How Much Are Airline, Hotel, And Credit Card Points Worth?

How Much Are Airline, Hotel, And Credit Card Points Worth?

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I often get asked how much I value various miles & points currencies, including those issued with credit cards, airlines, and hotels. The truth is that there’s no valuation for these currencies that everyone will agree on. That’s because the value that you’ll get from rewards points will vary significantly based on how you redeem them, and that’s also largely based on your travel goals.

Nonetheless I try to use my knowledge of these programs to assign a value to each currency, which can fluctuate over time. Below I’ll share my valuations of most major miles & points currencies, and then afterwards I’ll explain my methodology.

Value of bank & credit card points August 2022

To me credit card points are the gold standard of rewards currencies. They offer a ton of flexibility, since you can transfer them to all kinds of partners. On top of that, there are so many lucrative credit cards that offer generous rewards structures for earning these points.

Personally I always try to earn transferable points currencies with my credit card spending. Unlike other points currencies, I value these more or less the same, given just how many partners each program has.

Below are my valuations of the major transferable points currencies.

Program
Value
1.7 cents/point
1.7 cents/point
1.7 cents/point
1.7 cents/point
1.7 cents/point
Credit card points give you endless flexibility for travel

Value of airline miles August 2022

There are lots of ways to earn airline miles, from actually flying, to using co-branded airline credit cards. The value of airline miles does vary significantly between programs. It’s important to keep in mind that major airlines have lots of partners, so the value of these miles isn’t just based on the ability to redeem for travel on that particular airline, but also based on the ability to redeem for travel on partner airlines.

Below are my valuations of the major airline mileage currencies.

Program
Value
1.3 cents/mile
1.3 cents/mile
1.5 cents/mile
1.3 cents/mile
1.7 cents/mile
1.4 cents/mile
1.5 cents/mile
1.4 cents/mile
1.3 cents/mile
1.2 cents/mile
1.1 cents/mile
1.3 cents/mile
1.1 cents/mile
1.3 cents/mile
1.3 cents/mile
1.3 cents/mile
1.5 cents/mile
1.2 cents/mile
1.4 cents/mile
1.2 cents/mile
1.4 cents/mile
1.3 cents/mile
1.2 cents/mile
Redeem airline miles for first class flights

Value of hotel points August 2022

Much like with airline miles, hotel points can be earned either through staying at hotels, or by using co-branded hotel credit cards. Generally hotel points are easier to redeem than airline miles, given that there aren’t as many capacity controls or restrictions when redeeming them. That’s one of the reason many prefer to earn hotel points rather than airline miles.

Below are my valuations of the major hotel points currencies.

Program
Value
2.0 cents/point
0.5 cents/point
0.6 cents/point
0.5 cents/point
0.5 cents/point
0.7 cents/point
0.3 cents/point
1.5 cents/point
0.7 cents/point
Redeem hotel points for luxury hotels

How to go about valuing miles & points

With the above out of the way, how do I actually go about coming up with a value for miles & points? First of all, let me share that I’ve been obsessed with miles & points for 15+ years. Keeping track of these programs is my passion (and my job), and I’ve also helped people redeem well over a billion miles over the years. I’d like to think I have a bit of experience.

Even so, that’s not to say that you should value miles & points the same way I do. Let me share some basics on how I go about valuing miles & points, and everyone can decide for themselves how they want to go about it.

Miles & points can’t be valued objectively

Miles & points are ultimately a form of currency, so you might be wondering why we can’t value them objectively. After all, there are exchange rates between monetary currencies, even though different factors impact their valuations.

There are a few reasons miles & points (at least for non-revenue based programs) can’t be valued objectively in a useful way:

  • There are so many different ways to redeem miles & points, which will give you vastly different valuations
  • There’s typically not a way to “cash out” your miles & points, and when there is, that’s generally not the most efficient way to use them
  • Everyone has different travel goals, and you’ll get different value depending on whether your priority is taking the family to Disney World, or flying first class to Singapore
  • Miles & points can be devalued over time, and are generally the property of the loyalty program rather than the member, so really we’re just playing by the programs’ games

Let me give a concrete example of why there’s no correct objective valuation of rewards points. Let’s say you have Capital One miles, which I value at 1.7 cents each, and you transfer those to Air Canada Aeroplan. You could redeem 90,000 miles for a one-way ticket in Lufthansa first class from Newark to Frankfurt.

