Advertisement

Just How Much is an Airline Mile or Hotel Point Worth?

by on January 5, 2014 · 46 comments

in Sunday Reader Questions, Video Blog Post

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

TPG reader Mahon112 tweeted me to ask:

“What do you consider a valuable point redemption for airline and hotel (cents per point)?”

So just how much are airline miles and hotel points worth? There’s no easy answer to that question and there’s no set value, which is at the heart of what I talk about every day on ThePointsGuy.com.

Everyone gets a different value out of their redemptions, and people argue all the time about whether they’re getting the full value of the face value of a ticket or hotel room from the miles or points they redeem for it. A lot of people say that they’d never pay for a super expensive business or first class ticket, so you’re not actually getting that value from that kind of award. But at the end of the day, the fair market value of the ticket is probably the easiest indicator to determine the value of your award. Because whether you want to pay for it or ever would, the airline still sells those tickets for those prices.

However, depending on whether you are basing your redemption off the market value of a ticket or hotel night, or based on the price you would pay for it, your value will vary.

Now for Mahon’s question. When it comes to credit card spending, you get 2.2% back on the Barclaycard Arrival when you redeem the miles you earn with it for travel purchases. Arrival miles are fixed-value points since you always get the same value from them for travel redemptions, and I would use them as a benchmark for what kind of value you get from the points or miles you generate from spending on your other credit cards.

That’s actually why I suggest the Barclaycard Arrival as one of the top travel credit cards out there, because you earn 2X miles per $1 on all purchases and you can redeem them for travel – pretty much any travel that you can’t normally redeem airline miles or hotel points for, such as rail tickets, car rentals, even the fees and taxes on award tickets – at a fixed rate of 1 cent per mile plus a 10% mileage refund, and know you’re getting a very decent fixed value or 2.2% back on your spending.

To contrast, let’s say you’re using a Delta Amex and you’re getting 1 mile per $1 on all purchases except Delta ones (2X per $1), and you redeem those miles at a rate of 1 cent per mile with Delta’s Pay With Miles feature, you have to think, “Why would I do that when I could be getting more than double in value from those Arrival miles?”

You only get 1 cent per mile with Delta's Pay With Points.

You only get 1 cent per mile with Delta’s Pay With Points.

In fact, you could purchase that Delta ticket using your Arrival card (which has roughly the same annual fee as the Amex Delta SkyMiles Gold card), redeem your Arrival miles for the purchase and still earn Delta award and elite-qualifying miles on your flight!

The Delta card does give you some perks that the Arrival would not, like free checked bags, priority boarding, and things like that. But you should definitely be getting more than 1 cent per mile with your airline miles, because otherwise you could just be using a fixed-value card like the Arrival or another like the Capital One Venture Rewards card – or even a card like the Ink Bold or Sapphire Preferred, which let you redeem your Ultimate Rewards points for travel at 1.25 cents apiece if you don’t want to transfer them to the program’s travel partners. Delta miles are at the low end of the spectrum, but other miles, like American or United (at least until next month’s devaluation) can be worth a lot more than that, especially on premium awards.

This whole equation is thrown off by big sign-up bonuses as well, because generally cash back and fixed-value points cards don’t have big sign-up bonuses of 50,000 or 60,000 points, but are closer to the 10,000-20,000 mark. However, the Arrival is the exception here as well since it offers a sign-up bonus of 40,000 miles when you spend $3,000 in 3 months – the equivalent of $440 worth of travel.

Additionally, elite status also provides some equation-skewing factors like bonus flown miles and other perks – so as you can see, there are a lot of variables to take into consideration!

However, if you’re looking for a rule of thumb, I’d say that in general, you should be getting more than 1 cent per mile in value from your airline miles.

With hotel points – the value range can be huge. For instance, with Hilton HHonors points, where you could be using 40,000 points to pay for a $239 hotel room like in the example below, you’re only getting a value of about 0.6 cents per point.

Screen shot 2014-01-03 at 5.28.43 PM

While I’d put Starwood points at a much higher value, like anywhere from 2-4 cents like in this similar example below.

Screen shot 2014-01-03 at 5.31.23 PMHere are my “rough” valuations of various miles and points below – and please feel free to comment with your own valuations. Because when you get down to it, the value really depends on how you like to travel, where you want to go, and what matters most – convenience or price. Sometimes the best redemptions aren’t for the most expensive tickets or rooms, but being able to redeem for the travel you want or need. However, do be smart about it and make sure that you are getting some value from your points or miles, because that’s what they’re for!

My Miles and Points Valuations - I’ll be reevaluating soon once various devaluations take place including Delta, United, Hyatt and others.

