Earlier today it was possible to cash out Hilton points at Amazon.com at 0.5 cents per point (cpp). This was a good deal. I personally think the average redemption value of Hilton points, for Hilton award stays, is around 0.45 cpp. Being able to redeem it at a slightly higher value for something more universally useful like Amazon is pretty cool. I was busy at work the whole day and missed it. Would I have partaken had I not missed it? Probably not. Here’s why.
I get closer to 1 cpp for my Hilton redemptions. The sweet spots are in “<=10k” and “>=80k” levels. In other words, the lowest and highest levels. Probably my last ~20 award nights at Hiltons were all in the <=10k level, including several in my top 10 low category redemptions list. On the other end of the spectrum, I have reserved Conrad Bora Bora for 80k/night next year. The most basic room in high season (when I’m going) is going for $1,300 after tax. That’s over 1.5 cpp! Even if you deduct the expensive inter-island flight cost to Bora Bora from the room price, it’s still about 1 cpp. Would I ever pay this kind of cash for this room? Absolutely not. Then again, I also wouldn’t pay the cash price for a 10k hotel like Hilton Sibiu, when I can get something just as satisfying (for what matters to me) for half the price.
So, the lowest and highest redemptions levels are where the best CPPs are. That’s not to say every hotel in those categories have amazing CPPs, but on the whole they’re higher. Where you see the crappy average 0.45 cpp is in the middle levels – the 30-60k levels. I see all the time mediocre hotels, especially in the US, that cost $150 after tax, require 40k points. That’s a horrible value. I am never going to redeem for those. I hope you don’t either. If you do, then today’s short-lived Amazon deal was probably better. After all, for just 2x of 40k, you can have the $1,300 Conrad Bora Bora. That possibility makes it even hard for me to redeem 40k points for a $250 hotel (like DoubleTree Queenstown), although I could be convinced if there were no cheap cash options in the vicinity.
I will continue to use Hilton points for the lowest and highest redemption levels for maximum value, which should far exceed the 0.5 cpp Amazon deal. This means ~95% of Hilton properties, in the middle levels, are worthless to me from a redemption perspective.
I would have to challenge the methodology by which people use to figure out what value they’re getting. I have discovered that those 10 K properties are often in locations where for about $50 or $60 I can get an excellent hotel of comparable quality. examples of that would be in many parts of south east Asia, so trying to compare it against a clearly overpriced chain hotel like Hilton is not really an accurate evaluation. At least it’s not for disloyal tourists like myself.
I agree the RIGHT way to assess REAL CPP should be based on the best comparable cash alternative, keeping in mind the ~15% tax incurred by cash stays that award nights usually spare. That said, I usually redeem in high season to get max value. We must also consider status benefits like free breakfast/dinner, lounge access, and upgrades – and how much value those add for you. To me, the value of an award night is ~130% of the room price. Although I try to get 1 cpp for Hilton, I value it at 0.65 cpp, which I think passes the real CPP test for just about every redemption I’ve made.
Thank you for a thought provoking article. I just read it out loud to my husband as we were discussing the merits of 40,000 points vs $153 for the Hampton Inn Chicago Midway (have to be at Midway for work). I asked him if he would have traded our 1,000,000 HH points for $5000 at Amazon and he shockingly and unhesitatingly said yes, whereas my reaction would have been the exact opposite. On the surface, one million points seems huge while $5000 is next to nothing.
After about thirty minutes of discussion and math, I began to see his point. We live in Europe and tend to apply a much less scientific approach to points redemption. While some redemptions are a no-brainer (we love the 95,000 point redemption at Conrad Rangali Island), our rational otherwise is basically – does the room rate seem ridiculous (pretty much $200-$250+)? Then use points. Otherwise use cash.
After reading your article maybe we need to start pulling out the calculator more often.
Thanks for the lively discussion on a dreary November London morning.
Glad to provide thoughts for your discussion! I think it’s worth considering CPP for your redemptions, but of course it also depends on the acquisition cost of the points and also your cash saving strategy.