Meanwhile if paying cash, that ticket would cost over $12,000.

Alternatively, you could redeem 109,300 miles for a one-way ticket in Air Canada business class from Fort Lauderdale to Montreal.

Meanwhile if paying cash, that ticket would cost $1,171.

As you can see, you can redeem fewer miles for a ticket that would cost more than 10x as much when paying cash. This is purely intended to be an example, but hopefully at least demonstrates the complexity of valuing these currencies.

Redeem rewards points for Lufthansa first class

Be conservative when valuing miles & points

For a variety of reasons, I try to be conservative when it comes to valuing miles & points:

  • Miles & points can be devalued by programs at any time, so you have to apply some sort of a discount to them to account for that; in general there’s much more of a risk of devaluation for an individual airline or hotel currency, rather than a transferable points currency
  • With most programs, you don’t actually own your miles & points; they belong to the program, and you’re just allowed to use them as long as you have an account in good standing
  • People should be encouraged to earn & burn, and creating an artificially high value for points discourages that

As you can see, I value credit card rewards points more than a vast majority of individual airline currencies, even though those are the best ways to redeem them. That’s because I’m willing to value the points at a premium for the added flexibility that they offer.

Redeem rewards points for JetBlue Mint business class

Valuing miles & points is both absolute & relative

Coming up with a valuation of a mile or point is both an absolute and relative exercise:

  • The valuation should be absolute in the sense that a currency should be valued somewhere between the typical acquisition cost and the typical redemption cost; at the end of the day this is why I value most of these currencies at somewhere around one to two cents each
  • It’s relative because the way I come up with differing valuations between currencies is based on the pros & cons of redeeming with each program in terms of redemption rates, routing rules, and more
Valuing miles & points isn’t a science

How you’ll get the most value with your miles & points

Generally speaking, if you want to get the most value from miles & points, there are two key aspects to that:

  • You should spend some time studying these programs, because the deals to be had are in some cases amazing
  • In general you’ll get the most value from points if you’re looking for aspirational redemptions, like staying at five star hotels, or booking international first & business class flights, where the cash value would be disproportionately high

Admittedly that’s not how everyone wants to redeem, and that’s totally fine:

  • If you don’t have a lot of points, it’s probably not worth investing the time to study these programs all that carefully
  • If you have a family with toddlers, then understandably your priority might be traveling to somewhere close by and having a room with a lot of space, rather than flying halfway around the world to stay at a five star hotel
Everyone is looking for different travel experiences with miles & points

Don’t fall for the retail cost fallacy

I think it’s important not to get too carried away with points valuations. For example, above I showed a $12,000+ one-way first class ticket from Newark to Frankfurt on Lufthansa that could be booked with 90,000 Aeroplan points.

Yes, on the surface I suppose you are getting over 13 cents of value per point. However, don’t focus on that too much. For mental accounting purposes, personally I value redemptions based on how much I’d otherwise actually be willing to pay for that experience. I would never, ever drop that kind of cash on a one-way first class ticket.

So while on paper that might be the valuation, I always ask myself how much I’d be willing to pay for a first class ticket to Europe. Personally I’d estimate that I’d probably actually value that flight at $1,500, in terms of what I’d otherwise be willing to pay.

I’m not looking to get into a huge debate here about perceived value rather than retail value, but my point is that it’s important to consider how much you value these premium experiences, rather than just how much they cost.

Don’t take a trip just because it would cost a lot when paying cash, but rather do what you want to do, and try to maximize value along the way. At least that’s my take.

How much would you actually pay for a first class experience?

Don’t value miles & points based on one redemption

Another thing I consider with each points currency is how many good redemption options there are. The more flexibility and more options there are, the most I value those currencies.

