Can you rent or AirBNB instead of hotel?
I never really got the airline point think.. you spend say $20k on an airline credit cards to get enough points for a flight.. well I get 2% cashback on my credit card, so I could have gotten $400 from spending the same 20k.. and bought the same airline ticket.. without forcing myself to do the airline point thing.
I know sometimes you can game it with new signups and stuff.. but I would just rather have cash than spend my life messing with points...
As you mention, most points are earned with signup bonuses, and most people who do travel hacking are repeatedly getting signup bonuses, all year long. We then close the cards before annual fees hit, or negotiate the waiver of the fees. This has the added bonus of increasing most people's credit, since the high credit available to low usage affects most people's credit as a net positive. People can earn literally millions of points a year while not increasing their expenses at all by being clever and observant with signup bonuses. This is virtually impossible with your 2% cash back card.
Many people also do what's called manufactured spending, which is essentially arbitrage where spending on the card is moved through cash equivalents, then to cash, and then pays the card off. The net cost is 0 or close to 0, often earning up to 5-6 points per dollar moved through the process.
Finally, no matter what you do with your cash card, you'll only ever get 2 cents per dollar spent. With points, you can redeem them at vastly higher values, often up to 6-8 cents of value per point spent.
In your example, you get $400 in value on $20K spent. Spending $20K, I could easily get signup bonuses on 10-20 cards, and probably 400-600K points on various programs. I could redeem those points for 15-20K in travel. Starts to make more sense when you look at it that way. :)
To give an example, with very little work on my part, I earned 750K points across various programs last year. I did practically no manufactured spend, just paying attention to using the right cards for the right expenses where bonuses were present. I can basically take me and my SO anywhere in the world, several times over, first class. I also earned the Southwest Companion Pass, which means my SO flies for free with me on Southwest until the end of 2016. I fly free because of all the southwest points I accrued. I spent about $38 on gift card load fees, etc. last year. Pretty tough to manage that with 2% cash back.