Oct222009

Spending HHonors Points – a Qualitative Analysis, part 2

What is a good value when spending hotel points?

This is the basic question I am asking. This is a qualitative and subjective question. Yesterday, I just threw out some charts of qualitative value without much discussion of why I created the tables.

I’m working to come up with qualitative ranges in value because it would be really cool to just look at a chart and make a quick decision of which hotel provides a good or excellent redemption value for my hotel points when faced with a choice of hotels at various price levels and different redemption categories requiring different amounts of points.

Say I spend 40,000 hotel points instead of the $200 room rate (after tax) being asked by the hotel.  

Did I get “good” value for my points?

Quantitatively I can say I received $5.00 per 1,000 points I spent.

$200 ÷ 40,000 points x 1,000 = $5.00 per 1,000 points.

 

This is a simple quantitative value I can calculate based on the money I saved by using points. But my main question is qualitative.

Is spending 1,000 HHonors points to save $5 a “good” value for a Hilton HHonors member?  

When I spend 30,000 points rather than spending $100 for a hotel room I can calculate the quantitative value of my points spending as $100 ÷ 30,000 points x 1,000 = $3.33 per 1,000 points.

Is spending 1,000 hotel points to save $3.33 a “good” value? I know I can get much higher value when spending my points if I am selective about when and where I spend points.

In real travel I am often faced with choices. When I search Miami and see 12 hotel choices how do I determine which hotel is a good deal for my points?

I can stay at one Hilton hotel, rated HHonors Category 6, that will cost $300 per night or I can spend 40,000 points and leave the hotel with no credit card charge for the room night. (Tax is usually included in a hotel room night reward using points although some hotels have additional resort fees or city tax not covered in the hotel points reward.)

Another Miami area Hilton brand hotel is only a Category 3 hotel at 25,000 points or a room rate of $140.  Which hotel – the category 6 at 40,000 points saving $300 or the Category 3 at 25,000 points saving $140 is the better redemption value? Quantitatively it is easy to see that the Category 6 hotel provides better value on a simple numerical basis (Redemption value = $7.50 per 1,000 points), but how much worse is the value for the Category 3 hotel (Redemption value = $5.60 per 1,000 points).

Saving $7.50 per 1,000 HHonors points I spend is a better value, but is getting only $5.60 per 1,000 points a much lower value for my points? Should I be concerned if I only save $5.60 per 1,000 HHonors points? Am I wasting the value of my points?

I am only considering the numbers here and not specific hotel attributes like location on the beach, hotel facilities, and TripAdvisor reviews which may all be important factors in your final decision on where and when to spend points.

The primary qualitative question most of us want answered when trying to get hotel value out of our points spending still remains after determining the quantitative redemption value for hotel points.

Is redeeming 1,000 HHonors points for a $5 hotel cash savings a “good” value?, an “average” value?, or a “poor” value?

Loyalty Traveler Guide to HHonors Hotel Value

My Loyalty Traveler question is whether I can create a guide for hotel loyalty program members to reference and quickly decide what is a good value for any hotel program?

Yesterday, I started on this path of qualitative analysis with HHonors.

I have redeemed around two million HHonors points for free room nights over the past 10 years. Intuitively when I started to create tables I thought getting $10 per 1,000 HHonors points would be the benchmark for getting “excellent” value from points spending for free hotel nights. This means if I spend 25,000 HHonors points I want to realize a $250 cash savings with my hotel points redemption reward.

Once I placed these values into tables I had to reconsider my initial qualitative analysis. When looking for $10 per 1,000 points redemption value as the standard for determining an “excellent” use of points instead of cash, I am saying that I don’t rate a hotel redemption as “excellent” in a Category 6 property unless I am saving $400 by using 40,000 points for a free night.

Finding a Category 3 hotel requiring 25,000 points for a free night or charging $250 per night may be tough in the real world. I doubt Hilton has many hotels in the Category 3 level charging $250 for a free night.

In my economic reality I will be happy if I can save $300 by spending 40,000 points. Sure there may be better redemption values possible, but when faced with the choice of spending $300 or 40,000 points I almost certainly would go with spending points.

Higher category hotels can have outrageously high-priced room rates. Finding a Category 6 hotel requiring 40,000 points for a free night or charging $400 per night might be much easier to find than a $250 Category 3 hotel to realize  “excellent” value for my points.

Finding  a $200 per night Category 2 hotel costing 20,000 points per night is probably not that common a redemption value. I adjusted my initial tables based on seeking $10 redemption value per every 1,000 HHonors points to a lower $7.00 per 1,000 points to better match the real world rates of most Hilton Hotels across the 7 hotel redemption categories and Waldorf-Astoria Collection.

Qualitative table for HHonors Points Redemption Value

Qualitative table for HHonors Points Redemption Value

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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