People who collect miles and points to book “free travel” have the desire to put a value on each “currency.” Several websites publish guides listing these values and announce updates when a currency changes value due to a change in the loyalty program. These guides provide those who are just starting an idea of if they are getting a good value for points when making an award redemption.
I’m all for this because everyone needs a starting place. There’s no market where you can look up what a point in Delta SkyMiles, Alaska Mileage Plan or Hilton Honors is worth. The award programs have made it more difficult to determine value since they can change an award’s cost whenever they want.
The universally accepted valuation is Cents Per Point or CPP. It’s an easy calculation: You take the cost of a travel reservation (in cents) and divide that by the number of award points required to make the same reservation. If a cash booking costs $100 or 10,000 points, you’d be getting a value of 1 CPP: $100 x 100 cents/dollar /10,000 points.
The issue I have with this points valuation method is that it doesn’t take into account if the cash price of your award is artificially inflated.
Taking advantage of high prices during peak season
For example, we stayed in New York City over Thanksgiving in 2018, and we got a value of 2.25 CPP for our Marriott Bonvoy points. That’s because the hotel we were staying at was charging between $499 to $699 a night for the duration of our stay. If I didn’t have points, would I have paid that much for a room at a Residence Inn? Probably not.
Since I was able to get this value for my points for one reservation, do I expect to get this value for every Marriott Bonvoy redemption? Of course not. But it was nice to know I saved a bunch of money on that one reservation by using points.
Getting less value when the hotel is overpriced
However, not all hotel redemptions are equal. For a recent stay in New York, we stayed at The Draper. The room rate for 2 nights was $882 after taxes.
Instead of paying cash, I used 160,000 Hilton Honors points. I was getting 0.55 cents per Hilton Honors point, and I view anything over 1/2 cent with Hilton as a decent value. But this hotel wasn’t worth $425/night. In the comments of my review, I found out that this same hotel used to belong to the Choice Hotels Ascend brand and was bookable for 20,000 Choice Rewards points. That would have been a much better value.
Live and learn
I didn’t mind using 160,000 Hilton Honors points for 2 nights in Manhattan. What disappointed me was overestimating the value of my redemption by thinking the hotel I stayed at was worth the cash price they were charging. So next time you’re considering a booking based solely on Cents Per Point, keep in mind that the cash value of the reservation is just as important in those calculations as the number of points you’re spending.
But if you’ve done the math and think it’s a good value, then go ahead and spend your points like no one’s watching.
Use your reward points in whatever way you want. Someone who spends 200 nights a year in hotels will have a different idea of what makes a good redemption from someone trying to maximize every dime they spend on a credit card to have enough points for one flight.
If you’re happy with how you used your points, then it was a good redemption.
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1 comment
By that logic than the earnings rate shouldn’t matter either.