For example, I’d argue that the world’s best redemption option is through Virgin Atlantic Flying Club. Specifically, you can redeem 60,000 Flying Club miles for a one-way first class ticket on All Nippon Airways between the United States and Japan, and that would cost a lot if paying cash.

Nonetheless, as you can see above, Flying Club miles aren’t the currency I value most. Why? Because there aren’t many other good redemption options. So while I absolutely love to redeem miles that way, that doesn’t leave me with a whole lot of flexibility.

I try to factor in these sweet spot redemptions while acknowledging that they provide limited flexibility, especially at a time like this, when borders are still partly closed.

Redeeming Virgin Atlantic miles for ANA first class is a phenomenal value

Bottom line

Hopefully the above is a useful rundown of the value of various credit card, airline, and hotel points currencies. There’s no absolute right or wrong way to value points, and it’s totally reasonable if your valuation is different than mine. My goal is just to share my take, and provide a general framework for valuing these currencies.

I’ll keep my valuations updated over time, to reflect changes with these various points currencies.

How do you go about valuing miles & points, and are your valuations substantially different than any of mine?

Conversations (34)
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  1. foo blah Guest

    I use my Chase point to buy Apple products. They always seem to have a 50% bonus using Chase points to get Apple stuff... right after I've already made my trade. LOL!
    Need a new iPad so holding out this time...

  2. George Romey Guest

    I think this is very subjective to a person's point of view. Personally I think using miles/points for domestic flights are a waste (exceptions possibly of HI/AK) unless one needs a last minute ticket and prices are high. Although with business travel still down I see those kind of "walk up" fares less and less.

    There are many cost benefit analysis one could take in determining whether to burn miles or not other than the...

    I think this is very subjective to a person's point of view. Personally I think using miles/points for domestic flights are a waste (exceptions possibly of HI/AK) unless one needs a last minute ticket and prices are high. Although with business travel still down I see those kind of "walk up" fares less and less.

    There are many cost benefit analysis one could take in determining whether to burn miles or not other than the cost per mile. Is burning a bunch of miles/points for a live time memory to HI worth it? Many would say yes.

    1. Eskimo Guest

      On the contrary, I've been getting better returns on domestic flights. This isn't about subjective valuation but just merely pointing out that you can't generalize these anymore with dynamic pricing. You seem to be stuck at the old award chart when it was 25k anywhere.

      Last minute awards can go crazy, like 100k economy domestic R/T.
      However with good planning, I've crisscross the country dozens of time in 2021 from 5-15k each R/T, yes...

      On the contrary, I've been getting better returns on domestic flights. This isn't about subjective valuation but just merely pointing out that you can't generalize these anymore with dynamic pricing. You seem to be stuck at the old award chart when it was 25k anywhere.

      Last minute awards can go crazy, like 100k economy domestic R/T.
      However with good planning, I've crisscross the country dozens of time in 2021 from 5-15k each R/T, yes transcon included.
      Same goes with international flights. It used to be premium cabins that get you good value, now many economy are using even fewer miles.

  3. Morgan Diamond

    No QANTAS valuation?!?

  4. Ray Gold

    I find putting a value on any points is simply for your ego to look at your "stash" and say I have "this much in the bank". I have never viewed them with a monetary value. I just look at what I want to do (flight or hotel), determine if the number of points seems reasonable, and either book it or pay for it. Reading all of this, I have the sense people look at...

    I find putting a value on any points is simply for your ego to look at your "stash" and say I have "this much in the bank". I have never viewed them with a monetary value. I just look at what I want to do (flight or hotel), determine if the number of points seems reasonable, and either book it or pay for it. Reading all of this, I have the sense people look at say "oh no, that ends up being a $.045 per point valuation and I feel they are really worth $.05 so I will pay for it". With airlines, if it is a saver award, I just book it. If not, then pay for it. I don't book last minute so don't need to worry about the valuation so much on expensive tickets. Basically, Biz or FC on international either gets saver award, I wait for a sale, or I find another location that is available. Don't get locked into a location.

