Value of marriott rewards points
 

Well, I actually have valued MR points at around $0.0088 per point. There are a few key assumptions in deriving this value. Firstly, I assume that 80% of your stays are at categories 3-6, and the remaining 20% split evenly between the tail categories (the super awesome hotels and the super crap ones where the fbi kicks in the door on a regular basis). I also assume that 25% of your stays rely on PointSavers rates--since its not always a given that you can get it. I also assume that 1 out of every 5 stays has a stay of five nights, which earns you a free night (after 4 nights, so you get the fifth free). The national average for stays is between 2 and 3 nights, so it seems fair to assume that only 1 out of 5 trips would be for 4+ nights. Lastly, I assume that 25% of your points will be used to purchase rewards packages, with the balance being used on just straight up hotel stays. Rewards packages are generally a better deal (they are worth, in my calculation, slightly north of $0.01 per point), so if you plan on taking lots of vacations you could argue for a higher value for MR points. Of course, I also have priced out average hotel rate stays for these hotels. I didn't apply a priceline type discount, though one could argue for that. Based on all that, I arrive at the abovementioned point valu. To see the hard-core details of the analysis, check out the post http://www.plasticiq.com/blog/2009/0...ewards-points/.

PlasticIQ, you are a veritable genius, and I say this having read your analysis of not only the Marriott scheme but also *wood and Hilton.

The answer you say is $0.0088 per point, with Hilton coming in at $0.004 and *wood at $0.02... yes that is 2 cents each... but just for my own curiosity, per dollar spent which program of the 3 is worth most, using the final balanced values per point you have given?

As a matter of interest I achieve about 1.5 cents per point, but that's because I deliberately eschew the poorer value redemptions. In fact I have booked a stay in Moscow during December and after the pointsavers 15% rebate it costs 68,000 points for 5 nights valuing each point at 4 cents:D

PlasticIQ, that is a great comprehensive analysis of rewards points.

On thing that I do question is whether people overvalue their rewards points because they lock the member into using the points at a specific brand. There are many opportunities to stay at a similar quality hotel (using hotwire and better bidding) for half the rate that a Marriott offers, or just stay at a cheaper hotel, so the value is not always as simple as price of a Marriott room/points used.

That does take some of the fun out of things - I know I would never have paid 500Eur for the Marriott Champs-Elysee - if I did not have Marriott points, I would have found a 150EUR (or less) hotel and I would not have booked somewhat less desirable nights there either. That's a good reason to not Marriott CC on non-Marriott purchases.

I agree with BrightlyBob, 1.5-4¢ per point is what I get for point redemption. Anything less than 1.5¢/point I pay for the stay. YMMV

I agree. It doesn't make much sense to buy use points Marriott sells for $0.0125 a point for a hotel where the daily rate works out to less...better to earn instead.

RE: value of MR points
 

Thanks for the responses. I'll try to tackle a few of the questions and comments in order:

Well, I assume you mean if you use the respective credit cards, which program yields the best benefit? (otherwise the answer would simply be *points, which are valued highest of the 3 programs in play here). So actually the main reason I am making the plasticIQ site is for the credit card ranking engine (and thus why i wrote these articles), to answer exactly those types of questions.

So I just ran the PIQ Ranking Engine with the following profile:
Credit score: excellent
Pay-down behavior: always pays monthly balance in full (so no interest charges).
Monthly spend: $1,842 (of which air travel averages $208 per month, hotel is $83/month). I wont bother to list out all the other spend categories.

So the results are interesting.

The AMEX *wood pref guest card takes top honors (prob not a huge surprise, given its $ value per point is slightly north of $0.02). If you use the card for 3 years (with the spending profile i specified), it would be worth $1561 to you, after netting out any fees and foreign transaction charges ((I assume 3% of yearly spend is subject to foreign fees).

The Amex Hilton Honors card actually gets 2nd spot; if you use it for 3 years, you should make about $1332 after netting out any fees and foreign transaction charges . Dont forget on this card you get 6 points on supermarkets, gas spend, telecom/cable, and drug stores. You also get 6 points + 15% silver bump (=6.9 pts) for stays at hiltons; i assume 80% of stays are at hiltons, 20% non hilton, for blended hotel bonus of 6.1 pts per $ of hotel spend. There is also a nice 20K instant point bonus; and another 10K pts you earn over the 1st 2 years if you make 4 stays at Hiltons (which I assume you do capture). And of course everday spend gets 3 points per $.

