Yesterday One Mile at a Time decided to throw down with me over my comparison of the value of Starwood and Hilton HHonors points.

Roughly speaking, as summarized by Ben, he thinks that a Starwood point is worth a little less than 3 Hilton points, I think a Starwood point is worth about four Hilton points.

That doesn’t seem like a huge difference but it actually is. It’s the difference between the Starwood Preferred Guest American Express (which earns 1 Starpoint per dollar) being a better card for everyday, un-bonused spend than the Citi Hilton Reserve Visa (which earns 3 Hilton points per dollar), or vice versa.

Plus, it’s a blogfight. So it really matters(tm).

But let’s put it another way. I think a Hilton point is worth between 0.5 and 0.6 cents, he thinks it’s worth at least 1/3rd more:

I think Gary is spot on in his valuation of Starpoints. I just believe that he’s substantially undervaluing Hilton points, and that my valuation of 0.8 cents per point is a conservative one.

Here’s Ben’s argument. He takes the very best discounted Hilton award redemptions, and the most expensive properties, that are effectively underpriced by Hilton HHonors. And he says you can get really great value out of your Hilton HHonors points that way. I agree.

One of the things that I really like about Hilton is that their best properties which are not part of the Waldorf=Astoria brand are 50,000 points per night. I get aspirational hotels for the same points price as the Doubletree in Manhattan.

His first example is the Conrad Koh Samui in Thailand, a property where the base level room is a standalone ocean villa with its own pool. And that is exactly how I love to be able to redeem my own points. In fact, I did redeem my own points there for a fantastic stay in November. I even managed to get a two-bedroom villa, one of the best rooms I’ve ever had. Anywhere.

But this completely misses the point. You do not value a point based on the published price of the best possible redemption you can get.

I may be able to get 1.6 cents of ‘value’ for a Hilton point at the Conrad Koh Samui. But unless I was actually going to spend $800 per night to stay there, I haven’t ‘saved’ myself $800 and therefore my Hilton points spent on the room weren’t really ‘worth’ $800 (or 1.6 cents a point).

Instead, the value of a loyalty program point, expressed in dollars (cents), is the amount at which you are indifferent between holding points and holding cash.

When Hilton HHonors points were on sale as part of the Discover America Daily Getaways at half a cent apiece I said to give it a miss. Basically the points were on sale at half a cent, I valued them at half a cent, not a bargain, why switch out your cash for points?

On Wednesday, April 25 you can buy Hilton HHonors points for about $0.005 apiece. On the whole, that’s what they’re worth, it’s a pretty standard redemption value, I usually shoot for about a penny apiece and have gotten as much as about 3-4 cents apiece on top end redemptions. But those only come from booking Hilton’s most expensive properties on points. So unless you’re looking for something like the Conrad Koh Samui, on a mult-night stay as an elite (which conveys a redemption discount) then I’d probably give this one a miss. On the other hand, it’s unlikely you’ll do worse than half a cent a point in redemption value, unless you try really hard, so you won’t take it on the chin if you do it

In other words, half a cent is basically my indifference point. I know I can get half a cent of value out of my Hilton points, so at that point it’s as good as holding cash. Since I can replace cash on pretty much any given Hilton stay and each point will be worth about half a cent when I do so.

It isn’t that I can’t do better. I can and I do. The reason I spend 5 nights at the Conrad Koh Samui paying 200,000 points is because I calculated my stay ‘cost me’ $1000 or $200 per night. I was willing to spend $200 a night to stay there, I wasn’t going to spend $800 to do so.

But comparing to the priciest redemptions you can find makes no sense. And remember that cash can be used to cover almost any obligation. Points can only be used for travel (or at a huge discount, merchandise, etc. etc. but it’s a limited set of options).

Cash earns a rate of return, while points only get less valuable over time. And your redemptions are in the future, there’s both time and risk, a given property may change hotel brands by the time you want to redeem your points down the road.

The relevant metric is, when putting a value on points, at what price would you buy points? If you did a consulting project, at what price (leaving aside tax issues) would you not care whether the client paid you in cash or points?

Here’s a question for Lucky:

    How much have you spent this year on the Starwood American Express and how much have you spent on a Hilton credit card? That’s called revealed preference.

    And of course what we’re interested in is what actual behavior says about how much you value each point. So I want to know how much you’ve spent in un-bonused charges. (And don’t tell me you’ve put $40,000 on a Hilton Surpass American Express to earn Diamond status — that’s about the value of an elite level, not about how much the HHonors points you earned are worth.)

