Originally Posted by
mikeef
Thanks!
Question #3 is on cost accounting:
I traded 10K Marriott points, which I value at about 0.8c per mile, or $80, for 8,000 Wyndham points, which I value at about $90. All assumptions are based using the value of points on the best hotel that the top tier could get me.
In terms of determining the value of the Wyndham hit that I will receive, which of the following is the most valid way to do it?
1) It cost $80. I traded 10,000 Marriott points for the hit and I value those points at $80.
2) It cost $70. The Wyndham points were worth $10 more than the Marriott points, so I need to incorporate that savings into the price, since I saved $10 by not having to use my own Wyndham points (which I don't have).
3) I gained $10. The Wyndham hit was worth $90, I paid $80, thus I made a net profit of $10.
My response would be that it seems that valuing 10K Marriott points at $80, but valuing what they can be exchanged for at $90 is a bit odd. It seems by your description that the value of 10K Marriott points should be $90, since they can buy $90 worth of Wyndham points.
So I'd say the hit cost
$90 -- the
opportunity cost of the 10K Marriott points.
Of course, as a poster above noted, you have to figure out the marginal utility of the points. I'm assuming you have made those calculations already and decided that THIS batch of 10K Marriott/8K Wyndham is worth $90 to you.
That's my logic -- others may have a different take.