Valuing points seems to be more difficult than proving Beal’s conjecture though if you have some time on your hands, the latter is worth $1M, which might be better for you than getting the Hawaiian Airlines card, but barely. It is sad to see people claiming that points are worth any more than the price they can be acquired for, because it means they totally lose sight of reality. I’ve spoken about this in the past, and here is an Infographic on valuations for those who have trouble reading, but enjoy pretty colors.
Today I transferred 7000 ultimate rewards points to Hyatt in order to book a room for my mother’s last night in NYC, since traveling down from upstate is a trek, and it allows for some site-seeing in Manhattan. I typically carry very low balances of points, at the time of this award I didn’t have enough hotel points for a stay in any single chain. My strategy is to keep (if possible) anything up to 100,000 variable points in programs like Ultimate Rewards, Membership Rewards and SPG. The latter is a hotel chain, but I tend to think of them more as a way to top up my American Airlines balances instead.
I store all my balances in AwardWallet, it is a great App that allows you to link all your accounts together, somewhat like a mint.com for miles, and also has autologin to the individual sites.
Variable Value when Burning
You most often consider the variable value on the earning side. This is the root of the Mileage or Mattress Run – where people pay for flights or hotels they don’t ‘really need’ in order to push them past a status tier. However, when looking at options today I thought about the variable nature on the burning side. My options were as follows:
- Pay cash for a room in NYC – since I like my mum I would probably go for 4* or higher, the rate for that would be around $255 on Hotels.com once you add in Taxes/Fees etc. And then once you back out rebates, probably netting about $210 (welcome rewards+2x points on Credit Card+portal).
- Pay points from one of my programs:
- Club Carlson – far too short, plus no viable transfer partners
- Hilton – I have about 30K, would need to transfer 30-40K Membership Rewards for a night…
- Hyatt – 18K – would need to transfer 7-12K Ultimate Rewards for a night.
I did try to book the Park Hyatt NYC for 30,000 per night as a ‘treat’ but they had no award space. Ultimately we settled on the Hyatt at 48th and Lex, for 25,000 per night. Now, the hotel rate for the night was $545 so I’m sure someone would love to claim I got 2.2 cents per point value… but I would never have booked a hotel at $545 per night, so that is, as the French would say, bollocks. The 0.84 cent valuation I gave this award was to compare it to the $210 room I would otherwise have had to pay cash for.
The variable nature being that you’d pay a lot more for a flight if it made you a top tier status flyer, with perks for a year, so you are paying more good money for points/status. The reverse is that when you think about points as a way to protect your money, you’d be happy to lose the points and keep the dough. I’d always lean towards keeping dollars in my pocket, and low points balances.
I see orphans everywhere
No, I am not Mother Teresa, I am talking about Orphan Points. The ‘industry’ definition of Orphaned Points is those left over remnants that you can’t do much with. My Hyatt points weren’t technically orphaned because lower down the award chart I could use them for a room. However I see orphaned points as any points that are locked into a specific, non transferable program.
These points are sitting there doing nothing, other than offering a little opportunity value if I need a last minute flight somewhere. However, I hate holding onto points like these. Because I hate getting caught out with devaluations. That is why I recently booked a ton of Avios awards, because I had close to 150K through two programs, and it was just too much exposure. Tickets and ‘free travel‘ I love. Points balances, not so much.
By wiping out my meager Hyatt balance, and losing some Ultimate Rewards at 0.84 rates, I get to keep $210. My balance of 100K Ultimate Rewards can buffer this outflow, and will rebound (using regular spend) before I need to tap into again.
Ironically, I think that many of you might also think that 25000 for a $545 hotel was great value, and we both might have booked the same hotel. The difference is that if you think about it ‘the other way’ where it is 2.2 cents per night, you don’t mind buying, or ‘manufacturing’ points at a price below that.. to that line of thinking ‘buying Ultimate Rewards’ at 1 cent each would be a bargain, but when you do the math, perhaps it isn’t so cut and dried. For those who fly First and take a lot of trips, I can see the value in paying more for their points, but for the ‘average joe’ paying a net cost for your points, even one that appears discounted can be a real mistake.
Be careful when reading others valuations, if they are ‘selling’ a lifestyle you might find that their logic might work, but also you might find yourself buying points for more than you burn them for. I’m not offering 1M for proof otherwise, but if you think i’m wrong to value at .84 cents I’d be glad to hear why! And yes, there must come a time where the value ‘isn’t worth it’. For me the math on that is the spread between point acquisition and for an acceptable alternative.