    1. DCS Diamond

      One of few things nominal values of points currencies that are constantly peddled are useful for is precisely to quantify "if the number of points seems reasonable". How far below the cost you can buy points for are you willing to go?

      The lowest Hilton award I will redeem is 0.4cent/HH point (taxes included). If it is lower than that I will pay cash or redeem at another chain, e.g., Hyatt, if that would give...

      One of few things nominal values of points currencies that are constantly peddled are useful for is precisely to quantify "if the number of points seems reasonable". How far below the cost you can buy points for are you willing to go?

      The lowest Hilton award I will redeem is 0.4cent/HH point (taxes included). If it is lower than that I will pay cash or redeem at another chain, e.g., Hyatt, if that would give me a better value. Because I usually do not have as many Hyatt points as I do HH points, I do not redeem at Hyatt below 1.3cpp, though I could go down to 1.2cpp if everything, especially the location, is right and the nightly revenue room rate is $150 or more - I could use the cash for my entertainment!

  5. DCS Diamond

    ...points can’t be valued objectively.

    - Ben

    Knowing what I now know firmly, I can stay without equivocating that that claim is only partially true or it may not refer to what it means.

    Nominal values of hotel points currencies -- i.e., the ones that this site, TPG, VFTW and others publish to great fanfare and are actually not too bad, especially if one averages them across sites -- can be calculated analytically...

    ...points can’t be valued objectively.

    - Ben

    Knowing what I now know firmly, I can stay without equivocating that that claim is only partially true or it may not refer to what it means.

    Nominal values of hotel points currencies -- i.e., the ones that this site, TPG, VFTW and others publish to great fanfare and are actually not too bad, especially if one averages them across sites -- can be calculated analytically (meaning using a [very simple] mathematical equation), at least in the case of points currencies that I have modeled (Hilton, Hyatt, Marriott, IHG and Radisson Rewards), more extensively during the pandemic.

    It is how I know that, except for valuing the nominal value of the Radisson Rewards point too low, OMAAT's estimates of hotel points currencies are better than TPG's (on the high side) and VFTW's (on the low site). It is also how know that points currencies, at least those of the five hotel loyalty programs that I have modeled, are worth exactly the same.

    I can rigorously demonstrate what I am talking about with equations, charts and other scholarly devices, except that I do not wish to steal my own thunder, as I've decided to write a magnum opus that will "demystify", once and for all, hotel points currencies (I have yet to model airline points/miles).

    What can be said, on the other hand, is that points currencies do not have redemption values until redeemed. That is where the subjectively comes in, and where I believe the quoted claim would fit.

    Stay tuned!

    1. DCS Diamond

      "...where the subjectivity comes in..."

    2. TimR Guest

      LOL, no one objectively would claim 1 Hilton point is worth the same as 1 Hyatt point.

    3. DCS Diamond

      LOL, no one objectively would claim 1 Hilton point is worth the same as 1 Hyatt point.

      @TimR - LOL is exactly right because I agree, as I never made such a stupid claim. Quite to the contrary. just yesterday I showed support for why

      1 Hyatt point = 3 Hilton points

      or

      (1 Hyatt point)/(3 Hilton points) = 1 (just like 1/1 = 1!) rather than (1 Hyatt point)/(3 Hilton points) =...

      LOL, no one objectively would claim 1 Hilton point is worth the same as 1 Hyatt point.

      @TimR - LOL is exactly right because I agree, as I never made such a stupid claim. Quite to the contrary. just yesterday I showed support for why

      1 Hyatt point = 3 Hilton points

      or

      (1 Hyatt point)/(3 Hilton points) = 1 (just like 1/1 = 1!) rather than (1 Hyatt point)/(3 Hilton points) = 1/3, which is wrong!

      That 1 Hyatt point = 3 Hilton points enables one to compute the relative worth of the two points currencies by straightforward dimensional analysis, whereby one can change the unit of measurement (cents/WoH point to cents/HH point) without changing the original value (we are simply multiplying 'cents/Hyatt point' by 1!)

      1.5cents/Hyatt point * (1 Hyatt point/3Hilton points) = 0.5 cent/Hilton point.

      i.e.