Marriott card comes in rank#5, with a 3 year value of $995.

Interestingly, the citibank hilton honors visa clocks in at rank 8, at $813. This is due to less attractive rewards per spend category (only 2 pts per dollar of everyday spend, only 3 pts on supermarkets, gas, drug stores)...

Here's the session ID: http://plasticiq.com/index.php?go=Su...&SessionID=913

On to the next topic:
Yeh, the trick is this. Folks on FT are pretty sophisticated when it comes to maximizing the value of their points. They are very disciplined in the use of these pts. My site and analyses are actually written more for the "average joe", and the valuations are accordingly represented. Given that Marriott is willing to sell points for 1.25 cents each, it signals to me the points probably arent worth more than that for the average redeemer). For example, spg will sell you *points at about $0.035 per point, further validation that there is no free lunch when buying points...Interestingly, if you divide *point sale price by my estimate ($0.035/$0.021) that's a premium of about 75%; when you do the same math on the marriott pts (0.0125/0.088) thats a premium of 40%, so assuming the hotels are economically thinking similar, the $0.088 may not be insane for the average joe.

Final one (before i get fired at my day job):
I agree in general with this comment. Actually, for hotels I do assume a loyalty/preference factor (unlike for airlines, where I assume people just want to get there for the cheapest they can without multiple stops). But for hotels I feel its a little different since u are staying there, potentially for a longer period of time. BUT--for the hilton program i actually did apply a 25% priceline discount to my estimate of hotel costs, which could serve as a proxy for what you are talking about (I realize you can sometimes get much more of a discount, but hey its a step in the right direction,and maybe errs on the conservative side). Which reminds me--I have yet to apply that same logic (priceline discount) to the other hotel programs--which isnt fair to the hilton program. So i need to do that--which will reduce the value of *points, MR, etc. Will try to integrate that this weekend.

Thanks again all for thoughtful comments and perspectives.

Well, I know for a fact that this does not apply to many of us who use the Marriott Premier Visa. Many of us only use the card at Marriott properties yielding an additional 5 pts/$. Plus for Plats at most properties another 15pts/$, yielding a total of 20pts/$. We then cash them in on Travel Packages and get a return of 20 miles on our favorite airline per dollar spent at Marriotts. Show me where else you can get that per $ return for airline miles.

May on us who use this card, have another card we use for everyday purchases, like a Schwab Visa which gives you 2% cash back on ALL purchases and NO foreign exchange fees. Or an alternate airline's affinity card so when we have to fly the competition, we have miles to upgrade. Or *wood Amex if you split your hotel stays with SPG. So while you may have some analysis tool, it is generic and does not fit everyone's scenario, much less those here on FT.

No, he did not say anything about credit cards. He wants to know which chain has the best bang for the buck.

The following assumes top tier elite status in each program and use of the best affinity card for each hotel chain, with annual hotel spend of $20000. The figures below do not take into account extra point earning promotions (Megabonus, SPG Double Starpoints, etc) and arrival gifts bonus points Marriott (500), Hilton (1000), etc.

Marriott Plat – 10 pts/$, 50% bonus points, and 5 points/$ for using Marriott Premier Visa for a total of 20 pts per dollar spent yielding 400,000 points for the $20000 annual spend or a point cost of 5¢/Pt. Using a 5th night free award at a category 7 property costs 140000 points for 5 nights which translates to 28000 points per night or per night dollar cost of $1400.

