Book low-end or luxury hotels to get the best value from your points

After saving up your points and miles to redeem for your dream vacation, you want to ensure you are getting the best value. AT TPG, we've created points and miles valuations to help you better understand the average value your rewards are worth.

When it comes to booking a hotel room, there are a healthy number of ways to get huge value for your points, such as:

• Redeeming your points for a specified number of consecutive award nights to achieve a "bonus" free night (five nights with Marriott and Hilton, and four nights with IHG when you also hold an IHG credit card)
• Using your hotel points to reserve hotel rooms at events like the Super Bowl and the Indy 500 when rates are cripplingly surcharged
• Booking activity-specific locations during peak dates — such as ski resorts in January, St. Patrick's Day in Dublin, etc.

However, there's one philosophy you can follow to nearly guarantee yourself a great deal every time. Keep reading to find out the best ways to use hotel points to (almost always) get outsize value.

Related: How (and why) you should earn transferable credit card points in 2024

Book low-end or luxury hotels with points

Here are the current TPG valuations for the most popular hotel chains:

• Marriott: 0.84 cents per point, on average
• Hilton: 0.6 cents per point, on average
• Hyatt: 1.7 cents per point, on average
• IHG: 0.5 cents per point, on average

All but Hyatt have abandoned an award chart, as loyalty programs have migrated the way of "dynamic award pricing." That basically means hotels will charge you whatever they feel like, with cash prices and demand likely contributing to the award price.

Still, as a rule of thumb (there are certainly exceptions), you'll get significantly more value than the figures listed above by redeeming your points for either the absolute cheapest or the most expensive hotels you can find.

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For example, there are almost 200 Marriott hotels in the Dallas area. Here are the lowest award prices for a random date in November.

The cheapest rate is at the Courtyard Dallas-Fort Worth/Bedford. You'll pay 12,000 points per night for a room selling for $131. That's a value of 1.09 cents per Marriott point. Since TPG values Marriott points at 0.84 cents apiece, it's not a spectacular redemption but is significantly better than more middle-of-the-road hotels like the Renaissance Dallas Richardson Hotel. This hotel charges 23,000 points for a night costing $124, a below-average value of 0.54 cents per point. Let's scroll down the page to examine the opposite end of the award price gamut.

The JW Marriott Dallas Arts District costs 43,000 points for a night that otherwise costs $564 — providing a value per point of 1.31 cents. And The Ritz-Carlton, Dallas costs 87,000 points for a $1,042 night, yielding a value of 1.2 cents per point. As you can see, the best value for redeeming your points for hotel stays tends to exist when booking super-cheap or luxury hotels.

Related: What are the best hotel rewards programs in the world?

How to book hotel award stays

If you know the destination you're after, head to the hotel website where you plan to book. For this example, let's use Hyatt.

First, enter the location and desired travel dates. Make sure to click the "Use Points" box located below the dates.

Then, on the results page, you can use the filter menu to sort available hotels by award price. Make your selection and click "Apply."

We can now see all available hotels. There aren't many in Zurich, which makes this example all the more potent.

The Park Hyatt Zurich, a bucket list hotel, costs 40,000 points per night, or $864. That equates to 2.16 cents per point — a considerable 0.46 cents more than TPG's reasonable redemption value of 1.7 cents apiece. The cheapest hotel on the list, the Lindner Hotel Oberstaufen Parkhotel, costs 12,000 points per night, or $276. This gives you a value per point of 2.3 cents per point; that's 0.6 cents higher than TPG's estimated value of Hyatt points.

The two middle-of-the-road hotels offer 1.16 and 1.66 cents per point, both of which are below TPG's estimated average value.

Bottom line

To squeeze the most value from your hotel points, try to stick to either the cheapest award prices at unmemorable hotels or the most luxurious resorts you can find. The middle-of-the-road hotels are where there is generally less value.

This is in large part because you hardly see a hotel priced under $100 nowadays — but award prices go as low as 5,000 points. Any hotel you find for 5,000 points is almost guaranteed to be a steal.

Likewise, the most luxurious resorts can easily cost $1,000 per night. Even a sky-high award price will likely yield a good value for such exorbitantly priced hotels.