Let’s talk about a potential framework when establishing a value for your points. This isn’t the only method, but it’s the one I prefer to use when I stay at a hotel chain often.

Everything has a value

I don’t need to reiterate what I’ve already stated previously, but it’s still worth mentioning. Travel using points isn’t free. Since it’s not free, there must be a value attached to it. You could then calculate the value of a point.

It’s important to also distinguish the value of a point from the cost of a point. The value is what the point can buy while the cost is what you spent to acquire the point. The difference, then, between the value and the cost can be thought of as the spread. Common sense would dictate that you don’t want the cost to exceed the value of the point (i.e., a negative spread) or you would have lost money in the transaction.

For the purposes of the below, I’m just going to define the value of the point and not the cost. Everyone’s cost will vary depending what avenues of acquiring points are available to them. I’ll save that cost calculation for you to do.

Key considerations

It’s important to identify a few key considerations to this valuation so we can look at this in the proper framework.

Each point in the same program is not worth the same amount

This one is an odd one. If you open a loyalty account and only earn one point, what is that point worth? Well, assuming you can’t redeem just one point, that point has zero value to you. In fact, each point you earn before you can redeem any of them is worth zero. The point that enables you to then redeem for an award is the one that’s worth a significant amount.

If you were to theoretically plot this out on a graph, you’d see a chart that jumps all over the place. It’s not very useful to think of points as a function plotted on a graph. Instead, it’s better to think of points as an average value. I’d rather not think about calculus when spending time in this hobby.

How much do you cherry pick your awards?

Now that you’re thinking of points themselves bouncing around in value, you can also start thinking about cherry picking for the better awards. Do you spend 1,000 miles buying $10 off travel or do you wait for 2,000 miles when you can get $25 off? That’s a simplistic example but it does help demonstrate what this dynamic entails.

Your comfort level in cherry picking the best value will depend on your earn rate, your comfort level in the program not devaluing, and the spread you’re looking to get.

The cash price the award replaced isn’t always the proper valuation

Let’s say you find an award for two one-way international flights that together form a roundtrip journey. If you didn’t have access to points, you likely wouldn’t book these flights as one-ways. Generally international roundtrip flights are significantly cheaper than one-ways. Claiming your points have the value of the cash price of two one-ways would then be inflating the value of the points.

The proper valuation should consider opportunity cost. If you didn’t have points at your disposal, what would you have paid in cash? Sometimes the cash rate might be the proper metric (it could be the only hotel in town that works for your needs), but it might not be.

Everyone’s valuation will be different

It’s important to know that my valuation will be different from yours. That’s because the awards that I might be interested in aren’t the same awards you would be interested in. Valuing points is inherently a very personal calculation that considers what I would redeem for and when.

Within this concept is the truth that sometimes elite status affects the value of points. Take Hyatt’s program where Globalist status can offer free parking on award stays but no free parking on cash stays. That then means that Globalists might have a higher valuation of Hyatt points than non-Globalists. Another example might be Hilton’s fifth night free when booked with points but only for elite members.

What do you get out of my valuation? It’s more of the framework that matters, so that you can consider your own valuation.

The method of valuing a Hyatt point

We’ve talked about how we built up the value for each of the following:

• Accor points (worth 2.4 cents each)
• Choice Privileges points (worth 1.1 cents each)
• Hilton points (worth 0.4 cents each)
• IHG points (worth 0.64 cents each)
• LHW Leaders Club points (worth 8.0 cents each)
• Marriott Bonvoy points (worth 0.9 cents each)
• Wyndham Rewards points (worth 1.0 cents each)

Though there are several approaches to building the value of a point, I prefer to build the value of a Hyatt point by looking at where I have stayed recently. There might be some excellent deals out there, but if I don’t plan on ever staying there, can I really add them to my valuation?

