Not all points are created equally. At MileValue, we take pride in assigning values to frequent flyer miles and analyzing their best uses. Scott worked up the Mile Value Leaderboard, and his math reveals the rational step-by-step method he used to arrive at his cent per mile valuation. He even created a Mile Value Calculator to help you with your own valuations if you want to take a crack.
In the coming months, we will assign a value to hotel points as well. The process is going to be a bit trickier. After all, not everyone appraises hotel rooms the same way. Scott enjoys meeting new friends at hostels or even couchsurfs. It’s how he gets incredible locals-only experiences and stretches his dollars even further. I love hostels, especially the Wombat’s City Hostel in Munich. Most times, though, I prefer hotel rooms.
This article will serve as an introduction to hotel point valuation as well as a peek behind the curtain at our formula. Feedback is encouraged and appreciated. We want to get this right.
What value do you assign to a hotel room?
The value of a hotel room is the lesser of the best available price and your subjective valuation. For example, I need a hotel room in Richmond for a wedding and the prevailing rates are about $110 a night. The wedding is for a good friend. I would pay up to $300 for a hotel room, but I can’t use $300 for my calculation if hotel room prices are $110. The lower price is what I have to use.
On the flip side, let’s say I’m contemplating going to Hawaii during Christmas season and rooms rates are outrageous, over $600 a night. I would only pay up to $300 for a room. I need to use the lesser valuation ($300 instead of $600) when calculating cost.
For more thorough information, make sure to check out Scott’s first-ever post, How Much are Frequent Flyer Miles Worth? A Guide.
What other factors will go into your valuation?
When booked through the official hotel website, your paid stay should earn credit towards elite status. If you value Gold status with Starwood Preferred Guest program at $250, one Starwood hotel stay should factor in 1/10th of that valuation. It takes 10 stays to reach Gold status.
If you are using points for an award night, you also need to consider the points foregone by not paying cash. At Starwood hotels you earn 3 Starpoints on every dollar spent on the base rate of the room. By booking a stay with points, you are forfeiting the opportunity to earn points.
Our basic formula for hotel points is below:
Point value = (value of the room + value of earning status – cash outlay)/ (points used + points foregone)
Which programs will you be analyzing?
We will start with arguably the most popular program, Starwood Preferred Guest. From there, we want to assign values to other major chains: Hilton, Hyatt, Marriott, and Priority Club.
Once we build our rankings for those five programs, we hope to branch out to even more, including Wyndham, Club Carlson, Choice Hotels, and Best Western.
How will you separate points that are close in value?
There is a lot that goes into understanding hotel points. Small quirks in each program might raise or lower the value of each program’s points. Below are some questions we aim to tackle through this process.
Which points can be used for room upgrades? Some programs, such as Hyatt, allow you to spend additional points to secure a suite or room with club access. For special occasions, that can be incredibly valuable. Other programs, like Priority Club, only let you use points to book a basic room. You must contact the hotel directly and negotiate payment for suites.
Sometimes, though, you don’t need to pay more points for a room upgrade. Scott used the infamous $20 trick in Hawaii and was given an incredible view.
Which points count towards elite status? Starwood award nights count towards elite status. They are trying to engender loyalty and shift your travel spend away from other hotel chains. Other programs, such as Hyatt, don’t count your award nights towards elite status. Though I’ve been told it’s simply an IT issue at the present time, it’s still a glaring negative compared to other programs.
In that same vein, not all hotels even recognize your elite status on award stays. Priority Club is famous for not being obligated to offer certain benefits on award stays. On the other hand, I’ve been treated very well as a Starwood Gold member, regardless of my booking method. When I stayed at the Moana Surfrider in Waikiki on points, I was upgraded to an Ocean View Deluxe room without prompt.
Which points can be transferred to frequent flier programs? We will be devoting a lot of time to this question. It seems like most programs allow transfers of hotel points into frequent flier miles. That doesn’t mean it’s a great value. Starpoints, with a giant list of transfer partners, are the gold standard of hotel transfers. Wyndham points also have a surprisingly favorable transfer ratio. That means something, especially when you are in need of miles to top off an award ticket.
Versatility is the key to booking both hotel rooms and award flights. Being able to swap points into miles when needed and at a generous ratio is incredibly helpful.
Which programs offer “cash & points” award nights? Cash & points is a great way to stretch your hotel point balance, but not all cash & points options are the same. Marriott’s program simply allows you to combine a paid reservation and a points redemption. That’s misleading, at best. Starwood’s cash & points award chart had some great deals, but it’s recently been devalued. We will show you which cash & points are good deals.
Which programs have the best aspirational awards? There is something to be said for using points to book a luxury hotel, especially one that is normally out of your budget. Some programs, Hilton and Hyatt in particular, have great ways to snag those dream hotel rooms (think: Maldives or Bora Bora) for fewer points than you would expect.
Determining hotel point valuations will take time, but we think it’s an important complement to our Mile Value Leaderboard. Everyone has different preferences and budgets for hotel rooms. Our goal is to rationally compare each hotel point and its features, so you can make an informed decision on which to earn. And so you can make decisions between booking award nights and booking cash night.