In most cases, spend your points on the flight. A business class seat booked with points often returns several cents per point. A five star hotel night usually returns closer to one or two cents, because airlines charge far more cash for premium cabins than the award costs in points. The one big exception is World of Hyatt points at a pricey hotel on a busy night. There the room can match or beat the seat.
How do I work out what a point is worth?
Take the cash price, subtract any taxes and fees you still pay on the award, and divide by the points it costs. Then multiply by 100 to get cents per point.
Here is the formula in plain words:
- Cash price of the same seat or room
- Minus the taxes and fees you pay on the award
- Divided by the points needed
- Times 100 equals cents per point
A higher number means each point is doing more work. Use real prices for your dates. Look up the cash fare on the airline's site and the cash rate on the hotel's site. Then check the award price in the same place. Award prices and cash prices both move, so run the numbers for your trip, not someone else's.
What does a business class seat return per point?
A long haul business class seat often returns somewhere around 4 to 8 cents per point or more, because the cash fare is so high. Here is a worked example with round numbers, not a quote for any real route.
Say you want a one way business class seat from Toronto to London.
- Cash fare: $6,000
- Award with Aeroplan: 70,000 points plus $300 in taxes and fees
- Math: ($6,000 minus $300) divided by 70,000, times 100
- Result: about 8.1 cents per point
If you hold American Express Membership Rewards, you can move those points to Aeroplan when you find the seat. That means your Amex points can earn this same high return.
One honest check: the value is only real if you would actually take that trip. If you would never pay $6,000 for the seat, compare against what you would really spend, such as a premium economy fare. The return will be lower, but it is still often strong.
What does a five star night return per point?
A five star hotel night usually returns about 1 to 2 cents per point. Hilton Honors points often come in under 1 cent. Here is the same kind of worked example, again with round numbers.
Say a five star hotel costs $800 a night with taxes. Here is how it might price in each program:
- World of Hyatt: 30,000 points. $800 divided by 30,000, times 100, is about 2.7 cents per point.
- Marriott Bonvoy: 80,000 points. $800 divided by 80,000, times 100, is 1 cent per point.
- Hilton Honors: 100,000 points. $800 divided by 100,000, times 100, is 0.8 cents per point.
Do not read too much into the low Hilton number alone. Hilton prices rooms in large point counts, and its card earn rates are high to match. Still, when you compare it with the flight, the seat almost always wins.
American Express Membership Rewards can move to Marriott Bonvoy and, depending on your card and country, to Hilton Honors. Amex points do not move to World of Hyatt. In the US, Chase Ultimate Rewards points do. Check the transfer ratio on your card's own transfer page before you move anything.
Why do flights usually win?
Premium cabins usually return more per point because airlines charge huge cash fares for business class, while the award price for the same seat stays much lower. Aeroplan, for example, prices partner flights on a set chart based on distance. A seat that sells for many thousands in cash can cost the same points as a cheaper one.
Hotels work differently. Marriott Bonvoy and Hilton Honors use dynamic pricing, which means the points price rises and falls with the cash rate. That keeps each point's value in a narrow band. You rarely get a giant win, and you rarely get a terrible loss.
There is also the size of the gap. The jump from economy to business class on a long flight can be thousands of dollars. The jump from a good hotel to a five star hotel is often a few hundred. Points do the most good where the cash gap is widest.
When does the hotel win?
The hotel wins when you use World of Hyatt points at an expensive hotel on a busy night. Hyatt still uses a category chart, so the points price is capped by category even when the cash rate soars.
Say a top Hyatt property charges $1,500 a night during a big event, and the award costs 35,000 points. That is about 4.3 cents per point. Now say your flight is a short trip in a plain business class seat with a cash fare of $900 for 25,000 points plus $100 in fees. That is 3.2 cents per point. In this case the room is the better use.
The hotel can also win for a simple reason: no business class award seat exists on your dates. Points you cannot use are worth nothing. If the seat is not there, booking the room with points and paying cash for the flight is a fine choice.
A good habit is to keep your points in a flexible bank like American Express Membership Rewards until you book. Then price both sides and send the points where they earn the most.
If you run a business, you may already spend enough to fly business class and stay in five star hotels more often than you think. You can see what your spending buys.