A LoyaltyLobby reader left a couple of comments to a recent Hilton Honors buy points piece regarding the valuation of expensive hotels and business/first-class airline seats.
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Here’s the response from the reader:
Also worth to note that Hilton devaluates points in many hotels so I guess value is not 5c anymore but 4c at best, 3.5c more realistic.
My response:
I agree when it comes to most hotels. Very expensive ones do make sense as awards, though when buying points.
Reader’s reply:
I think that RRP/points ratio mostly artificial ad trick in favor on cobranding credit cards.
If one not regularly book 600usd or 6000usd suites at own money it is very false “wow lets pretend for one day we are high rollers”, same as 10k-25k.usd list value of first class seat on regular commercial plane.
Half bottle of quite simple champagne which no one buying at list price and spoon of <cheap kind of> caviar? No crazy menu, no neck and shoulder relaxing massage, no even dedicated air system with humidity control and real UV+coal disinfection?
I am mostly on the same page with the reader that many program participants, not just with Hilton but all others, tend to overestimate the value of their miles and points.
It seems that the latest trend is to say what “the fair value” is that they got from their upgrade or stays on points or from a premium airline ticket, regardless of whether they had ever been willing to pay for the cash for it.
This valuation method is entirely incorrect.
I like my upgrades and booking expensive hotels and flights with points and miles. However, I don’t fool myself, and neither should you; what is the value to you or me.
Would I have been willing to pay $3K/night for my stay at the Waldorf-Astoria Maldives, or $10K for my ANA First Class flight from Tokyo to Europe last fall? Absolutely not.
And then there is a subset of readers and program members who would pay for that stay, perhaps not at the sticker price, but by cutting it half by buying points or miles and then redeeming for an award. The same goes for that airline ticket.
Conclusion
You should not “fool” yourself with points and miles valuations that many websites publish whose primary business is to get you to sign up for expensive credit cards (for which they get compensation).
There is nothing wrong with using the miles and points for these otherwise expensive trips, but don’t fool yourself with the “value” you derive from them. The value to you would be how much you would be willing to pay for the flight or stay.
I like to use my airline miles for one-ways between expensive city pairs (my last redemption was from Mexico City to Helsinki via Frankfurt that I wrote about), and hotel points at these expensive destinations (I have a point reservation for next year at that new Hilton property in Seychelles).