      1.5cent/Hyatt point = 0.5 cent/Hilton point

      That is an equality sign, which means that while the two points currencies are numerically different, they are "worth" exactly the same.

      Just like

      1 gallon = 3.8 liters,

      leads to

      1.5 cents/gallon = 0.4cent/liter

      Either gets you exactly the same volume of gasoline for the same spend.

      I am not going to repeat what I wrote just yesterday in this space. You must have missed the comment. Check it out and call me in the morning right here if you disagree:

      https://onemileatatime.com/reviews/credit-cards/american-express/hilton-business-card/

      I will be waiting for your call with bated breath.

      G'day.

  6. D3kingg Guest

    I’m stacking Hilton Honors points in anticipation of the Waldorf Astoria New York reopening in 2023. After seeing the iconic Hilton Chicago recently old meets new renovation I’m a believer.

    1. DCS Diamond

      An interesting question is what the top standard award cost at the renovated W=A will be: 95K/night like at all WAs, except at WA Maldives or WA Los Cabos, where it is 120K-150K/night like?

      Any of those would still be affordable, as, e.g., 120K/night with Hilton is the same as 40K/night with Hyatt.

      The monetary values are the same:

      120K HH/night * $0.005/HH = $600/night
      40K WoH/night * $0.015/WoH = $600/night

  7. Stvr Guest

    Hilton is too high. Other than that looks good.

  8. Gary Steiger - FreeFrequentFlyerMiles.com Guest

    I suggest you take a look at my write-up on this subject. For example, you have omitted consideration of the miles you would receive by paying money for the ticket instead of using miles to buy it.

    1. ffi Guest

      Your blog was the first source for me a long time ago and gave me info while never pushing or touting any cards.
      Your point on the lost miles is on the redemption side of getting value.
      Mine was on the acquisition side of the miles equation

    2. Ralph4878 Guest

      This makes sense if you don't have to worry about money, frankly.
      For example, I've got about a million AS miles, but after buying a condo and SUV, I don't really feel like spending $7,000 on a hotel room for two weeks on Oahu for an upcoming trip. In theory, I could get a $7,000 J ticket to Australia for 110,000 AS miles, but am I realistically going to be getting Down Under anytime...

      This makes sense if you don't have to worry about money, frankly.
      For example, I've got about a million AS miles, but after buying a condo and SUV, I don't really feel like spending $7,000 on a hotel room for two weeks on Oahu for an upcoming trip. In theory, I could get a $7,000 J ticket to Australia for 110,000 AS miles, but am I realistically going to be getting Down Under anytime soon? No. But I am definitely going to Oahu in July and I need a place to stay...and might spend 500,000 AS miles for a nice hotel room for those two weeks. Are the 200,000 Hilton Honors points I will earn if I pay cash for my hotel stay worth spending $7,000 on a hotel stay for two weeks? Not even close. Is saving that $7,000 for a new furnace and flooring in a few years worth 500,000 AS miles that I am otherwise not using? Absolutely.

  9. Jrome Guest

    As a "budget traveler", my valuations are definitely a bit different..

    How do you go about valuing miles & points, and are your valuations substantially different than any of mine?
    Aegean Miles+Bonus
    1.1 cents/mile
    Aer Lingus AerClub
    1.3 cents/mile
    Air Canada Aeroplan
    1.5 cents/mile
    Air France-KLM Flying Blue
    1.4 cents/mile
    Alaska Mileage Plan
    1.7 cents/mile
    All Nippon Airways Mileage Club
    1.5 cents/mile
    ...

    As a "budget traveler", my valuations are definitely a bit different..

