drminn

There has been frequent debate on these boards about the value of points and miles. I just completed my redemptions for the year and thought i'd post the values as data point. These are trips I want(ed) to take, I did not try to maximize point value, although I did book first or business class internationally when the opportunity arose.

This shed some light on "real" value for myself, especially for allocation of CC signups and spending.

The redemptions are for a mix of domestic and international flights, some in Y, some in C, one in F. Mileage programs involved are DL, AA, UA, and BA, hotel programs are Hyatt, Hilton, and SPG.

Total miles redeemed 705K
Total fares $48,000
Blended value/mile $0.068

Total hotel points redeemed 455K
Total room cost $ 4500
Blended value/point $0.01

Average value/mile(point) realized with
AA $0.09 (int'l only)
UA $0.06 (domestic + int'l)
DL $0.02 (domestic + int'l)
BA $0.05 (int'l only)

Hyatt $0.015
Hilton $0.007
SPG $0.021

After going through this exercise two things jumped out at me. One, there is a lot of value to be realized/money to be saved playing this game, and two, miles trump hotel points by a lot, even if we are talking skypesos.

This may be obvious to some of the greybeards of the mileage game, for me it really hit home after looking at those numbers. And as with most everything here, YMMV depending on your own situation.

bribro

Your Hyatt and SPG redemption values are shockingly low. I'm averaging >$0.03 cpp for both of those programs.

Nice work on AA and UA, although when calculating "realized value" you have to ask yourself, would I have really spent $10,000 in cash on that First Class seat? If not, you weren't really getting $0.10/mile (or whatever it came out to) in "value."

jakesideas

Why not?

drminn

I stand corrected on the SPG values, I changed hotel from Hilton to SPG and didn't update the points correctly. The actual value for SPG is $0.021/point.

Point well taken on the First Class seat. I wouldn't have shelled out the $10K+ to pay for the seat, but it sure felt nice to not be in the back of the bus.

mia

1. I didn't save $10,000 if I wouldn't have paid that amount. I saved the amount I would have paid for a revenue ticket if I had not been able to redeem miles.

2. The MSRP of airline tickets isn't always the real price. Just like anything else, if I am not seriously in the market for intercontinental first class seats I may not know how to find the best fares.

jmw

I agree with mia. You can even make economy ticket redemption look good by looking up the fare a few hours prior to takeoff. Hotels, you can pay less than half of rack rate with Priceline bidding for 4* and 5* properties. I've stayed at cheap airbnb properties that were much better than 4* hotels. The airline numbers are not real valuations since you would not have paid $10k for that seat. You spent 100+k miles for what is normally a $1k ticket plus the privilege of not sitting in the back. The value of that ticket is $1k and that's it. It's not 2k since I would not pay that. It's not even worth $1.2k. I think that's a bad deal unless you have a medical problem that would cause suffering if you sat in the back.

On top of that, you paid some fees when redeeming miles like phone booking fee, taxes, fuel surcharge, etc.

On top of that, you deduct the 2% you could have gotten with a cashback card. On $100,000 in spending, you can get 100K miles or $2k in cash. I would rather have the cash.

Lucrative credit card signing bonuses are in miles instead of cash with the possible exception of UR, but I would not do normal spend for miles after bonuses are earned.

TMKTakot

Ya'll are thinking about this from the other side of the absolute. Pick your poison, but keep in mind there's not really a "right" way to do this.

1. Liberal -Your redemption value is based on item/service value, regardless of whether YOU put that much value on it. I don't value a last minute ticket to anywhere higher than a ticket I purchased 6 months out, but it DOES have more value based on someone else's evaluation (source is irrelevant).

2. Conservative - Your redemption value is based on what YOU value that item at, regardless of actual price or outside input. Let's use airline tickets again, I'm the kind of guy who won't pay the premium for Business/First, so even if i do redeem for this it has no value over economy under this approach.

3. Blend - Take the conservative base and applies a subjective (arbitrary) premium to find value. Impossible to define what derives what value due to variances in environment, mood, tendency, and approach.

drminn

Actually what matters most to me is what I stated at the end of the OP - I can get a boatload of free travel (be it $50K or $5k, it is still a boatload) being in this game, and given my spending limitations I should concentrate more on mileage cards than on hotel cards. Your conclusion might be very different if you haven't slept in a week and all you want is a hotel bed.

exmike

Many of us would never buy a F ticket, but we sure would fly it on miles, so how do we value it? Its worth more than the Y ticket I would buy, but not worth the retail price either. I guess it comes down to how much each person values the marginal benefit of F over a paid Y ticket.

For example, if you wanted to fly F for your honeymoon, but couldn't afford it but was able to book it on miles, I'd say the value is close to the retail price of F since you might purchase it if you had the funds. Conversely, someone who would never pay more than discounted Y would value miles for F much much lower.

WheelsFirst

I think it's fair to use the cost of an F ticket, especially if you wouldn't pay for F or J but you wouldn't fly in Y and would only take the trip if you could get F/J using miles. This applies to many people for long international flights.

You do need to factor in the cost of earning the miles, if any, such as any annual fees or things like that.

Those are good numbers OP, I routinely get $.03 for SPG but only $.015 for Hyatt.

atxtravel

Would you have spent $500 - 1000 for the hotel rooms? Or could you have found a slightly cheaper but almost as nice property, or done something like AirBNB? I tried hard to get more than 2c out of SPG points and there's no way I could find a valuation that was reasonable without assuming that there were no affordable hotel options in a given location. Same for Hyatt.

SpunkyGD

Does this reflect the new AA award charts?

drminn

Yes and no. It was booked before the new charts went into effect, but the points for those flights have not changed with the new chart.

toomanybooks

You also have to account for the value of the miles (status and otherwise) you would have earned by paying cash. This can be substantial.

For example, with WN, if you are going for the CP, it may already make sense to turn your WN points into a WN gift card at 100 per dollar and use that to pay for the trip, rather than create an Award @ 70 per dollar. Certainly it does for Anytime and BS Award tickets, always.

Or get an Amazon gift card from WN at the same rate and use the money you would have spent at Amazon to buy a cash WN ticket.

And if you can somehow make it a business trip, you can deduct cash tickets, but not awards.

skibum7732

I have always gotten >$.02/SPG point, but most of my redemptions have been Cat. 2 hotels in BKK. Aloft and 4Points for 3-4k pts per night is a great redemption. Seeing as how we are heading back (6th time in 17 months) for some more debauchery in July I will likely spend one, maybe 2, nights in BKK before heading to Pattaya
I know that many places do not have Cat. 1-2 SPG properties, but there are gems out there at a good redemption rate.