Published on November 5th, 2018 | by William Charles104
Common Loyalty Points & Miles Valuation Mistakes
At the end of last month there was a incredibly small window of opportunity to redeem Hilton points at Amazon for 0.5¢ per point. One thing I noticed was some people saying the deal was bad because they value Hilton points at X amount per point, some of these valuations were (in my opinion) absurdly high and made me worry that readers weren’t properly valuing their points. After speaking with some of these readers, here are some of the more common valuation mistakes made.
The reason I think points & miles valuations are important is that in many cases it’s possible to effectively cash out your points, whether it be from For the context of this post we will be primarily talking about Hilton points and opportunities, obviously this is equally applicable to other loyalty currencies.
Nobody Pays List Price
When looking at valuations, one common thing people will do is look at how much a certain redemption would cost if you’re paying cash. For example a property might cost 10,000 in points or $150. That’s an easy 1.5¢ per point in valuation. Unfortunately that doesn’t take into account any stackable opportunities. For example with Hilton at minimum you should be getting:
- 2% cash back when using a rewards credit card
- 1%+ cash back when going through a portal
In addition to that you’re also earning elite night credits on a paid stay and points. At minimum you’re getting 10 Hilton points per $1 spent. In reality Hilton always has additional promotions you can stack it with. There are frequent American Express offers for different Hilton brands & you can currently get double or triple points. So on that $150 stay you’re actually getting:
- $4.5 in cash back
- Elite night credit
- 3,000 Hilton points
If you use your own valuation of 1.5¢ Hilton per point that’s $45 in Hilton points for a total discount of $50. Even at a 0.5¢ valuation that’s still $15 in Hilton points. You’ll note I’m actually being conservative because if you’re a base member (e.g not silver/gold/diamond) you can actually earn 10% cash back and Hilton frequently lets you stack for even more points.
All of the above also assumes that you’re booking direct. If you’re not booking direct then you have even more options. We’ve talked about how to stack deals with Hotels.com to save 33%+ before. Other online travel agencies will often have sales/special offers as well.
Would You Stay In That Property If You Were Paying Cash?
When I’m not using points I find it rare that I end up booking a cash stay at chain hotel stay (unless there is a lucrative promotion) as other hotels are either cheaper, look nicer or are in better areas. The majority of ‘value’ when it comes to award bookings also usually happens at the low and high end (e.g properties costing 5,000 points or 95,000+ points). If you’d normally never book a hotel costing $600+ per night then it’s important to keep that in mind when valuing points. I find it easiest to think “if this hotel was on sale, how much would I pay in cash” and work backwards from there.
Most Brands Sell Points/Miles
Most loyalty brands now sell points and miles. For example Hilton sometimes has a points sale where you get a 100% point bonus, this means you can effectively purchase points at 0.5¢. I find it strange how many people will value Hilton points at some absurd rate like 1¢ per point, but then not want to purchase any at half that price. Obviously people have limited vacation days and if you already get enough points from other lower cost sources I can somewhat understand the argument but it’s still a stretch and even more so when those same people have cash stays where points could have been used.
I understand that this sort of min/maxing isn’t for everybody and can ruin some of the enjoyment of this hobby. That being said it’s worth spending a small amount of time on this sort of thing so you make rational rather than irrational decisions. For a lot of people there is a reason they wouldn’t normally take expensive luxury vacations, yes this hobby does give you the ability to do that but would you be better served by spending less points/miles and turning some points into cash (e.g American Express Membership Rewards points into cash at 1.25¢ via Charles Schwab Platinum) to help pay off your mortgage sooner? You might decide that this hobby gives you the financial freedom to take those vacations that are a bit nicer, just make sure it’s a rational decision and that you don’t let lifestyle creep get the better of you.