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).
Sometimes Hilton points can be a great value. But at least during the past year, the points cost buying points during the bonus sales for Hilton umbrella hotels in Japan has been EXACTLY the same as the cash sale price. So YMMV.
I’ll share some YMMV data points with the two latest hotel points devaluation offenders:
1) Just redeemed 380,000 Hilton points for 5 nights mid-December at the brand new (opening Sept. 16) LXR Roku in Kyoto, at 95k per night with 5th night free. At $816 per night, I reckon I’m getting 1.7 cents per point, far above the 0.5 cent valuation. For the record, I did buy Hilton points during the 100% bonus promotion together with the Aspire sign up offer.
2) Redeemed 180,000 IHG points for 4 nights at IC Beppu with 4th night free mid-November. With lowest listed rate at $894 per night, that’s almost 2 cents per point.
Even with the Hilton points sales with 100% bonus points, it’s still not worth buying. I was tempted but ran a few simulations of points vs cash reservations, and cash still came out top.
150% bonus points would start to align the values and make it an interesting deal
I value Hilton points at 1/3 US cent. I have often got better than that, but it helps me avoid buying expensive points, especially now that my travel days are ending (I will not be a guinea pig, even if rewarded with some old carrot and lettuce).
I totally concur with John’s point that using an imaginary valuation may make a person feel good, but I have never subscribed to “ignorance is bliss.”
I never buy points. It is hard enough finding good redemptions for the points I already have.
I have and I do when it makes sense.
While I enjoy good hotels I rarely spend any time in them besides when I’m asleep – that’s hardly worth $$$ imo. So I usually question the value of my hotel point redemptions. But I looooove flying in business and first and that’s where my points go. And actual $$. I do pay for business if the deal is right.