Originally Posted by
sbm12
I'm sure there is no one correct answer here but I'm curious how folks do the math.
Say a room is $100 or 10,000 points. It is east to say that's a penny/point (though it will be slightly higher due to taxes). But what if there's also an option at $40+3000 points.
Are the points worth 2 cents each (3000 points makes up the $60 I'm not paying in cash for the room)?
Or are the points worth 0.57 cents each (I spend $40 to "buy" 7000 points to complete the award)?
Something else??
I would value the transaction based on the cheapest means of obtaining that room based on my points valuation. The points would be worth their conversion value based on whatever I was otherwise going to spend, either the cheaper cash or points option. In your example, if I generally valued those points at 1.5 cpm (i.e. Hyattish), the the cash rate is what I would normally pay. I'd consider myself using 3000 points to save the $60 I would have spent, therefore redeeming at 2 cpm. If I valued the points at a much lower value (say 0.3 cpm Carlsonish), then I would normally redeem points. So I'm spending $40 to buy the 7000 points I needed to complete the reward, paying a rate of 0.6 cpm.