Let me start by looking at some of the hotels I’ve stayed at in the last two years to build a portfolio of hotels. Also provided are the points price paid for each night along with the equivalent cash price (including taxes). At some hotels I also parked a car and I indicated those below. Since Globalist status gives free parking on points stays, I need to include that in my calculation.

• Hyatt Regency Long Beach (15,000 points/night or $300/night not including $40/day parking)
• Park Hyatt Aviara (35,000 points/night or $800/night not including $68/day parking)
• Grand Hyatt Baha Mar (25,000 points/night or $600/night)
• Hyatt Regency Vancouver (18,000 points/night or $350/night)
• Park Hyatt Tokyo (35,000 points/night or $1,000/night)
• Andaz Maui (45,000 points/night or $1,500/night not including $48/day parking)
• Hyatt Regency Étoile (18,000 points/night or $350/night)

Caveats

Note that I’m only considering stays where I actually booked with awards. It’s not fair to count each point against the cash price listed, because in some cases, I wouldn’t have paid the cash price. In particular, the Park Hyatt Aviara, Park Hyatt Tokyo, and Andaz Maui are the three hotels that stand out the most for hotels where I wouldn’t pay the cash rate. Let me tackle each one-by-one.

• The Park Hyatt Aviara is a trip I would not have taken if there was no alternative given we live less than two hours away from it. It’s fair to exclude this altogether from the calculation.
• For the Park Hyatt Tokyo, we did need to stay somewhere in Tokyo for sakura season. While we did just come from the Tokyo Disneyland Hotel, I don’t think we would have stayed there each night. But the price of the hotel that we paid ($550/night) was roughly in line with cash prices elsewhere in the city. That said, the Park Hyatt did provide breakfast, so let’s just round this out to $600/night in value.
• The Andaz Maui is the classic over-inflated room rate situation. I’m not ready to spend anywhere near $1,500/night for a hotel. What would I have done instead? We might have stayed at the Grand Wailea. The cost of that would have been 110,000 Hilton points/night, which would have cost $550 based on the 0.5 cents price when they go on sale. However, parking was free at the Andaz and not at the Grand Wailea. We also did get a suite at the Andaz, which I would be fine with valuing at $100/night, and free breakfast also worth $100 ($25 per person).

And the survey says…!

All I need to do now is divide each cash valuation by the points price to see the damage:

My valuation would line up somewhere between 1.7 and 2.4 cents per Hyatt point. If I just take a straight average of the valuations above, that’s right at 2.0 cents per Hyatt point.

Limitations in this approach

The most obvious limitation is the small sample size of hotels in this calculation. It’s perhaps not accurate of me to establish the value of the overall currency. If I only used points at one hotel, would you trust a points valuation based on that single data point? Likely not. So you should take these results with a grain of salt.

Naturally, there is inherent bias in this method. I’m only looking at retrospectively at decisions where I knew I would get a better deal with points. To me, that’s OK. I’m not looking to spend points at a hotel where I get poor value.

There is also something to be said that I could certainly look at every single hotel in the world that I would consider staying at. That could be done by analyzing every major metro location, every location out in remote locations. I would then identify a cash price I would be comfortable paying for each of these (opportunity cost is a tough calculation sometimes). While that would be a fun(?) theoretical exercise, I don’t have the time to do that. That’s especially true when the cash price at the hotel isn’t always what I would pay as the alternative.

What the result does say

I have been picky with what hotel stays I pay with points and which I pay with cash. I mentioned that I only included the stays where I paid in points. If I included all hotels, the valuation would skew lower. That’s because at hotels with a cheap cash rate, I’m fine with paying cash. I’d rather save my points for a better use.

In other words, I’m fine with paying cash for hotel stays where I don’t get at least 2 cents of value for each Hyatt point. If I’m booking a room with Hyatt points, I’ll want to make sure it’s when the cash rate is high and there is no better alternative than to pay with points. Sure, the 2 cents per Hyatt point is higher than others might say the points are worth, but I’ve been able to reliably meet that number based on my own travel.

How much do you value Hyatt points?