Pretty much every day of the week you’ll find the average Hilton property redeemable at about half a cent per point. So you can unload your Hilton points and get that much value back. Shoot for more, to be sure. But don’t delude yourself into thinking that if you have a million Hilton points in the bank that it’s the same thing as having $10,000 in real money. It’s more like half that.

Who’s right here, me or Lucky? And more importantly, is there a prize?

  1. Ebing said,

    It is not appropriate to compare the value after maximizing the point value. I agree Hilton point worth 0.5-0.6.

  2. Dan said,

    I think you touched on the crux of the issue when staing what YOU think you would pay for a hotel room. What a point is worth depends on who is asking the question. A lot of bloggers tend to dwell on trips that some people may not want or need. I have a young child. I’m not going to Thailand anytime soon. I tend to look mostly at dosmetic(US) locations for vacations and most of the time that translates into HH points being worth about 0.5 cent. So from my perspective you are right. Have a gold star.

  3. Andre said,

    I’m personally as happy holding HHonors points as cash at 0.5cpp. I usually travel to big cities like Paris, HKG, NY, London when rates are rather high at all hotels, so I get better value not only analyzing the Hilton/Conrad property’s rates, but others surrounding it.

    I’ve transferred over 300,000 SPG points to miles over the last 3 years, mostly from hotels stays and promos. I’ve only ever found a worthwhile points-only redemption on SPG, in China 10,000SPG vs 800USD. Otherwise it’s almost always 20k points to miles, or using 1000pts for SPG50.

    I have the SPG card the foreign transaction charge bothers me though, I’ll probably apply for the HHonors card soon.

  4. matt said,

    It’s tough to directly compare Hilton and Starwood points, because if you use them “optimally” you’re not doing a lot of cross-shopping between spending one or the other.

    For Hilton, it really comes down to if it makes sense for you to redeem at the very top properties, along with what cash value you place on those stays. If you say $200 for somewhere like the Conrad Koh Samui example (and are not just back-calculating to get your desired result), then your valuation is right. If you’d be willing to pay out more cash, then maybe Lucky’s is.

    With Starwood’s decreasing value at the top, the “best value” properties to redeem at are often in the range you would consider to pay for, so it’s easier to assign an accurate value.

    Out of curiousity, if you value somewhere like the aforementioned Conrad at ~200 a night and starpoints at 2.2 cents each, do you even consider anything beyond category 4 and lower redemptions, maybe cash and points for cat5? Anything beyond that and you’re going out of pocket for well over $200 of value, and if you don’t value the Conrad higher I’m not sure I see where a starwood property would line up better in terms of value.

  5. LR said,

    You are SPOT ON! Only a lunatic amateur would value a HH point at 8 cents per pt

  6. anonymous said,

    he uses neither. he uses ink plus and gift cards

  7. Delta Points said,

    Oh I see a new lucky vs gary cartoon video on the way soon. Maybe CATS this time? Humm…. ;-)

    “o’h you did not just litter box me did you?”

  8. Matthew said,

    Hi Gary,

    I completely agree with you. The standard should absolutely be what you would pay for the stay you’re replacing with points. Like you though, I tend to book aspiration awards, and also only value the Koh Samui stay at a bit over $200 per night.

  9. LK said,

    I completely agree with you. HH points are rarely worth more than 0.5 cents.
    But last year I bought points for 0.5 cents at Daily Getaways which allowed me to spend a week at the Waldorf Cavalieri in Rome for less than $200 per night, which was a good deal.

  10. Rick said,

    It’s not a fair comparison to value points based on what you’d spend, because someone like me would stay at a Comfort Inn for $100/night or less, if I could do that at every destination.

    Unfortunately, good luck finding a decent hotel for under $300+ in NYC for example, around New Years eve. This situation applies in many other big cities, and around big events, where getting $200/night is nearly impossible without staying in a dump or very far away.

    The comparison should be made in that specific instance against another cheapest acceptable hotel you can find, and in many of those cases Hilton points approach 1.0 cents in value.

  11. ray said,

    For equivalent cash value I couldn’t agree more with the principle that the value should be based on what you would have paid in cash. You win.

    For relative value though (where the ‘cash value’ isn’t a cash value, but an normalized metric for comparison) between the two programs there is some merit in considering the highest value redemptions that you’re in a position to take advantage of. Lucky doesn’t not win…

  12. Matt said,

    @Rick,
    If you’d otherwise pay 100 or less, that’s all the points *save* you. If there’s a 150/night place that you prefer over the “acceptable” 100 option, but only enough to pay 120 for, redeeming points there in lieu of the 100 cash stay offers 120 in value.