Aeroplan Miles: 1.7-2 cents each
Alaska Airlines Miles: 1.9 cents each
American Airlines Miles: 1.8 cents each
Amex Membership Rewards Points: 1.9 cents per point
Barclaycard Arrival Miles: 2.2 cents per dollar return in value
British Airways Avios: 1.5 cents each
Capital One Miles: 2 cents per dollar return in value with Venture card
Chase Ultimate Rewards: 2 cents per point
Citi ThankYou Points: 1.25 cents per point
Club Carlson: 0.7 cents per point
Delta SkyMiles: 1.5 cents each
Marriott: 0.5-0.7 cents each
Hilton HHonors Points: 0.6 cents each
Hyatt Gold Passport Points: 2 cents per point
Southwest Rapid Rewards: 1.8 cents per mile
Starwood Preferred Guest Points: 2 cents each
United Miles: 2 cents per mile, 1.5 cents post-devaluation
US Airways miles: 1.8 cents per mile
US Bank Flexperks Points: 1.33-2 cents each

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Previous post:

Next post:

  • Andy

    Thanks for the listing! What about Club Carlson points?

  • Nick DeSantis

    I like to always consider my annual fee. I typically consider how many of my points will be contradicted by how much I pay for the card. My ThankYou Premier annual fee depletes the value of the first 12,500 points I make. Then again the sign up bonus like you said (also the fee waived first year) Means my annual fee is already payed for 5-6 years.

    I also consider categories. Though ThankYou and Hilton points are worth less then other loyalties, Their spending categories are much more relevant to my student lifestyle and casual travel. So they add up very quickly.

    Sometimes if the points are worth less is irrelevant if they add up twice as fast. For example Hilton points my be close to useless, but you can get 6-12 of them at a time which is drastically higher then 1-2 at a time.

    Am I looking at things in the right way? If so i’ll stick with my current cards, but if you say otherwise I may consider new ones for the new year.

    Thanks :)

  • Sanders

    Appreciate the videos–would love to see these more frequently if possible.

  • runnergirl

    when will we get the trip report on the Andaz Papagoya?!! :)

  • Todd

    Great post. Given the devaluations in HH, Marriott, United and Delta in the last year, what are your thoughts on Alaska, IHG, and Carlson point values.

  • Ruthlessly Absurd

    Agree with most, but I think your ranking of Marriott and Hilton doesn’t make sense. The top Marriotts are 45,000 points. The top Hiltons are 90,000. Now I grant that Hilton may have more aspirational properties, but I don’t think it makes sense to have Marriott points worth LESS in some cases when Hilton redemptions cost often twice as much

  • Joe

    Good post. Gary and Lucky also have their evaluations. I think you are undervaluing Marriott (I’d put them at .8 to 1 cent per point, with travel packages and 5th night free). It’s also interesting to think about the opportunity cost of redeeming rewards (i.e., not getting miles/points, elite status credit, etc.) as well as the extra advantages (i.e., not paying hotel taxes or sometimes resort fees, both of which can be major depending on the city and property).

  • Ncsam

    DL miles are worth the same to you as UA (post-devaluation) miles?

  • Fred

    Thanks for this great video. I am new to travel rewards, and I want to start acquiring them and using them this year.

    Would you be able to help me develop a plan?

    My wife and I fly about one to two times a year for vacations. This year we want to go to Italy, and in February 2015 we want to fly our family of five to Hawaii.

    I currently have US Airways dividend miles and Starwood Account.

    What is a good plan to be able to make the most of this travel and the most of our current spending?

    Thanks,
    Fred

  • Econjon

    SPG=hyatt?????

  • Pandakun

    What I’ve found – as far as hotel redemptions go – is way to generate those points makes them a bit tricky to figure out their value.

    Marriott, for instance, gives you tons of points. Let’s say you’ve got Gold status and are using a Marriott branded Chase card and wind up spending $800 at a standard Marriott property. That’s x10 for the stay, plus another 25% bonus (from Gold status), then x5 from the card. 8000 + 2000 + 3000 = 13,000 points. Also, you can transfer points from your Sapphire/Ink cards, and there’s plenty of opportunities to get additional Marriott points through Hertz, their shopping portal, etc.

    Whereas with Starwood, their branded card only gets you x2 points + the x2 points for staying, their bonus promotions aren’t all that great, and you can’t transfer points to them from… anywhere, I don’t think. So $800 spend there will net you 3,000 points.