    How do you go about valuing miles & points, and are your valuations substantially different than any of mine?
    Aegean Miles+Bonus
    1.1 cents/mile
    Aer Lingus AerClub
    1.3 cents/mile
    Air Canada Aeroplan
    1.5 cents/mile
    Air France-KLM Flying Blue
    1.4 cents/mile
    Alaska Mileage Plan
    1.7 cents/mile
    All Nippon Airways Mileage Club
    1.5 cents/mile
    American AAdvantage
    1.4 cents/mile
    Avianca LifeMiles
    1.2 cents/mile
    British Airways Executive Club
    1.3 cents/mile
    Cathay Pacific Asia Miles
    1.3 cents/mile
    Delta SkyMiles
    1.1 cents/mile
    Emirates Skywards
    1.3 cents/mile
    Etihad Guest
    1.2 cents/mile
    Iberia Plus
    1.3 cents/mile
    Japan Airlines Mileage Bank
    1.3 cents/mile
    JetBlue TrueBlue
    1.3 cents/mile
    Korean Air SkyPass
    1.5 cents/mile
    Lufthansa Miles & More
    1.2 cents/mile
    Singapore Airlines KrisFlyer
    1.3 cents/mile
    Southwest Rapid Rewards
    1.4 cents/mile
    Turkish Airlines Miles&Smiles
    1.3 cents/mile
    United MileagePlus
    1.1 cents/mile
    Virgin Atlantic Flying Club
    1.2 cents/mile
    Below are my valuations of the major hotel points currencies.
    Accor Live Limitless
    No idea
    Best Western Rewards
    No idea
    Choice Privileges
    0.7 cents/point
    Hilton Honors
    0.4 cents/point
    IHG Rewards
    0.5 cents/point
    Marriott Bonvoy
    0.8 cents/point
    Radisson Rewards
    No idea
    World of Hyatt
    1.8 cents/point
    Wyndham Rewards
    0.7 cents/point

  10. TimR Guest

    I think AS miles are now over-valued, should be closer to AA now that AA's program has better rates for many of the same partners.

    1. Adam Guest

      Agreed. Ben, based on your recent posts about AS redemptions, I was expecting them to drop here. Why did they not?

    2. Reno Joe Guest

      Point valuation is like quantum mechanics. Something's location is a fuzz ball until actually observed (actually redeemed). And, each observer sees it in a different spot.

      I target specific program points for specific routes. Period. So, I have a very specific result. Someone else's redemptions will have a very different result. I don't care what they get and they don't care what I get.

      How many angels can sit on the head of a...

      Point valuation is like quantum mechanics. Something's location is a fuzz ball until actually observed (actually redeemed). And, each observer sees it in a different spot.

      I target specific program points for specific routes. Period. So, I have a very specific result. Someone else's redemptions will have a very different result. I don't care what they get and they don't care what I get.

      How many angels can sit on the head of a pin? I'm waiting for the opus maximus to tell us the answer.

  11. Ethan Guest

    Your undervalue of East Asian carrier miles are already to the degree of unfunny.

    1. Art_Czar Member

      I agree. I have historically got outsized value from ANA RTW & RT biz class awards and have struggled to get 1.4c/avios. As Ben says, this is subjective and depends on each person's travel preferences.

  12. Eskimo Guest

    I am actually running into my personal valuation dilemma during Covid, which my even be a great analysis or write up for OMAAT. The thing is premium cabin is worth the ticket price like it used to be. And basing the valuation on economy ticket doesn't seem quite right or fair for me either.

    With international travel are still partially restricted and airlines are scaling back on services, I find myself quite difficult to justify...

    I am actually running into my personal valuation dilemma during Covid, which my even be a great analysis or write up for OMAAT. The thing is premium cabin is worth the ticket price like it used to be. And basing the valuation on economy ticket doesn't seem quite right or fair for me either.

    With international travel are still partially restricted and airlines are scaling back on services, I find myself quite difficult to justify the price tags of premium cabin these days. Especially with many flights in economy flying half empty. Still remember the service nightmare in 2020 reopening. No lounge no food no alcohol just a snack pack for a $3k ticket, almost the same service for the person in the back who paid 5 times less and even have more space to stretch around.
    Even without redeeming miles, I am still questioning myself is business class is worth it after all the service cuts. I feel like being ripped off for flying premium.
    Good news is many airlines are doing much better now, but still far from what it was like back in 2019.

  13. Gary Leff Guest

    I do not see how a Brex point can be considered worth as much as a Chase or Amex point. What am I missing?