    Hotels are not all created equal, and cheapest acceptable can be rather nebulous too, as acceptability and price both exist on sliding scales.

  13. Matt said,

    And rick,
    You’ve set what you’d spend at “cheapest ok property price”. Even while you say it’s not a fair comparison, it’s exactly what you do.

  14. jay said,

    gary in a knockout win. well done

  15. Rick said,

    Matt — I think you misunderstand what I mean.

    If I’m staying in a city where the cheapest practical hotel is $350/night on those days, and I have **no other way to spend any less**, then getting an AXON award at a Cat7 Hilton at 36k points approaches 1/cent redemption.

    I wasn’t talking about theoretical valuation, this is an actual scenario that happens often. No matter how little I value premium hotel stays, if I have no choice but to pay well above my personal valuation, than that’s the minimum you have to compare against.

  16. Carl said,

    I booked a 6-night stay at the Conrad Rangali Island in Maldives next January. The published rate was $2500/night plus about 20% in taxes and fees. The non-refundable advance purchase rate is about $2175/night plus 20% taxes and fees. With the multi-night discount it works out to 37,500 HH points/night. I’m getting about 8 cents/point in value based on the cash price. Even if I were only willing to pay $500/night for the experience, I’m still getting more than 1 cent in value. And I’m getting to stay in place that I’d probably never stay if it weren’t for the points redemption option.

  17. matt said,

    Rick: if you’re willing to pay $350/night for a hotel stay, then you value that stay at at least that much – regardless of whether that cost is driven by high demand based on location or by a hotel being “premium”. If, points aside, you’d cancel the trip rather than pay the cost, you can’t necessarily value the points that high.

    You have a way to spend less – don’t take the trip. Maybe go somewhere with $100 hotel rooms instead. It’s only a *hard* minimum to compare against if your behavior would not be affected by not having points and needing to go on all-cash. If you’re willing to pay, your personal valuation for that stay is by definition at least as much as the pricetag on offer.

    Once points let you do something you would otherwise choose not to do on account of cost, you’re into the realm of somewhat arbitrarily-valued “aspirational” redemptions, even if all you aspire to is to stay in a dump in an expensive city during a high-demand period.

  18. Elizabeth said,

    I collect miles and points so that I can go on aspirational vacations that I could otherwise never afford.

    Yes it is true that I would never spend $500-$1k per night on a hotel room or $20k on a first class flight to the other side of the world. BUT — I would have never reached or stayed in these locales in the first place if it was not for the points. So it doesn’t matter what a coach flight would cost or the price of the cheapest hotel room.

    I value the redemption values on what I would have had to pay to stay at that particular hotel and fly first class on that particular flight since paying those prices would have been the only other way to obtain them.

    Since the flights and hotels are nearly free I can save my money for food and excursions.

    If I used the logic that the points and miles are only worth what I would have paid, then they are worth zero which makes absolutely no sense to me at all.

  19. mike said,

    You call this a throw down? Nerd.. lol :)

  20. mdr said,

    The take-away for me is that the points value depends on both your earning and spending habits, and so there is no precise answer to the question of how much a HHonors point is worth.

    As a simple comparison, if one has oodles of points, then they would be worth less, since it’s difficult to arrange your life so that one gets maximum value out of them. OTOH, if one has fewer points and has earmarked those points for a future aspirational stay, then they would be worth more, since it is easier to maximize value.

    I will say that Lucky probably makes a mistake in not building in some conservatism to his estimate, to account for downside risks [e.g., unannounced point devaluations, redemption level creep, etc.].

  21. Ansh said,

    What about Hilton points vs. Marriott points? I have a few stays coming up and I can choose between the two. I already have 270k Marriott points, but only 60k Hilton points.

  22. Chas said,

    I generally agree with you, Gary, on the “all-purpose” valuation for HH points and the need to consider your indifference point not just the retail cash price when thinking about value. That said, if it was that simple, there wouldn’t be a blogfight between two people that I don’t think are that far off in their cash valuations of hotel rooms (even aspirational ones).

    So where is this substantial discrepancy coming from? I think mostly we need to keep in mind we’re talking about accumulating a relatively illiquid product with very discrete redemption opportunities, so many are likewise accumulating this product with discrete redemptions in mind. For many of us those are aspirational redemptions, or redemptions we couldn’t or wouldn’t otherwise afford in cash. That is, a key part of the value of points points is that they open up possibilities that otherwise wouldn’t even exist for us, since regardless of whether I “value” the Conrad at $350/night, I will never have the option to pay that when rates start at $800+.