    What I’ve wound up doing is staying (and paying on my Chase card) at Marriott and shopping with the Starwood card so as to evenly increase the nights gained. I never transfer points from my Sapphire card to Marriott, as it’s “cheaper” just to stay at a Marriott hotel for a night for the same (or more) point return. Yeah, I don’t get the elite status of Starwood, but my strategy is to pay less or nothing for my stays when I vacation and I don’t vacation that often.

  • JakePB

    I’d be curious to know your 2 cents, as to whether or not Alaska miles are worth 2 cents.

  • Danny

    I think Marriott points are far more valuable than you’ve listed them as. 0.5-0.7 seems silly. Do you ever actually stay at Marriotts? Have you ever actually used their points?

    I just booked the residence inn in Alexandria VA – 270 a night in June – for 20K points. That’s a hotel at the low end of the spectrum. At the high end, you could go to london and stay at the Park Lane Marriott for 45K Marriott points per night – and the park lane is 300 GBP = about 500 USD.

    Plus, if you have a large number of points you can use them for travel packages which are a fantastic deal – They let you transfer Marriott points up to 100K at a time into airline miles for nearly any major airline. There’s also the 5th night free option.

    I suspect you didn’t actually do much research into the Marriott points. They’re pretty valuable when you put just a little bit of effort into redeeming them the right way. I feel like I’m always defending them on here.

  • Adam

    For daily spending would you recommend the Sapphire Preferred or Barclays Arrival card? I only fly domestic a couple of times a year around summer break and christmas.

  • Adam

    Although the Hilton Amex Surpass may seem relatively lower in redemption value, I found properties (i.e. Waldorf NYC) valued at $429/night for $80,000 pts. Considering the taxes, fees, internet and breakfast, the points seem to be worth far more than .5 cents especially at this property. If I spend 40k and earn platinum status with Hilton, the value of 3-6 points on most purchases will make this card very friendly for a weekend getaway on just $40k in spend. Any thoughts?

  • mahon112

    Thanks TPG. Let me know next time you’re in San Diego, drinks on me.

  • travelsaurus

    I just booked a $14,000 itinerary for 120,000 miles and was trying to consider if I got a good deal or not. I think I did! This is a very helpful post, though I agree, it does matter if you just “don’t want to pay for it” at a given point (personal value, not monetary). For example, sometimes we have to go somewhere for family or a wedding and I’d rather use my money for something I’d *really* like to be doing, so I use points instead.

  • Richard

    Status is understated in the article! Royal Ambassador status w/ IHC (Priority Club) increases the value of point stays at IC properties. The terms and conditions indicate no RA benefits on point stays but experience has proven quite to the contrary. Platinum status w/ Delta Airlines increases the value of miles redemption flights via no cost changes, cancellations and bookings as well as increased low availability. So I would value IHG points at 2X value due to RA status and Delta SkyMiles at 2X value due to Platinum status.

    Booked 10 day trip w/ destination Dubai / Abu Dhabi & stopover Rome via Delta and stays at 4 different hotels via IHG. Entire itinerary can be cancelled with zero cost so miles and points have the additional risk(less) factor.

    120,000 miles flight prices out @ $9,000

  • BobChi

    I think there are at least two important different valuations that determine what we think points are worth.

    On the acquisition side, the value is how much cash would you be willing to pay for a point? For me it is seldom more than 1 cent for airfare, less than that for most hotel points, because I can usually get them cheaper than that (credit card enrollment bonuses, category bonuses, BIS). I might pay more if I have immediate plans to top off for a particular redemption.

    On the use side, how much cash would you pay for a ticket to avoid redeeming points? For airfare, I will pay between 1.5 cents and 2.0 cents cash for a ticket to avoid redeeming points, depending on the program, because I can usually get more than 2 cents value out of a redemption. The major exception would be Delta where I’d use the miles for a lot less if I ever found a seat.

    There is and has to be a significant margin between the acquisition cost and the use value or why take the trouble to play the game? The exact numbers will vary substantially in each person’s situation, and TPG must be in a very odd situation indeed if he values Delta miles as highly as United’s.

  • HikerT

    I would say valuations in the 1.7-2 cent range are extremely dubious. When the airlines sell miles for significantly less to the CC issuers and portals, and in some cases directly to consumers in the ~1.2 cent range, you have to scratch your head at valuations north of 1.7 cents. Yes, you might extract value than this when you redeem the miles, but the price at which you are indifferent between accumulating miles speculatively is a far better indicator of what you value them at. For example, not many people will jump when US sells miles for 1.88 cents, but we see a lot of interest at ~1.2.

