Sep262018

What are hotel points worth? In my case, far more than average value

Three ways to pick up hotel loyalty points:

  • earn hotel points from hotel stays and associated spend and activity;
  • earn hotel points from credit cards;
  • buy hotel points.

Frequent Miler, One Mile at a Time and The Points Guy, all have a page on their websites detailing their estimated value of hotel points. These individual values are frequently used in their respective blogs as the basis for analyzing promotion value and credit card offers.

The main difference in the way I show points value is converting the commonly used cents per point equation to dollars per 1,000 points. Too easy to make decimal mistakes when calculating large values of points.

My points value calculations always look at the value of 1,000 points since that is the most common factor used to book reward nights and buy points from hotel companies.

By this measure I look at Best Western Rewards points value as $5.80 per 1,000 points for Frequent Miler not as 0.58 cents/point and $7.00 per 1,000 points for The Points Guy.

In general, I find these values pretty meaningless. I get 2x-5x the highest of these redemption values with several of these programs on many hotel stays throughout the year.

My estimates for the value of hotel points in different programs are based on two factors:

  • What is the value of hotel points for places I want to visit? This is place and time specific for each hotel stay where I redeem points.
  • How much does it cost me to acquire hotel points?

For each trip I take, the cost of rooms at hotels in hotel loyalty programs where I can earn points or redeem points is compared to the price for similar or comparable lodging options.

Other factors in play are potential elite benefits, ease of booking, hotel brand standards, precise location and the value of earning bonus points and free nights with current hotel loyalty promotions. Making my final lodging choice balances earning and burning and other options. I rarely find Airbnb or other options a better value than hotel loyalty programs for a lower priced room.

Since I travel solo or with my wife, we have little need for a self-contained apartment. Hotels are convenient.

Hotel loyalty programs keep me happy as long as I can earn and buy hotel points and realize a hotel spend discount compared to other lodging choices.

And I generally find far better than average point value with my hotel stays using points.

New World of Hyatt Promo: Earn Up To 60,000 Bonus Points

TPG values World of Hyatt points at 1.8 cents each, making the full 60,000-point bonus worth $1,080 if you max out the promotion. If you’re planning any Hyatt paid or award stays this fall, certainly take the time to register once the link is active tomorrow. This promotion is not the richest we have ever seen from Hyatt, but some bonus points are better than no bonus points.

The Points Guy (Aug 29, 2018).

The 60,000 Hyatt points in my account earned prior to this promotion had very little value over the past three years. There were three hotel stays at Hyatt category 1 hotels for 5,000 points per night in 2017 and a 2018 Points & Cash stay at a category 4 hotel for 7,500 points + $100. My points value over 4 nights redeeming 22,500 points was around $25 per 1,000 points.

However, Hyatt Hotels were not even present in most places I traveled and needed hotels in the past three years. In places with Hyatt Hotels, there were generally other hotel chains where I found better value with my points from other loyalty programs.

Getting outsized value from Hilton points can be tough

Last year Hilton switched to a new system for points redemptions, where award pricing is now more variable. They no longer publish award charts. The good news is that I find Hilton Honors offers pretty consistent value. You can usually redeem points for 0.4-0.5 cents each towards the cost of a hotel stay.

That’s good for most consumers, since most people want to redeem points for the same hotels that they’d usually pay to stay at. It’s less good for those who are specifically seeking out more aspirational hotels.

One Mile at a Time (Aug 4, 2018).

Lucky stated he had his best Hilton Honors redemption ever this summer 2018 at Hilton Tallinn, Estonia, where he redeemed 30,000 points when rates were €900 during a special event night. That is a $1,058 for 30,000 points. $35/1,000 points is an excellent and outlier reward night redemption rate, and demonstrates the value of holding points in reserve for places when there are no reasonable room rates.

My next Hilton Honors stay coming up in a few weeks has a redemption rate of $22.89/1,000 points. I also found an outlier redemption rate value using Hilton Honors points for my travel. These far exceed the $4.00 to $6.00 per 1,000 points redemption rate given by these three blogs as the reasonable value of Hilton points.

Recent changes to Hilton reward rates raised the rates for the hotels I will be staying at next month with a substantial reduction in the redemption value to the $4-$6 range, if I had to cancel and rebook these hotels at their current reward rates.

Which Hotel Program Has The Most Rewarding Q3/Q4 2018 Promotions?

Each hotel’s promotion will be assessed based on the following three scenarios:

  • 5 stays of 1 night.
  • 1 stay of 5 nights.
  • 3 stays: 1 for 1 night, 1 for 3 nights and 1 for 5 nights.

With regards to the cost per night, I’ve gone with $131.56. That’s the figure Nick used for his posts about which hotel loyalty program in general was the most rewarding.

To then calculate the value of each set of bonus points, I’ve used the Frequent Miler Reasonable Redemption Values for each chain.

As before, the best hotel promotion will vary based on the promotion periods, cost of stays, length of stays, etc. This is simply an attempt to assign some kind of value. You can also always find a list of the current hotel promotions here.

Frequent Miler (Sep 25, 2018).

My Value for Hotel Points only extends to my currently booked award stays and past stays

I approach the value of hotel points in a very different way from these three blogs. The value I place on hotel points is only as fixed as the value I found with my upcoming booked hotel stays using points.

Over the past three years I have stayed an average 70 to 90 hotel nights per year. About half of my hotel nights are hotel reward stays using points.

I redeemed points in 8 major hotel programs for hotel reward nights many times in each program. Actually 9 programs, but SPG is now Marriott Rewards.

