If I were the friend, what I think would be fair is that you get credit for the $150 plus tax in the cost splitting and maybe I buy a few extra drinks if there's a real upgrade in hotel quality.

I don't really understand all the people suggesting that there's something wrong with your longstanding and mutually agreeable practice of splitting the bill. Given that you're sharing one hotel room to save $75 per night, I gather that neither of you thinks the amounts involved are too trivial justify doing an accounting between friends.

Personally, however, I would strongly suggest that you don't even bring up the subject of points and just pay cash and split the cost in the same way you've done in the past. As you can from comments here, a lot of people think frequent flyer points don't have real value and don't think that you're giving up something valuable by using your points. I think there's a lot of room for misunderstanding and hard feelings with your friend.

My suggestion is to save the points for a future trip where you would otherwise be paying the cost entirely yourself (think female roommate rather than buddy).

BTW, my opinion would be exactly the opposite if there weren't a cost (in lost points) to the OP of providing the "free" room. If he had some kind of expiring certificate or had access to unlimited free rooms as an employee benefit, then I might be taken aback if he expected to be reimbursed for the "cost" of something he got completely free. The difference is that I don't think using up valuable points is "free".