I’m an equal opportunity miles/points collector. I love airline miles and I love hotel points. Together, they can form the perfect vacation. However, while I’ve loved getting more into collecting hotel points over the past couple of years, they do give me a headache compared to airline miles. Let me explain.
When it comes to flights, I find it incredibly easy to decide whether I will use miles or pay for a ticket. I have a simple policy: I pay for domestic tickets and redeem miles for international tickets. Why? Because my upgrades domestically clear over 99% of the time, not to mention I travel entirely for leisure, meaning I can go wherever the low fares will take me. While I also travel exclusively for leisure internationally, I far prefer the comfort of first class (or business class), though I’m not willing to pay $25,000 for a ticket. Therefore, I obviously end up using miles.
At the same time, when it comes to valuing airline miles it’s important to keep in mind that the “value” of an award ticket shouldn’t be equal to the revenue cost of an airline ticket. In other words, if I redeem 125,000 miles for a ticket that would cost $25,000, I wouldn’t for a second claim that I’m getting 20 cents of “value” out of each mile, because I wouldn’t in a million years spend $25,000 on a ticket. Instead I might say that I’m reasonably getting two cents of “value” per mile (by my standard), since I would be willing to pay $2,500 for that ticket. So in other words, I rarely have a need to actually value miles. If I can find an international premium cabin ticket to a destination I want to visit, I’m getting a good value.
Now let’s talk about hotel points and what makes them “special.” As I mentioned above, I would never actually pay for a normally priced premium cabin international ticket. The cost is just too high. Hotels are a different story though. There are some nice hotels I would instinctively use points for (for example, any hotel beginning with the words “Park” and “Hyatt”), even if it’s not entirely rational.
Here’s an example: I’m thinking of staying at a Park Hyatt hotel which would cost 15,000 points per night, or has a revenue rate of $290USD per night. Before reading on, ask yourself, would you use points or pay for the stay?
I’m guessing most of you said, “use points.” Why pay nearly $300 per night when you can have the stay for “free?”
And that was my initial reaction as well — “of course I’m going to use points, I don’t want to pay nearly $300 per night for a hotel.” Well, based on what I’ve read, typically Hyatt points are considered to be worth anywhere from 1.5 to 2.0 cents each, which seems like a fair valuation. I realize just how tough it is to apply that standard, though, when actually making a reservation. At 2.0 cents per point a hotel room would need to cost at least $300 per night for one to logically use points in this situation. Let’s even take the value of 1.5 cents per point. At that rate, we’re valuing this at $225 (15,000 points x 1.5 cents each), meaning using points is $65 per night cheaper than paying for the room. But I’m conveniently forgetting to include the points I’m not earning for the stay (at least 2,000 points per night, though probably much more if there’s a promotion), the stay and night credit I’m not earning for the stay, not to mention the fact that I could use a confirmed suite upgrade for my reservation on a revenue stay, while I couldn’t for an award stay.
But again, going back to the “big picture,” why would I spend $290 per night on a hotel when I could just use points? I guess the decision making process is a bit easier for those of you that travel for work, since you don’t directly “pay” for accruing points. But like many others, I often mattress run. A mattress run that costs me $90 or so nets me about 6,000 points, which is right on the cusp of the value above.
And while I’m on the subject, I think redeeming for very high end properties (think hotels like the Park Hyatt Paris) isn’t that easy of a decision either. A night costs 22,000 points, which are “worth” anywhere from $330 to $440 depending on how much you value Hyatt points at. At that point I would probably just say “screw it, I’m staying at the Holiday Inn Express.”
Ah, the complex world of miles and points. Where do you stand? In the above example of $290 vs. 15,000 Hyatt points, which would you do, and why? Am curious to hear some other perspectives on this…
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