    1. TimR Guest

      I agree, maybe Ben means Bilt where I can actually see the same valuation

    2. Eskimo Guest

      Same reason as I always wonder why transferable points gets a higher valuation than the highest of what it can transfer into. Yes the argument of reducing risk of devaluation and benefit of flexibility. But this is valuation here not average redemptions so flexibility doesn't make your points grow bigger nor devaluation affects anything unless the highest valuation transfer program gets devalued.

      But it's all subjective and based on personal assumptions. So no right or...

      Same reason as I always wonder why transferable points gets a higher valuation than the highest of what it can transfer into. Yes the argument of reducing risk of devaluation and benefit of flexibility. But this is valuation here not average redemptions so flexibility doesn't make your points grow bigger nor devaluation affects anything unless the highest valuation transfer program gets devalued.

      But it's all subjective and based on personal assumptions. So no right or wrong here either.

    3. Levi Member

      The value of an airline or hotel point/mile fluctuates from day to day. A day there's no redemption you want to make, it's worth zero; this includes both days where there's no availability and days where your balance is below what is required for the available desired redemption (a 50k mile redemption which you value at 5 cpm (i.e. you'd be willing to pay $2500 for that ticket) is worth zero cpm if you have...

      The value of an airline or hotel point/mile fluctuates from day to day. A day there's no redemption you want to make, it's worth zero; this includes both days where there's no availability and days where your balance is below what is required for the available desired redemption (a 50k mile redemption which you value at 5 cpm (i.e. you'd be willing to pay $2500 for that ticket) is worth zero cpm if you have 49,990 miles). This value should also, strictly speaking, be discounted to the present (for a variety of reasons, from devaluation to the fact that you might be able to earn miles between now and then to miles not being worth much to you when you're dead, etc.) at some appropriate rate. Sum those daily discounted values (which, as implied earlier, entails estimating your expected balance) out as far as necessary into the future (until the values are pegged at zero due to depletion and discounting) and you get your personal vaiuation of that currency.

      For the transferable currencies, it's basically the same process, but with a twist: you perform that valuation across each transfer partner each day and use the highest (after discounting etc.) partner each day. Assuming that the partner with the best daily valuation varies from day to day (and given that there exist regions where each airline/hotel program has no good redemptions, it seems likely that that variation (or "volatility") exists), this alone implies that the transferrable points are worth more than any points they could be converted into.

      For example consider AFKL vs. DL. Next week, I want to book a BOS-ARN award. Both AFKL and DL are going to book on AFKL; there's no availability on DL beyond Pay With Miles (1cpm) but there's a 1.5 cpm redemption on AFKL. The week after, I'm flying BOS-PUJ. There's no AFKL availability at all, but there's a DL 1.2 cpm redemption. The AFKL valuation is some weighted combination of 1.5 cpm and zero, the DL valuation is some combination of 1.2 cpm and zero. But the MR valuation is some combination of 1.5 cpm and 1.2 cpm.

      Returning to the example of a 50k mile redemption that you'd pay $2500 for, but you have a 49,990 balance, so the effective value is approximately zero. If there were a way to get 10 miles or more right now, the activity that generated those 10+ miles is worth the $2500, because the miles you had may as well have been worthless. A 1000 UR point transfer in that situation is worth $2.50 (250cpm) since it unlocks that value (plus whatever the value of having the 990 miles left over is). This in turn suggests that the transferable point currencies can be valued partially on the basis of what the partners charge to buy points for cash. If this partner normally charges $50 to buy 1000 miles, I don't think anybody would criticize you for buying the miles, so the 1000 UR points are, as an alternative to points.com, worth at least $50 in that situation.

      Note that this sort of analysis almost certainly applies regardless of one's subjectivity or personal assumptions: absent a probably rare situation (see below), the value of transferable points exceeds their expected value at any transfer partner.

