probably been the coolest part about this for me, and I know for AJ as well. We get to help out with a lot of trips that are extremely special for people. We’ve done quite a few honeymoon trips — that’s a big event, a big celebration for somebody in their lives. Before considering travel hacking, they might be thinking Florida, or maybe Mexico, and now it becomes a South Pacific or Southeast Asia trip. Many times we see people turn their honeymoon into these really exciting adventures.
Other times, it’s folks that have never traveled abroad. Maybe the furthest that they have gotten away from home is a two-hour flight and now they are looking at a trip to visit another continent. They had not before because of cost, now the barrier is gone. What we do opens up doors where people can have new experiences that they wouldn’t otherwise be able to take advantage of.
There was at least one person that we worked with that was really excited about tracking down her family lineage. She had a bunch of family in Ireland and wanted to go there to see where her ancestors lived.
We have seen so many different reasons and motivations for travel. Travel gives you an opportunity to learn both about yourself and other people. I truly believe that travel makes the world a better place. It makes us more open-minded and so that’s been the most rewarding part about this, is seeing how enabling people to travel can make an impact.
3) What are some solid strategies and/or tactics you recommend for people trying to maximize the fun and enjoyment they experience while traveling?
One thing to me that is really interesting about what we have been doing is this idea of being able to work with different people on different trips. We’ve gotten to really see what their motivations are, which has a huge impact on how you should plan your trip: how much time you should give yourself, how many destinations you want to visit, etc.
I think one of the most powerful things that you can do to make a trip more meaningful is to carve out time to connect with locals and to meet people from the area. It doesn’t have to be anything that’s super in-depth.
Many times there is a language barrier. People are somewhat intimidated when they don’t speak the language. Often, initially they gravitate to other tourists that speak their same language. However, sometimes there is a breakthrough moment for many people traveling when, even if it is frustrating and hard, they try to make a connection with locals. Even something as simple as buying a cup of coffee at a local coffee shop and struggling through an unfamiliar language to order it — that conversation can add so much value and depth to the experience of travel.
I always personally really try and make time to just wander around new places, spend time with locals and, if possible, try and find a way to have a local be a part of the travel itinerary. Maybe you have got a friend that’s living abroad and/or knows the language. Maybe you’ve got somebody that’s lived where you are going a few years ago that could connect you with somebody that’s still there. If you can get a local connection, somebody to even just go out to lunch with you to help you get a feel for their city and make some recommendations — that to me is when so many opportunities that could easily, easily be missed on a traditional vacation end up manifesting for the traveler.
I also personally, if it is possible, advocate slow travel and spending more time in each location because it can be really hard to jump quickly from one destination to another. A lot of times people have this sort of fear that: maybe I will never get back here … maybe I won’t have this opportunity again, and I need to squeeze as much in as possible. The trip becomes a vacation that’s two days in Barcelona, two days in Rome, two days in London and a day in Paris, and then they’re back. In this scenario, they have not actually really gotten to experience any of those places. I think if possible, to be able to carve out more time is another big benefit of travel hacking because being able to go to the other side of the world doesn’t have to be such a huge financial investment.
If you are interested in meeting people and spending time a little bit outside of the tourist circuit, a lot of times there are much cheaper accommodations that are available with Airbnb or with hostels and things like that. You don’t have to do that for the entire trip, for some people that can add stress, but to me the communal aspect can be a really cool way to make your experience a different kind of trip.
If I am in a situation where I am forced to take a much shorter trip that I can’t extend out, I will reframe those sort of short trips as just a preview of the place — knowing that my primary goal on that trip is to just figure out if this is a place that I want to come back to and spend a couple weeks and/or do a prolonged adventure.
Some of my favorite travel experiences personally have been through Airbnb where the hosts have been incredibly generous with their time and knowledge about the location. I’m thinking specifically of a trip that I took to Cinque Terra in Italy with my mom and sister, and the person that hosted us made it their mission to show us around and tell us where to go and what things to see. We saw so much stuff that wasn’t in our four, five guidebooks — my mom loves guidebooks! She had all of this research, and we still stumbled into these super cool places because we manufactured the opportunity to spend a few minutes talking with somebody that knew the places that weren’t in the guidebooks.
4) How have you seen parents with children approach travel hacking? Are there any nuances and/or considerations when trying to travel hack as a family?