    It might not be rational of me (but then again who is?), but just don’t get that tingly feeling using points I value at $150 to save $100 on a $250 Sheraton room.

  23. Mrig said,

    Can’t we just say for mid-level hotels, SPG points are worth more and for high end hotels, Hilton points are worth more.

    First post ever…and providing solutions already!

  24. Matt said,

    At the top end, it’s the difference between if you’d spend 200-250 or 300-400 per night for somewhere at the top end, say maldives, bora bora, orsome of lucky’s properties, as long as that is areasonable use for you. Neither answer is wrong(although lucky’s is only valid for a small subset of properties and redemption patterns), but Gary happened to be the one to write down his math.

  25. Rick said,

    Matt — I guess I’ll agree with you on that assessment, but then it goes against the spirit of what we do here. The point is to be able to travel in a way that you can’t afford, so by your definition of “value” a high-end trip to Europe with points is the same as staying at an amusement park here in the US.

    I think there’s a lot of value to having an experience that you couldn’t otherwise afford…it’s priceless really.

  26. nsx at FlyerTalk said,

    “But unless I was actually going to spend $800 per night to stay there, I haven’t ‘saved’ myself $800″

    Right. Now apply that argument to J and F international travel. If you would have paid only $2000 for a round trip in F, that’s what your miles were worth. Less than 2 cents per mile.

    Last-minute domestic coach travel is not as much fun but in pure dollars and cents it’s often a better redemption value.

  27. Jim said,

    I really don’t care if a HH point is worth .05 or .08 What I do care about is my ability to earn these points.Right now there are 7 CC which will earn HH points and some are churnable.And many are between 3/6 points per dollar.Or I can get one SPG card every few years.This is not all that difficult to figure out.

  28. matt said,

    Rick – It can certainly be a slippery slope, and at some point we can get so far outside of where we would be with cash alone that everything becomes extremely arbitrary.

    I’m not sure quite how you’ve arrived at that point based on my statement, though. The amusement park thing sounds more like “cheapest acceptable”, which I think was your standard.

    With money you have (in the real world) the choice to pay list price or not, but if offered some intermediate price between the amusement park and first class at some price point you’d take it. That’s the true value your actions put on your points, or at least a truer one than the pricetag in dollars of whatever you’re purchasing.

    I don’t know about you, but I’d gladly pay substantially more for a high-end trip to europe than I would for your amusement park example. Would I pay full price for a pair of biz tickets and a few nights in city hotels? No, I wouldn’t, but maybe $1500-2k per ticket, couple hundred or so a night for hotels, etc. would be reasonable costs to me (regardless of whether those prices match anything actually available for sale). That’s a reasonable place to start when valuing points/miles.

    Of course experiences are priceless, and you determine the true value of points when you burn them, but it helps to have a rough valuation if nothing else as a sanity check for when to burn points vs spend money. If I reserve a villa at the conrad maldives with a $2500 rate for a refundable rate, I’d only be fooling myself if I claimed to be getting a true 7 cents of value per hilton point. I’d be getting a unique and priceless life experience in exchange for points worth something in the range of say $200-500/night. For less than 250-300 (depending on how many nights)or so with hilton, I’d be tempted to pay cash, or seek a cheaper option. I guess that puts me between gary and lucky in how I value the points.

  29. Jack said,

    Totally agree with you and said as much in my comments to him.

  30. marc said,

    SPG AMEX is the winner, hands down. True that some people may value HHonors points higher than 0.5 cents per point, but properties like the St. Regis Deer Valley on peak weeks regularly charge over $1400 per night. With a 5-nt stay at this cat 6 property (no dates are ever charged at peak 25,000 point per nt rate), you can get 8.75 cents per point. I’ve done this 4 times already. If you were to stay here in the summer, room rates drop to $200 and your point value plummets. It really just boils down to using your points in a prudent manner and being honest and consistent with your valuation method in comparing the two programs.

  31. Rick said,

    That’s my strategy with SPG and Hilton. Save Starwood for lower end cash and points properties, and get a Hilton award in expensive cities where I don’t want to go far away or stay in a dump. I can mint Hilton points at 6points for 0.4cents so for me it makes sense to accumulate them.

  32. RJ said,

    Hi Gary,

    “Cash earns a rate of return” what country do you live in? with ZIRP (zero interest rate policies) and the rampant crushing of the devalued U.S. dollar (AKA, inflation) what ROR are you referring to? I think you and Ben Bernanke think alike. Lol. I’m just playing with you gary and I love both of your blogs.

  33. W Brian Duncan (aka IPBrian) said,

    You boys are funny when you do this!