SPG Plat – 2 pts/$, 50% bonus points, and 2 points/$ for using SPG AMEX for a total of 5 pts per dollar spent yielding 100,000 points for the $20000 annual spend or a point cost of 20¢/Pt. Using a 5th night free award at a category 6 property costs 10000 points for a 5 night stay during peak season which translates to 20000 points per night or per night dollar cost of $4000. For non-peak 5th night free award at category 6 it is 80000 points which translates to 16000 points per night or per night dollar cost of $3200. Using a 5th night free award at a category 5 property costs 64000 points for a 5 night stay during peak season which translates to 12800 points per night or per night dollar cost of $2560. For non-peak 5th night free award at category 5 it is 48000 points which translates to 9600 points per night or per night dollar cost of $1920. While I love the Westin and St. Regis brands, and stay there occasionally, the SPG redemption earn/burn ratios are horrible in comparison to Marriott or Hilton IMO.

Hilton Diamond – 10 pts/$, 50% bonus points, 5 pts/$ for double dip hotel points and 5 points/$ for using Hilton HHonors AMEX for a total of 25 pts per dollar spent yielding 500,000 points for the $20000 annual spend or a point cost of 4¢/Pt. Using a 6 night GLONP2 award at a category 6 property costs 175000 points for 6 nights which translates to 29167 points per night or per night dollar cost of $1166.67. From an earn and burn perspective HHonors is a bit better than Marriott, but only by a small margin. My personal experience with Hilton is that the hotels where have stayed, once every few years, have been a bit worn.

YMMV based on promotions, stay lenth/# of stays, etc.

What's the value of a point if Marriott won't let you redeem it? I tried to book a hotel in NOLA 2 months out on points (Nov 27 and 28). None of the 9 Marriotts would let me redeem while all 3 Starwood properties would. That is why I'm staying at a Westin right now as a gold instead of a Marriott nearby as a Platinum.

Another city wide search bug? Nothing came up on city wide search, but drilling into a specific hotel, got me this, no problem:

JW Marriott Hotel New Orleans
Marriott Rewards category: 5
614 Canal St.
New Orleans, LA 70130 USA


Check-in/check-out dates:
Friday, November 27, 2009 - Sunday, November 29, 2009
Number of rooms: 1
Guests per room: 1


Marriott Rewards Redemption: Select Rewards

Guest room, 1 King or 2 Double Room details
Hotel Reward 50,000 points for stay Reserve a Room

It's interesting to see this thread and see how things have changed over the last 9 years.

Also I saw Doc's huge number of posts but couldn't recall seeing any recent posts from him/her. Sure enough they were posting quite heavily up until Nov. 20, 2006 and then suddenly stopped. Anyone know what happened to Doc?

Because I use my points mostly for travel packages, I probably still value them at something close to 1 cent a mile. But it really does entirely depend on your personal travel and points redemption habits.

I always try to pay for my rooms because I'm gunning for lifetime plat. So what do I do with my points? I trade them in for $1000 in gift checks - costs me 135K pts. For that $1K, I should get back a minimum of 15K pts (10/$ plus 5 for plat bonus) ... that assumes that I don't stay at a Residence Inn or TownePlace Suites. I try to go for properties with 10pts/$ since I need 3 million points for lifetime plat.

re: value of MR points
 

thanks for the detailed responses/clarifications aaupgrade--quite insightful; i completely agree that there is no "one size fits all" calculation for value of points--and any tool would ideally need to be able to take into account such information as what status you are for each hotel/network, what category preferences you have, even potentially what seasonal/geographic travel preferences you have, whether you value/use upgrades,etc. to really begin to dial in on a customized, directionally accurate personalized valuation (all of which is actually do-able in theory, and a worthy goal).

I think from reading other posts on this thread, some people seem to value MR at around $0.01, whereas you have built a solid case for a whopping 20 pts per dollar of spend. So it seems the value is somewhere from $0.01 to $0.20--depending on many factors, including the sophistication of the user.

I would just note the target audience for my particular assessment is not the guy/girl spending $20K per year on hotels; according to some stats i have from bureau of economics, avg spend on hotels per year is quite low, maybe 10-15 nights per year or thereabouts, which i believe gets you to silver status, so, for the "average joe", values will likely be lower...

again thanks though for the thoughtful reply and details...

I COMPLETELY forgot about that bug! This gives me more motivation to go now. I rarely use the points, just horde them ha. Thanks!

The bug is a real PITA. Now you have to do 9 seperate searches rather than one, and most people are just going to assume there's no availabity and move on.