We get a lot of questions about how to coordinate a point strategy with a family member or with a partner. One of the biggest things that we run into is that some frequent flyer programs won’t allow you to redeem points for other people, or if you can redeem points for others that they have to be immediate family members. The latter can become an obstacle for folks that are not married, also with folks that are trying to travel with a friend. Many times there are unforeseen complications. Mapping out the lay of the land here has been a major undertaking for us. A problem we solve for our clients — going through all these different rules, which also tend to change somewhat regularly. There are situations where frequent flyer programs unilaterally announce that they have changed the rules around who can travel, where they can travel and/or when they can travel. One of the major things we try and do is keep all that information up-to-date and organized so that we can give people good advice on how to use their points to achieve their travel goals.
Here are a few basic principles to keep in mind. With children, for the most part children cannot accumulate points nearly as fast as adults. As parents, one thing that you can do is open up frequent flyer accounts and/or hotel accounts for your kids where it makes sense. For flights, the passenger is the only one that can claim flight points, so you might as well get them for your kids. The really nice thing is that often the bank programs, specifically Chase, American Express and Citibank, have rewards that have really changed the landscape of how you can combine and utilize points together. With these programs you can transfer points to your own frequent flyer accounts but also to a spouse’s, dependent’s or partner’s frequent flyer accounts.
The banks have such powerful strong negotiating power with these loyalty programs, they have been able to negotiate a pact around some of these rules and say, “Okay, we’re going to give you X billion dollars to buy a whole bunch of these miles and we’d like to be able to transfer them to different accounts and this is how it’s going to work.” Accordingly, bank points are really valuable for families because they make things much easier.
The second strategy for travel hacking with a partner is fairly straightforward. What we recommend to people is if you and your spouse want to travel together, it is a great idea for you both to get the same card. When you get the same type of reward points, it makes it much easier to be able to travel together.
The final recommendation is that after you’ve established an account with a decent number of points, it’s a really good idea to diversify and look to different frequent flyer programs, ones with little overlap. We see a lot more success in getting the exact trip that you want when you have more than just airline points.
5) Does travel hacking involve more than collecting credit cards? What are some of the myths around travel hacking?
The piece that we haven’t really covered a ton so far is on the redeeming side of using points. Getting rewards cards is where a lot of the focus is on the travel hacking. I think that’s partially because a lot of the sources of information — like blogs — the creators of these sites their major revenue source is from the banks, when people sign up for those rewards cards.
As such, there’s a ton of information about what type of points you get when you sign up for a new card, but there’s actually a huge amount of value to be extracted on the redemption side, too. Understanding what type of points are going to be best for your trip and understanding how many points you are going to need — that’s one of the huge things that frequent flyer programs, and also the banks, have been able to do — redeeming points and miles are not a transparent transaction.
One of the things that we see all the time is people spending two or three times as many points as they need to get a trip. For instance, they just don’t know that it shouldn’t cost 200,000 points for a business class ticket to Europe. It just shouldn’t, it should cost maybe 60,000 points. Somebody that hasn’t done it before, that hasn’t booked that ticket, doesn’t know what the lowest possible price is to pay and they don’t know necessarily what the taxes and fees should be as well. The airlines are very good at price discrimination and being able to figure out if you’re willing to pay a little bit more. When they can, they get you to pay a little bit more. So I think at least half of travel hacking is about using your points efficiently, but there isn’t a ton about redemption out there.
We have divided our clients into two categories. The first being folks that just want to get the outcome and do not really care to learn too much about points and how everything works — all the rules. For those folks, we try and help offer a solution where we act as a concierge. We charge a fee for that, but for many people that don’t have a ton of interest in learning travel hacking, we offer this service so they can skip the much more time-consuming part of figuring out the ins and outs.
On the other side, there are the true travel hackers that love this stuff. They follow the blogs, listen to podcasts, and really try and understand how this stuff is working and how changes that are happening now might impact, for better or worse, any future travel plans they have coming up. For these folks, the biggest piece is to understand that every different type of points has different rules.
The big opportunity on the redemption side is knowing which type of points will give you the best overall value. There are tons of scenarios like this where you could very easily spend 80,000 Delta points, but instead you could spend 50,000 points from a different rewards platform and get the exact same flight. There are scenarios where you could be sitting next to somebody on the same plane and you two used two different types of points to book the ticket — you paid 80,000 points and $600 in taxes and fees, and the other person paid 50,000 points and $8 in taxes and fees. That happens all the time; it is the meat and potatoes of travel hacking.
