Before my wife and I tied the knot, I was just a shell of the man I am today. At the time I proposed, my net worth in hotel points and airline miles was only the equivalent of one free night at a Courtyard Marriott. She said yes anyway. With wedding planning in full force, one day she said to me, “We should get a Hilton American Express credit card. My parents have it and it helped us get free hotel rooms and free breakfast in Hawaii. That could save us money on future vacations.” It sounded like a good idea so I agreed and applied for the card. After we received the cards is when I really began researching how to earn more points and maximize the benefits. The can of worms was opened. Almost 10 years later (!?!?!), the roles are reversed.
Me: “So…there’s a new credit…”
Her: “We don’t need anymore credit cards.”
Me: “At least let me tell you about the benefits and how this will help us.”
Her: “Ugh….if you must. Is there an annual fee?”
Me: “Yeah, but it’s worth it. <Explains the benefits>
Her: “<Sigh>…..Okay, I guess that sounds good. But what about other cards?”
Me: “Yay!” <runs off>
Ironic, isn’t it?
Today, I have points and miles across a number of programs. This gives us a lot of options and helps us lower our out-of-pocket cost on most, if not all, of our travel. Since I’m not a road warrior though, I don’t have the ability to “earn and burn” because my balances aren’t being replenished as quickly. All of my points come from credit card spend. At such a slow earning rate, I have to put a little more thought into determining whether or not to use points and miles or pay out-of-pocket.
On my first Hilton Hhonors redemption, I didn’t know any better. I redeemed points for a one-night stay without any regard to the redemption value of the points. It was probably a poor redemption but it was so long ago that I (thankfully) don’t remember the details. It wasn’t until I started chatting with one of my good friends, who’s much more involved than I am, that I learned about valuations. It’s a pretty simple calculation:
- Cost of the hotel room or flight (including taxes and fees) / Number of points or miles required for the entire trip
- Example : $178 / 30,000 Hilton Hhonors points = $0.004 cents per point
Now you may be wondering if just under half of a cent is a good redemption rate. A trusted reference point is The Points Guy’s July 2016 valuations. It offers valuations on all major airlines and hotels. According to this chart, Hilton Hhonors points are valued at exactly half of a cent. At 0.4 cents per point, it’s not an ideal redemption, but it’s close. However, if your main goal is to not spend any money, then there really isn’t anything to decide. Just use the points. Or you could find another hotel in the vicinity and see if you can find better terms.
Reading a lot of the popular travel blogs can create illusions of grandeur. Flying in first class and staying in luxurious hotel suites is appealing to anyone but those don’t come easily. I’ve come to realize that when you’re traveling with a family AND without having any airline or hotel activity, those aspirational vacations just aren’t feasible. I get way more value through hoarding and strategic use. One of these days I’ll loosen the reins, not worry about valuations, and just blow every thing on a really nice trip. One of these days…