  1. Best Western Rewards
  2. Choice Privileges
  3. Hilton Honors
  4. Hyatt
  5. IHG Rewards Club
  6. Marriott Rewards (and SPG)
  7. Radisson Rewards (Club Carlson)
  8. Wyndham Rewards

The remainder of this article looks at the cost to buy hotel points in each of these hotel loyalty programs. In follow-up articles, I will expound on how I value current hotel loyalty promotions based primarily on my other primary factor in determining how much hotel points are worth to me by examining what is the value of hotel points used for reward nights in places I want to visit?

How much does it cost me to acquire hotel points?

In general, I value the cost of points acquisition as the amount equivalent to the lowest purchase price it will cost me to buy points in each hotel loyalty program.

As an example, IHG Rewards Club sells 1,000 points for $13.50.

While that is the cost to buy 1,000 IHG points, I consider my acquisition cost of IHG Rewards Club points to be $5.00 per 1,000 points since there are many opportunities during the calendar year to buy 200,000 points and many more at that price.

By this same measure, I have the following values for the price to buy points.

Best Western Rewards

Choice Privileges

  • $9.90/1,000 points when buying 5,000 to 50,000 points. $14.30/1,000 points when buying 1,000 to 4,000 points.
  • $7.50/1,000 points when booking a PointsPlusCash reward stay. Cancel the reservation and the points return to your account.

Hilton Honors

World of Hyatt

  • $24.00/1,000 points when buying 1,000 to 55,000 points.
  • Hyatt had 2018 promotions in past year for 30% and 40% bonus points dropping the price to price to $17.14/1,000 points (40% bonus points and $18.46/1,000 points, while also raising the maximum purchase limit to 71,500 points (30%) and 77,000 points (40%).
  • Daily Getaways sold 229 sets of Hyatt points for about one second this year at a price around $10.38 to $11.00/1,000 points. Most members who try to be this annual discount are unable to buy any Hyatt points through this sale. I had to go back and check to see 2015 was the only year since 2012 I was successful in buying Hyatt points through this sale. I landed on 24,000 points for $260.

IHG Rewards Club

  • IHG Buy Points rates
    • $10.00/1,000 points when buying 26,000 to 100,000 points ($260.00-$1,000.00);
    • $11.50/1,000 points when buying 11,000 to 25,000 points ($126.50-$287.50);
    • $13.50/1,000 points when buying 1,000 to 10,000 points ($13.50-$135.00).
  • $5.00/1,000 points – IHG Rewards Club has regular promotions for 100% bonus points dropping purchase price to $5.00/1,000 points when spending $260 for 52,000 points. These promotions also allow a member to buy up to 200,000 points in a calendar year. The normal Jan-Dec purchase limit is 100,000 points. Bonus points do not count for the purchase limit.
  • $4.85 per 1,000 points when IHG Rewards Club has a member promotion for 15% or 20% off Points&Cash rewards cash portion. I recently received a promotional offer for 15% off Points&Cash reward rates reducing the price to $97 to buy 20,000 points at some hotels. Book a reward stay, but points and points go back to account if the reservation is canceled.

Marriott Rewards 

Marriott Rewards does not regularly offer promotions to buy points at a discount. There are more deals through Marriott Rewards for discount room rates. I am interested to see if the merger with Starwood Preferred Guest will result in any change from normal Marriott Rewards practice. SPG regularly had promotional discount sales to buy points.

Radisson Rewards (Club Carlson)

Wyndham Rewards

  • $13.00/1,000 points at Wyndham Rewards buy points regular rate. One of the main issues with Wyndham Rewards points is the low annual purchase limit of 10,000 points in a calendar year at a price of $13.00/1,000 points. Prior to 2018 the annual purchase limit was 5,000 points at $11.00/1,000 points.
  • $11.67/1,000 points Daily Getaways April 2018. There was an opportunity in April to buy 15,000 points for $175 or 30,000 points for $350. This was both the lowest price and highest number of points a member could purchase.
  • As low as $8.00/1,000 points. Hotel stay promotions were the cheapest way to buy Wyndham Rewards points in past year were three Visa and MasterCard Wyndham Rewards promotions offering 15,000 points for 2 stays and 15,000 points for three stays. These promotions allowed a member to accumulate 50,000 points inexpensively for less than $400. I earned 18,000 points in October 2017 with two hotel stays I needed in Nice, France and Plovdiv, Bulgaria for about $170.

Now that I established how much my acquisition cost if for different hotel point currencies, the more important factor in my opinion, and the basis for how I evaluate hotel loyalty promotions is

  • What is the value of those points for places I want to visit? This is place and time specific.

For me this factor is the far more interesting and artful part of the equation in determining the value of hotel points.

That is my focus for the next article to come in this study.

 

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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Comments

  1. Good stuff, Rick, as usual. I’m doing a couple 5k Hyatts in Atlanta next week. Paid rate with taxes around $200. Easy $40/1000 redemption. Not world class but respectable.

  2. Informative article, most “incredible redemption” stories look at the value based on the price if paying cash at that particular hotel. I also like to compare to similar hotels in the area to see how much I am actually saving with the redemption. I would do not redeem at a $200/night 3 Star Hilton property because I’m getting $.009/point if a 3 Star non chain hotel was going for $95 3 blocks away.

  3. I agree 100%. I always roll my eyes at these travel bloggers who claim to have calculated an average value of a hotel point down to the tenth of a cent. Those “averages” include hotels with really bad award values that I would never redeem. Why would I possibly be interested in the value of awards I would never redeem?

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