In the past, I’ve written about how to decide whether to pay cash or redeem miles for flights. In this post, I’d like to take a look at how to decide whether to pay cash or redeem points for hotel stays.
Continue reading: When Should You Redeem Points For Hotel Stays? How I Do The Math…
Share your questions, experiences, and thoughts below.
All I know is that I’ve used this methodology for Hilton for years and NEVER found myself redeeming Hilton points. If that’s the case something about the methodology is wrong.
In the meanwhile I’ve redeemed plenty of Hyatt points, some Marriott points (but too rare, shame on Marriott), and not enough IHG points as to make the program worthwhile.
I agree as far as Hilton in the USA but Hilton's in Europe usually makes for much better redemptions. Especially if you stay 5 nights. Marriot makes sense lots of times in the USA but you also get better value abroad.
Beyond the points vs. cash analysis, a traveler needs to take into consideration the opportunity, or lack thereof, to otherwise use the points in the future at other properties. If you probably have no other opportunity to use brand x points in the foreseeable future, it may be wise to just use the points when you can rather than keep them in your bank them for some future hypothetical trip that may or may not materialize. and the longer you wait, the more likely it is that the points will be devalued in the future.
Nope nope nope nope. I only ever use points on business class air fares - 70,000 Aeroplan get you a $7000 one way J class in a wide body if you’re lucky. The only two points I collect are Aeroplan and the wonderfully flexible Amex offering.
Other times the math isn’t so straightforward. For example, should you redeem 80,000 Hilton Honors points for a night at the Waldorf Astoria Bangkok, if the rate would be $400 per night?
I would say this is a pretty straightforward yes even though it isn't an amazing value.
1. You can frequently buy Hilton points for .5 cents so really no opportunity cost
2. Hilton has no problem with biannual devals.
3. Almost impossible to get .5 cents booking a Hilton in the US
It’s all about breakeven vs. maximizing value vs. opportunity cost. And, these days, since devaluations are the norm, often better to use ‘em than lose ‘em, so don’t hoard points. Still, it’s a case by case determination, even for those of us who sorta know what we’re doing. I feel for those who have no clue. Hilton free night certificate on a Garden Inn by the airport? Yikes.
Are most award stays $0 in taxes and fees because said taxes are a percentage of the room rate? (Obviously not referring to hotel-imposed resort/destination/junk fees)
My strategy for using Bonvoy points is to not redeem them at hotels in the US where the standard of service is hit and miss and redemption rates are often overinflated. I save them for when I travel overseas.
For 120K points, I stayed at the Sheraton Grand Sukhumvit for 3 nights in Bangkok. My experience staying at that hotel blew away any experience staying in a US hotel. It was the first time I had front desk staff greet me by my name whenever I walked past the check in area. A butler was a phone call away. Every element of my stay was first class.
I am heading down to Panama next spring. For example the Westin in Panama City is 22K points a night. I am leaning towards the Sortis (21K points/night) which is near Via Argentina and has great reviews.
This analysis is all based on the assumption that the customer's valuation of the stay coincides with the hotel's pricing. It's naive to accept that the 'total cost of the hotel stay' is what's being displayed on the website of the chain; the logical first step is to check which hotels are available in/around a destination and which of them are suitable for the type of stay (presumably most people won't have the same needs/expectations when grabbing a room next to the airport for 9 hours as when they're arranging a month's stay for their honeymoon). The next step is to check pricing for the hotels in question using something like Trivago which compares what's available through various channels. It's not uncommon for Agoda etc to offer rooms for 25-30% less than the 'official' website.
Only after those steps have been taken can one start to assess the value of using points for a specific stay.
Of course, those of us who prioritise ALL and GHA Discovery have less work to do as the value of each point is totally obvious.
Milaidhoo Maldives gives free seaplane transfer (otherwise $1000pp + taxes) when paying with points. At 150k per night (and 5th night free), it was already a no-brainer for us, but this made the slam dunk
Yes, as taxes are a government thing. And often the resort fee will be waived, presumably as it stands out like the proverbial.
That’s a good point. Similarly, if HR Waikiki is $250-300 per night and valet parking ($80 per night) is free on award stays, that’s something that can move the needle.
While that's true, and I cringe when I hear those stories, it can still be a good use of points, even if it's not aspirational. We often look at an aspirational redemption on this blog, as expected, but some of those airport or smaller city hotels can have wide swings in pricing. A college town with the big game over a weekend, suddenly your average Hampton is going for $300+ per night. Those points aren't earning any interest in staying in your Honors account, so if you are not one for aspirational travel, you can still easily make the math work on the Aspire card.
It kind of all depends.
@Ben, if in your example the points rate is 106,000 and you would have earned 21,000 points by paying cash, why not just treat it as a 127,000 point redemption when figuring out basic value per point, instead of converting 21,000 points to cash equivalent? Especially since with hotel redeemed points and earned points come from/to the same program. I can see how the calculation can get trickier with airlines, when you can redeem points from one program while a cash ticket can earn points in a different program.
Often my decision of points vs cash is more do I want to spend the cash (or even have it) on the stay. The points world has not only allowed me to stay and fly much more luxuriously than I would pay for but it has allowed me to even just travel more than I could afford. Those cases are much easier to decide to use points - do I want to save my points and stay home or do I want to take a trip.