Originally Posted by hhdl

Fundamentally for airlines and hotels, the point price is determined by: (p*m + (1 - p)*r))/c, where p is the probability the seat/room wouldn't have sold, m is the marginal cost, r is the expected cash revenue if the seat sold, and c is an internal cash/point valuation. Yield management does a better and better job of maximizing r and minimizing p, inflation is generally if anything increasing m, and the data scientists of the world are improving their estimates of p, m, and r. All of that means that even if the internal exchange rate c is constant, the visible effect is persistent devaluation of points/miles.