  34. chemist661 said,

    I am fairly new to Hilton but I would value a Hilton point for a decent redemption at 0.5 cents/pt. Alot of properties are overpriced redeeming for points so I would either pay cash for those (if I want that exact property) or bid on Priceline if I just want a comparable hotel without preference for a Hilton/Starwood/Marriott/Priority Club, etc. (For priceline bidding, I do the research on biddingfortravel, betterbidding & look at trip advisor reviews before bidding).

    For some aspirational properties, I may increase my value of a Hilton pt more.

    Bottom line: I go with Gary & value a Hilton pt at approx 0.5 cents/pt with redemptions I would usually do.

  35. Stacey @VeryGoodPoints said,

    I love a good blogfight! This gives me an idea for new reality show (I feel a blog post coming on)

  36. Confessions of a Points Hoarder - Very Good Points said,

    [...]  Now, you can check out BoardingArea for the latest reality twist, BlogFight featuring Gary of View from the Wing and Lucky from One Mile at a Time.   So it got me thinking, why not a show about points hoarders? [...]

  37. Mike said,

    “How much have you spent this year on the Starwood American Express and how much have you spent on a Hilton credit card? That’s called revealed preference.”

    Since you both value Starpoints more than HHonors, just differ on the degree, this question doesn’t make sense. For points only you should spend all the money on the SPG card because it’s worth more. You wouldn’t vary spend based on how much you think 1 HHonors point is worth.

  38. Gary said,

    @Mike, no, of course 1 Starpoint is worth more than 1 HHonors point. but the HHonors cards earn 3 points per dollar. So if I’m right, you put spend on the Amex card. If Lucky’s right, $1 on the Hilton card earns a better return.

  39. matt said,

    Hilton points only reach max value for top cat7 properties. If ythis is your target redemption, and you value a top hotel more like 300+ than 200, Lucky’s value is accurate. If you want to redeem for lesser properties, yours is.

    If you want to redeem for top properties with starpoints, you may struggle getting your consensus value. You’ll easily exceed it with C&P on moderte properties though.

    Valuing Hilton vs starpoints is ridiculous in a vaccuum. How you will realistically use them matters. They are not currencies you would want to use for the same hotel classes, if given the choice. Your desired redemption needs to drive your spend choice.

  40. UAPhil said,

    Sometimes Starpoints are a great value at midrange properties even if cash & points is not available. Example – 4 Points San Francisco Airport, Friday night stay, lowest refundable rate $255 (including tax), or 3000 Starpoints. That’s a true 8.5 cents/point for a midrange stay during high season that might be a required part of a trip itinerary – not a theoretical aspirational option. (Bottom line – comparing apples to apples, and ignoring a few “outliers”, I think a 4:1 ratio is fair.)

  41. Once More Unto the Breach, Dear Friends… Hilton HHonors Points Are Not Worth 0.8 Cents Apiece - View from the Wing said,

    [...] really do think my formulation holds: [T]he value of a loyalty program point, expressed in dollars (cents), is the amount at which [...]

  42. TravelerMSY said,

    I’d say a fair way to set a dollar value on the redemptions is to use the Priceline or maybe the IBM rate. Keep in mind that you’re only getting inventory that would otherwise go unsold. I am deliberately ignoring elite benefits.

  43. TravelerMSY said,

    For air, I’d use the retail rate for discount F/J, unless you’re truly getting last-seat availability through non-saver redemptions.

  44. 35% Bonus on American Express Points Transfers to Virgin Atlantic Starts Tomorrow - View from the Wing said,

    [...] and I had a long debate on the value of HHonors points, he values them at 0.8 cents, meaning he things he gets 2.16 cents per point out of the deal. Not [...]

  45. Wal-Mart, Amex take on banks with Bluebird debit card - Page 239 - FlyerTalk Forums said,

    [...] Here's an interesting blog post from when Gary and Lucky where debating the value of Hilton points. http://boardingarea.com/viewfr…he-is-edition/ [...]

  46. Choosing a Hotel Loyalty Program – Part 1 - Mommy Points said,

    [...] to one that One Mile at a Time developed.  Of course, not everyone agrees with specific values as View From the Wing thinks that Hilton points are worth .5 – .6 cents instead of the .8 cents that Lucky settled [...]

  47. Points on the Dollar - How I Estimate The Value Of Points And Miles said,

    [...] this past February, but, at the time, Ben argued that each Hilton point was worth .8 cents, and Gary thought a better estimate was .5 cents.  Both arguments are excellent reads, though I think that Ben overstated the impact of [...]

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