      These are all, broadly speaking, manifestations of volatility: the chance that things don't go exactly as expected. The value of an option is affected by volatility/uncertainty (you see this in finance: during the Gamestop short squeeze, someone who was directly short GME was losing money, somebody who was short via a put option actually made money because even though the intrinsic value of the option went to zero, the increase in the value of the portion of the option which was effectively a bet on something crazy happening in GME exceeded the intrinsic value going to zero!). If every winter you use your miles/points for JFK-SJU on Delta and 5 nights at the Caribe Hilton, that's low volatility: earning SkyMiles and Honors points or considering your MR points to be only worth the SkyMiles/Honors transfers you can do is basically the way you should approach that. That you could transfer the points to VS and redeem for NH first class is worth zero to you.

      As an alternative perspective, valuations are perhaps best interpreted as "try to avoid redemptions that deliver less than this in value", so valuing transferable points more highly than any currency they can be converted to is just a means of expressing the general advice to only transfer points if they're needed for some redemption you want to make at that moment (assuming that the points transfer is instant...).

  14. ffi Guest

    Valuations are subjective - lost cash is not - The lost cash with any mile is at least 2.625c
    If you get the points as 5x, it costs you 0.525c and you may get value from 0.3 - 5c
    If you get the points as 4x, it costs you 0.655c and you may get value from 0.3 - 5c
    If you get the points as 3x, it costs you 0.875c and you...

    Valuations are subjective - lost cash is not - The lost cash with any mile is at least 2.625c
    If you get the points as 5x, it costs you 0.525c and you may get value from 0.3 - 5c
    If you get the points as 4x, it costs you 0.655c and you may get value from 0.3 - 5c
    If you get the points as 3x, it costs you 0.875c and you may get value from 0.3 - 5c
    If you get the points as 2x, it costs you 1.312c and you may get value from 0.3 - 5c
    If you get the points as 1x, it costs you 2.625c and you may get value from 0.3 - 5c
    The trick is to get more value than the cost

  15. Jan Guest

    I’ve gotten SkyMiles flash sales that got me ~2.5c/mi. Also, I find most economy int’l flights tend to hover around 1-1.2. My latest Emirates itinerary (J/Y) would net me 4.8c/mi

  16. polarbear Member

    Excellent writeup - and good to mention that value assigned is based on inspirational redemptions requiring some flexibility.
    I think having another column with value for (as you mentioned) family with toddlers? In other worlds, if one is to use miles on preset itineraries with some - but not much - flexibility? And some hints on how to redeem. For example, Delta, (the one I am most familiar with) will probably come at 1c/mile...

    Excellent writeup - and good to mention that value assigned is based on inspirational redemptions requiring some flexibility.
    I think having another column with value for (as you mentioned) family with toddlers? In other worlds, if one is to use miles on preset itineraries with some - but not much - flexibility? And some hints on how to redeem. For example, Delta, (the one I am most familiar with) will probably come at 1c/mile - and questions would be redemption vs pay with miles and choosing partners vs Delta metal, surcharges, etc.
    Thank you!

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Gary Steiger - FreeFrequentFlyerMiles.com Guest

I suggest you take a look at my write-up on this subject. For example, you have omitted consideration of the miles you would receive by paying money for the ticket instead of using miles to buy it.

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foo blah Guest

I use my Chase point to buy Apple products. They always seem to have a 50% bonus using Chase points to get Apple stuff... right after I've already made my trade. LOL! Need a new iPad so holding out this time...

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Ralph4878 Guest

This makes sense if you don't have to worry about money, frankly. For example, I've got about a million AS miles, but after buying a condo and SUV, I don't really feel like spending $7,000 on a hotel room for two weeks on Oahu for an upcoming trip. In theory, I could get a $7,000 J ticket to Australia for 110,000 AS miles, but am I realistically going to be getting Down Under anytime soon? No. But I am definitely going to Oahu in July and I need a place to stay...and might spend 500,000 AS miles for a nice hotel room for those two weeks. Are the 200,000 Hilton Honors points I will earn if I pay cash for my hotel stay worth spending $7,000 on a hotel stay for two weeks? Not even close. Is saving that $7,000 for a new furnace and flooring in a few years worth 500,000 AS miles that I am otherwise not using? Absolutely.

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