  • Christian

    I value miles at the cost I can acquire them consistently (for example United 2.1c, IHG .56c), and use that to determine whether I use miles and acquire miles, taking into account the opportunity cost (earned miles both directly and on cc spend, status miles) and the added flexibility. I often book a reward and when plans finalize re-evaluate at the then current cash price. For flights I usually only compare business reward tickets vs. upgraded economy revenue tickets, taking the cost of the upgrade into account.

  • UAPhil

    Even post-devaluation, I value UA miles significantly higher than AA miles because UA availability is much better to most destinations. (Possible exceptions – Central and South America, and some short-haul non-stops between non-hub cities where AA PlanAAhead availability is good.)

  • Juno

    While Hilton maybe just 0.6 cents per point, the AmEx Surpass gives me 6 points per dollar spent at Grocery stores and Gas station.. that’s 3.6 cents per dollar spent and Hilton also allows booking Suites and Premium rooms, and not just a standard room, (as I did i booking the 2000 sqft/ 2 story suite in Hawaii Waikoloa Hilton) That to me is a lot better VALUE per dollar spent than the other brands.

  • luv2mtb

    “Everyone gets a different value.” That sums it up. Some folks are trying to squeeze the maximum value out of each point, while others (me) are trying to squeeze the max out of our limited dollars. I tend to redeem hotel and airline points on cheaper hotels (Hampton Inn) and economy airfare. I’m not getting great value out of those points, but I’m saving a diaper load of cash. In ’12 I got Diamond status with Hilton by staying over 40 nights at an average of about $65/night. I was booking awards nights in $100 rooms in the South West for 7500 points. Granted, I wasn’t getting great return for those points, but I was saving some cache. Or those 100,000+ miles I cashed in for two coach tickets to Korea on United. Sure, I burned them on the cheap seats, but I’d have never made the trip if I had to pay $2,500+.

  • http://continentaldrift.co/ Eli Stoughton

    I agree with the general range for both Marriott and Hilton. I wouldn’t value Hilton at anything more than .5. And I think the Marriott range provided here is very accurate. I think that 2 cents for Hyatt is a little high, especially with the new Hyatt changes. If you’re doing your Hyatt calculations at the ultra high-end properties, I can see how you come to 2 cents with the high market rates. For SPG, you can easily get in the 2.2-2.5 range. After March, Southwest points will be pegged to about 1.4-1.45, so the 1.8 valuation must be an older calculation.

  • John

    Appreciate the post, but have to admit I don’t understand the relative SPG and Hyatt valuations. I personally use 2.5 for SPG and 1.6 for Hyatt. Surely you would almost never stay at a Starwood property if you truly believed the point values were equal given the significantly higher earning velocity (not to mention better promotions) at Hyatt, yes?

  • Danny

    yeah, that’s pretty freaking good. I’m assuming it’s first class tickets (or something very similar), but any time you’re getting anywhere around 10 cents per miles is a great redemption.

  • Don

    Dude…how the eff are SPG points worth the same as Hyatt????????

  • HerrHimmler

    You missed Lifemiles, a mileage programs that is severely undervalued by most bloggers.

  • Nick

    Serious question. Can someone explain to me, if airline miles and hotel points are all valued at or less than 2 cents, why not just get the Barclay Arrival and be done with it? Points are worth more and you can use them however you want.

  • Jeff

    Does it seem to you that the Club Carlson scheme allows the most value per dollar charged? Barclays is listed at 2.2 and Club Carlson at 0.7 cents per dollar. But Club Carlson gives you 5 points per dollar charged the equivalent of 3.5 cents for every dollar charged.

  • Ruthlessly Absurd

    How can you rate Marriott and Hilton as the same if Hilton redemptions cost twice as much?

  • http://continentaldrift.co/ Eli Stoughton

    You should get your calculation based on how much you would actually have to pay for a hotel. If the JW Marriott Essex House would cost you $289 after taxes, then your Marriott points would be worth .65 cents per point. If you do this for enough hotels that you would potentially stay at for both chain, then you should get a reliable range for you.

  • Ruthlessly Absurd

    Yeah but there’s a flaw to that. I would never spend 1000$ on a hotel night. Never, ever, ever. I doubt you would either. The most I would ever pay out of pocket for a hotel is 200/night.

  • http://continentaldrift.co/ Eli Stoughton

    Right. Then the best thing to do would be to run your calculations at a bunch of different hotels in each chain that you would perhaps stay at. That should give you an accurate range. So, I would include the expensive hotels and also include typical hotels. If you are getting within the same range even it more typical hotels, then your calculation is good. This is why I agree with TPG’s ranges for Hilton and Marriott above, I think that 2¢ for Hyatt is a bit too high (because I think that its tougher to get 2¢ value at mid-category hotels with Hyatt), and I think that SPG should be more like 2.2¢-2.5¢ (because I’ve found that I can get that value at every category with SPG).