The hidden city ticketing stuff is still alive and well (to learn more about hidden city tactics and other airline booking ploys, click here). Those sorts of things change all the time. Skiplagged is an interesting site for those interested in this type of hacking.
Probably the easiest travel hack on the redemption side is that if you want to go from somewhere in the U.S. to somewhere in Europe, the most important thing is to find your flight across the Atlantic. For instance, it might not start at the airport that you’re beginning your trip. A lot of time the flight that is the best deal to get across to Europe is going to be from a different place (than where you live). Often you can buy a really cheap ticket, just a positioning ticket, to get from wherever you live to the airport that you’re departing from, and save a huge number of points on the international part of your trip by positioning to a different airport — the same thing applies to your return ticket.
The common question that we get from people is about credit ratings and how using rewards cards is going to impact their credit score. The bottom line is that if travel hacking is done the right way, it doesn’t. The information on this is actually readily available. FICO has a secret-score formula as far as how exactly they calculate your credit score, but they share what the five major factors are. If you look at that and take a look at what factors go into your credit score you can see why applying for one new card — not applying for 10 cards at once, that definitely will hurt your credit score — won’t hurt your credit. The idea is to do this responsibly and sustainably. The idea is to take advantage of big bonus offers when they come along and use your regular spending to earn those points and do that slowly over time. If you do that and accumulate cards, a couple cards a year, you can go as far as five or six cards a year and not hurt your score. This is because the major credit card factors are to pay your bills on time, which is a really easy one to do if you stay organized.
The second-most important factor is how you are using the available credit that you have. The primary reason that opening new cards can strengthen your credit score over time is that you’re slowly but surely adding more lines of credit. If you do not max out these cards it demonstrates your ability to use credit responsibly. Again, if you don’t do a ton of cards all at once, it can and should actually help your score over time.
People are correct to be wary of credit cards because it’s really important to know that, fundamentally, the thing that is underwriting this free travel bonanza is people that are paying extremely high-interest rates on credit cards. By the way, that’s not just rewards cards, that’s all kinds of credit cards. But if you don’t pay your balance in full every month, there is no amount of travel hacking that you can do that is going to help you come out ahead against 15 or 20 percent annual interest. You cannot win by carrying balances.
I think another concern that people have often about getting into travel hacking — and this one makes entire sense to me — if you start building up a whole bunch of these rewards cards, many of them have annual fees, and those fees can be pretty significant. One of the things you really do want to pay attention to is: what is the value proposition of a particular card for you and is it worth paying the annual fee if you need to, to be able to keep the card? In a lot of cases, the answer is: yes. In particular, some of the more premium cards surprisingly can give back enough value year after year that it’s a really easy decision to pay the annual fee if you do the math.
A really good example is the Chase Sapphire reserve card, which has a $450 annual fee, which is big-time sticker shock for people, but you also get $300 back towards travel. So if you definitely spend $300 every year on flights, your annual fee is down to $150 and there’s a bunch of other benefits that come with that card that may give you a net return on your investment.
People may look at this and think “Okay, yeah, but I don’t need five different cards with five different annual fees.” One of the things that many people don’t realize about this is that the banks are spending a huge amount of money to acquire you as a customer. They are doing it based on the math that says in the long term they’re going to earn a bunch of money from you having their credit card in your wallet. Banks spend so much money acquiring you as a customer that they will do pretty much whatever they can to retain you.
One of the things that we advocate, and that we do personally, is to call your bank and ask about the annual fees and ask the folks at the bank to waive the annual fee. Many times you have to say, “Look, I’m thinking about closing this card, I’m not sure if it is really worth $95 to keep it open, I was wondering if you guys might be able to do something to help.” It is always great to drop a name of a competitor’s card that you think maybe is a better value. I find that I end up taking bonus points in a high percentage of those negotiations where, at least, if you know what you’re doing with the points, it ends up playing in your favor.
It is important to note, there is some truth that closing rewards cards can hurt your credit score if you don’t do it in the right way. What we recommend to folks with annual fee negotiations is if you’re not able to either get the fee waived or to get points awarded as a retention award (that’s worth the cost of keeping the card open) you should consider closing the card. If you are thinking about closing an account to avoid a fee, a lot of times you can downgrade that card into a no-fee product. In other words, a card that normally has a $95 fee, instead of closing it and throwing away that credit line, you can keep it open as another product to maintain your credit line. (Reducing your available credit can negatively affect your credit score.) You now have a no-fee card that’s got a line of credit that’s helping to anchor your credit score.
