Value of Miles and Points for an Average Family
This overview is only my personal opinion. So, please, take it as such. Your value may differ from mine significantly and that is perfectly fine. I truly believe that in the world of miles and points, it's no "one size fits all," or even most, for that matter. Keep in mind, I am evaluating from a perspective of a middle-class family of 4, who travel occasionally and have no business expenses.
In this chapter, I hope to make it easier to evaluate each sign-up bonus. When a card gives $400, there is no need to discuss it any further. $400 will purchase the same airline ticket for you as it will for me. The same cannot be said for miles and points.
A single person with a flexible schedule will be able to derive a much greater value from a sign-up bonus of 50,000 miles on Delta than I would for my family of 4. When I say “value,” that is what I would pay for it. Also, I assume that the purchase is made speculatively. If you have a specific redemption in mind and can book it fairly soon, that changes the game considerably. So, without further ado:
Flexible points (transfer to miles, hotel points or can be redeemed for gift cards)
1) SPG point (Amex program) - 1.5 cents each. Flexible points that transfer to miles and can be redeemed for hotels. You get a 25 percent bonus on each 20,000 mile transfer. If you are interested in SPG category 1 and 2 hotels, which run 2,000 and 3,000 points per night on weekends, you can potentially get an amazing value from your redemption.
2) Ultimate Rewards point (Chase program) - 1.25 cents each. There are two reasons for this: Southwest Rapid Rewards transfer and the possibility to get 1.25 cents from each point toward travel redemption. So 1.25 cents per point will be the floor as long as they have that option.
3) Membership Rewards point (Amex program)- 1.10 cents. I value British Airways Avios mile (a transfer partner) at around 1 cent. The points transfer on 1:1 basis. However, since Amex often runs transfer bonuses, I would be willing to pay a little more for a Membership Rewards point.
Keep in mind, this only applies to a speculative purchase, since you can derive huge value from Avios. The award chart is distance based and some flights start at only 4,500 miles each way. An example: New York-Toronto and Miami- Nassau by redeeming on their partner American Airlines.
Airline miles
1) Most traditional airline miles - Around 1 cent each. I would be willing to pay a little more for AAdvantage. I wouldn't pay 1 cent for a Delta Skymile, but probably 0.8 cents.
2) Southwest Rapid Rewards point- 1.20 cents each, since you will get 1.43 cents on “Wanna get away” fare per each point after March 31st, 2014 (currently it is 1.67 cents).
Hotel points
First, be very careful when buying or hoarding hotel points. It is the most vulnerable type of currency in this hobby. Rates sometimes can go up overnight, with no prior notice. I usually book 2 or 3 rooms because we travel with my in-laws, so my valuation is influenced by that fact. However, my husband and I go on short trips by ourselves occasionally.
1) Hyatt Gold Passport point - 0.70 cents each. Their high-end properties go for 30,000 points and cost $800, but I won't be staying there any time soon. I am mostly interested in hotels close by or cities I might be visiting in the near future. There is a nice Hyatt on the beach not too far from us that goes for 20,000 points. Checking www.biddingfortravel.com (tracks Priceline bids), I saw that some people were able to get it for $140 per night including tax.
That is how I arrived at my 0.70 cents valuation ($140 divided by 20,000 points). That's the thing with "amazing" hotel redemptions. The rack rate is not what you should base your value on, but rather the lowest Priceline bid.
2) IHG point - 0.5 cents each. My value would be lower if it wasn't for their PointBreaks program where you can get certain hotels for only 5,000 points per night. Most IHG properties on the beach in Florida go for 35,000 points, a significant amount. If the PointBreaks program is discontinued, my value will drop as well.
3) Marriott point - 0.4 cents. Most Marriotts I am interested in run 20,000-30,000 points per night. There are quite a few in the USA that cost 10,000 points, so it could be a good deal, even if you needed 2 rooms. It would be an equivalent of paying $80 per night.
4) Club Carlson point - 0.25 cents. I don't have their co-branded Visa, which gives a second redemption night free. Otherwise, my value would be a bit higher. As it stands, the properties I like run at 38,000-50,000 points per night.
5) Hilton HHonors point - 0.25 cents each. Hotels I like in Florida cost around 40,000 points and I would be willing to pay no more than $100 for them.
There are other programs, but I wanted to round up all the usual suspects and hopefully provide a helpful guideline.