  • eajeff

    You stated….”The Delta card does give you some perks that the Arrival would not, like free checked bags” but supposedly according to this website>>> http://www.delta.com/content/www/en_US/traveling-with-us/baggage/before-your-trip/checked/first-bag-free.html

    it says: You don’t have to pay for your ticket using your Delta SkyMiles Credit Card to receive the First Checked Bag Free benefit, but if you do, you can earn double miles!2

  • thepointsguy

    You are reaffirming what I said- having the delta card gets you a free bag.. The arrival does not

  • Heidi8

    We’re doing just that at the Marriott Park Lane – two rooms for five nights each for a total of 360,000 points. We’ve been stockpiling, and are about to blow all our marriott points on that week, but it’s making the trip so easy, especially as we can rack up points until the last minute via their e-certs.

  • JoeRolex

    I will attempt to answer your question using the following imaginary example:

    Nick

    Signs up for Arrival. Earns 40,000 points. Spends about 3,500 a month on his card for about 2 years. Now Nick wants to go to Hong Kong from NYC for Christmas. Books a non-stop on Cathay Pacific Flight for 1,200 USD in Economy. Nick cashes in his Arrival Points, reducing his 1,200 dollar flight cost down to 0.

    Nick flies to HKG. His seat is 18.5 inches wide. He has 32 inches of pitch. He eats a warm fusilli with tomato sauce in a metal tin. Has trouble sleeping. Nick’s neck hurts. Old man behind him keeps pressing on the touch screen, waking Nick up. Nick is unhappy. Nick can’t sleep.

    Walking off the plane, Nick looks at the other cabins. Walks past the Premium Economy cabin. Then the Business cabin. Tries to peak into the First Class cabin, but can’t see past the curtain. Nicks wonders how people can afford such expensive tickets.

    His trip is off to a rather unpleasant start.

    Joe

    Signs up for American Airlines CC, earns 50,000 miles. Spends about 3,500 a month on his card for about 2 years. Now Joe wants to go to Hong Kong from NYC for Christmas. Books a 1st Class Award Ticket using his miles, non-stop on Cathay Pacific.

    Joe arrives at JFK. Breezes through security using the security lanes for premium pasengers in a separate section of the airport. Relaxes at the BA Lounge for an hour, drinking and dining for free. Joe boards the plane at his leisure, enters the 1st class cabin, a large space with only 6 seats. Joe asks the stewardess when the meal service will begin. He finds out that there are 10 different appetizers, entrees and desserts waiting to be cooked for him at anytime. He drinks a glass Krug Champagne and wonders if he can ever go back to economy.

    Joe arrives at HKG. Walks towards the airport train to downtown. Sees a sign for Cathay Pacific Arrivals Lounge. Finds out that he qualifies for a free meal. Takes a shower at the lounge, and is on his way.

    Joe’s trip is off to an excellent start.

  • Nia

    Interesting analysis, I’m interested if you could take me through how exactly you landed the numbers, for example, united and chase.

  • JPW

    How exactly did you come up with your figure for American Express point value?

  • Frequent Tom

    Hilton sure is taking a hit on value. I personally like to factor in some of the other obvious benefits when I use my Hilton points at Embassy suites. Stayed it the one in Honolulu and enjoyed a cooked to order omelet at the free breakfast buffet. For my family of five in Hawaii, I add another $75 value to the room. Add in the managers reception (free alcohol for 2 hours) – well you do the math.

    Total cost, total value and obviously, a classy place to stay with my family.

  • Pingback: What Are Points and Miles Worth? June Monthly Valuations | The Points Guy

  • Michael Heffner

    I’m coming up with .4 at the WA Orlando… but with the devalue I just assume burn them and stay at a nice hotel. Too poor a redemption?

  • Cassie

    So this is my first time looking at getting an airline perk credit card. I will maybe be traveling only twice a year and would like to use it to also earn miles towards my flight trips or any additional vacation trips. I would like one that has no annual fee but I earn the most points per dollar being spent. The APR really doesn’t matter for me. What would someone recommend. Once a year I go home the other two times a year would be trips so if it has hotel perks with it, that would be great. Any recommendations?

  • TopAngler

    Good useful article. By some of the examples below, I would reiterate the value of miles/points varies depending on how they are used… For example, I save my miles for use on international flights. I buy an economy fare and use miles to upgrade to business class. Given the price difference between economy and business, this equates to roughly an $0.08/mile redemption value – or 4.5 times the values stated above.

Print This Page