When is an award night a good deal?

Suppose you are looking for a a hotel room and you find that you can either pay $300 a night or redeem 25,000 hotel loyalty points for each night. Which should you do? The decision can be complicated. You need to know how much those 25,000 points are worth to you. Plus, if you redeem points, you won’€™t earn points from the stay. And if you’re looking to earn hotel elite status, you need to consider that with many chains you won’t earn night or stay credits when you book award nights.

In order to try to wipe away most of that confusion, I’ve put together a three step guide to help you figure things out. The formulas are far from perfect and they won’€™t match everyone’€™s needs or beliefs about hotel points, but I know that I need something like this so maybe you do to. As much as possible, I’ve kept to nice round numbers and easy formulas.  Here goes:

Step 1) Take the # of points you would need to redeem, chop off the final two zeros, and add a dollar sign in front. Example:

25000 Points -> $250

This is the value of your points if each point was worth a penny.

Step 2) Multiply by the hotel point value (RRV)

Our Reasonable Redemption Values (RRVs) shows estimated values for airline miles and hotel points.  Find the RRV for the hotel chain you are interested in and multiply that value by the number from step 1.

Example:

At the time of this writing, the RRV for Hilton Honors points is 0.45 cents per point, so I would multiply the number from above by 0.45:

$250 x 0.45 = $112.50

Step 3) Compare

Take the value you computed above ($112.50 in the example) and compare to the paid hotel option. If the calculated amount is less than the paid hotel option, then redeem your points.  Otherwise pay for the room directly.

Notes:

  1. The formulas above do not account for the potential loss of nights or stays towards elite status.  With Hilton, Marriott, and SPG, you will continue to earn nights and stays even for award redemptions so the formulas should work reasonably well.  With other chains, if you are chasing elite status, inflate the formula results by the amount you think each stay/night is worth for getting you closer to the next level of status.
  2. The formulas above do not account for the fact that you won’t earn hotel points for your stays booked with points.
  3. Don’t forget to use your own common sense here. If you’re low on cash, or you don’€™t think you’ll ever be able to use your points for a high value redemption, or you simply don’€™t value your points, then by all means use the points despite what the formula says! Conversely, you may be working towards hotel elite status, or you may be holding onto your points for much higher value redemptions. In those cases, it would make sense to err towards paying for stays.

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