Among many other bits of Marriott news lately (NOW LIVE: New Marriott SPG Award Category Assignments) was the publication of the new Cash + Points award chart that will be in effect when the Marriott, SPG, and Ritz programs merge in August. At first look, I wasn’t impressed. After running the numbers, I’m still not impressed, but I do see a few nuggets of value…
Several hotel programs offer the option to pay for awards partially with cash and partially with points. The chart, above, shows the regular award prices (Points Only) and the Cash + Points prices.
The idea behind Cash + Points rates is that you might not have enough points to book your desired stay, so you can instead pay partially with cash. You can think of it as buying the points needed for the award. Take, for example, a category 4 hotel that would normally cost 25,000 points. If you didn’t have the full 25,000 points and Cash + Points rates were available, you could use 12,000 points plus $105 in cash to book the room. This is like buying the extra 13,000 points for $105.
Is that a good deal? Let’s crunch the numbers:
As I said above, booking a Cash + Points award is similar to buying the difference in points between the points portion of the Cash + Points award and the full points price of the award. The table above shows the point “purchase price” for each award.
I highlighted the chart in green where I think the “purchase price” is a good deal, and in red where I think it’s a bad deal. Green means that the purchase price is similar or less than the Reasonable Redemption Value for Marriott points, which is currently 0.72 cents per point. In other words, the cells in green show where it’s possible to buy points for what they are worth, on average. Keep in mind that the RRV for Marriott points is likely to change with the new program, but since I found that the average award price is about the same in the new program as the current program, it probably won’t change much.
The red “bad deals” indicate places where it’s possible to buy points directly from Marriott for less. Currently it is possible to indirectly buy Marriott points through SPG for about .75 cents each (35% off Starpoints is back), but the usual price Marriott charges is 1.25 cents per point. There’s little reason to pay a higher Cash + Points rate when you could buy the points for less and then book a points-only award. Of course we don’t know if Marriott will continue to sell points for 1.25 cents each in the new program, but I think it’s a safe bet.
The rest of the cells, the one’s not shaded red or green, could make sense under certain circumstances. When there’s no sale on points, and when you don’t have enough points for your award, it can absolutely make sense to book these. See the next section for details.
Comparing to all-cash
Another way of looking at Cash + Points awards is as a way of saving money over all-cash rates. When all-cash rates are very high, a points-only booking usually makes the most sense, but Cash + Points can make sense too if you don’t have the points to spare.
Let’s take a simple example: A category 3 hotel costs 17,500 points, or $80 + 8,500 points. And let’s imagine that the all-cash price for the same hotel room is $150 all-in.
If you had the 17,500 points available, a points-only booking makes sense. You would get $150 / 17,500 = 0.86 cents per point value. That’s not amazing, but it’s more than the current Reasonable Redemption Value.
Now suppose you started with zero points and simply bought 17,500 points for 1.25 cents each. That would cost you $218.75. That would be a very bad deal.
Cash + Points, though, is less obvious as to whether or not it’s a good deal. If the room rate was only $80 it would obviously be stupid to spend $80 + 8,500 points instead. In this case, though, the 8,500 points saves you $150 – $80 = $70. Is that a good deal? Actually, yeah, it’s not bad. In this example you would get $70 / 8,500 = 0.82 cents per point value. Since 0.82 cents per point is more than the Reasonable Redemption Value, it may be worth doing.
The above example glossed over the fact that you can earn points on your all-cash booking, but it should give you a general idea of how to evaluate when to go with Cash + Points.
Marriott’s new Cash + Points scheme is sometimes a really bad deal, sometimes a good deal, but often a deal that depends upon circumstance. If a points-only booking makes sense (e.g. the cash-only price is high), then there’s a good chance that Cash + Points makes sense too if you don’t have enough points for a points-only award. Keep in mind, though, that Cash + Points awards have historically been much harder to find than points-only awards.