TFC answers. When to pay cash and when to use points to book a room
Our weekly column today deals with a much-debated topic. The question has often been asked of us both [...]
Our weekly column Today deals with a much-debated topic. We have been asked the question often both in comments and in posts. "How do I know when it makes sense for me to use points and when it makes sense to book cash?"
Points or cash, that is the dilemma
In this article:
As well as Pablo Escobar offered a "Plato or Plomo" choice, the reward traveler is always faced with the important decision of whether to use accumulated points or pay cash for a reservation, especially when it comes to a hotel room.
Of course, there are occasions where the question does not arise. For example, I converted 440 thousand Hilton Honors points toward a 5-night stay at the new Hilton Amingiri in the Maldives, saving just under 8000€, over 1500€ per night.
Other times, however, the decision is not so obvious, I recently stayed at the Waldorf Astoria in Bangkok And I decided to take advantage of the program Fine Holtes + Resorts instead of using the points: the cost per night was less than 300€, while the required points were 80k per night, a totally unaffordable conversion.
First of all do the math well
Did you get your flight cancelled, miss your connection, land late?
You could get up to 600€ compensation per person
One thing I like about the Marriott app/site. is that you can select the mode taxes and surcharges included. Especially when traveling in the U.S., but also in other parts of the world, you are often attracted to a great price, but that in the end when you add taxes, surcharges, and resort fees is very different from what is shown in the initial search. In contrast if you use points to stay Hilton does not charge surcharges and taxes, while Marriott does.
So when considering whether to pay or redeem points, these variables should be taken into account. The steps are then as follows:
- Choose room and period and get down to the last click before confirming the reservation, that way we will have the final price with all the extras.
- Do the same operation but selecting the willingness to pay with points.
- Compare the price for traditional payment or points and, only at this point make the assessment.
Points earned or points bought/transferred
There are abysmal differences between booking a hotel, but also a flight, using points accumulated organically on the loyalty program and those instead obtained by transferring/buying points.
The first ones are free, in the sense that they were accumulated without spending anything more and using them does not give up other opportunities. Of course, we have written that it is possible convert points from hotel chains in points of frequent flyer programs, but we also said that this practice is not convenient.
The latter, on the other hand, have a cost, be it economic or waiver of alternative use, maybe cheaper.
This greatly affects my choice. For example recently I booked a super ticket to fly first class with Qatar. I ended up using 100 thousand avios I already had in my account, accumulated by flying, and just had to Transfer a small amount of MR points.
How much are the points worth
To understand how much the points are worth, it is necessary to give a value and to put a value on the points, it is necessary to evaluate how many points you earn and how much you save by using them instead of paying cash.
I Bonvoy points are generally more difficult to accumulate than Hilton's Honors points, so it is obvious that the former will have a higher value than the latter.
Basic accumulation is the same for all and with the two programs you get 10 points for every dollar spent, but what makes the difference are the bonuses, offers and statuses. Hilton Honors is always on promotion, while Bonvoy Is much more stingy.
Does the treatment change between a cash reservation and an award?
We have repeatedly explained that the best conversion, when booking a room with points, is to the base room reservation. The cost-benefit ratio is by far the best.
In 99.99% of cases, if you possess a status, you will receive the benefits provided by the level you possess and award nights will be counted for membership renewal purposes. In addition to this, all extra charges will generate points to be used for subsequent bookings.
What may change may be some costs, as mentioned for example HHonors does not charge resort fees and other surcharges when booking with points. At the Conrad in Las Vegas, it means saving 50$ per night, which is not the case if you redeem award nights at the Ritz Carlton in Cancun.
Other times, the assessment must be made taking into account other factors, e.g. the booking via FH+R adds numerous benefits to the stay and may lead to a different decision than making a "direct" reservation.
When I use points and when I pay cash
After this long but necessary introduction, here we come to the key point of the article. I obviously focus on Hilton and Marriott, because those are the only two programs where I organically accumulate points and why they are two of American Express' three partners and it is then also possible to transfer Membership Rewards points.
This year I "burned" over half a million Hilton Honors points., but thanks to the generosity of the program and the ease of accumulating so many bonuses, I have just as many points in my pocket, while unfortunately despite staying so much in Marriott hotels this year I have accumulated just over 100 thousand points.
I generally try to use points when I can also take advantage of the fifth night for free i.e., the ability to book 5 nights but pay only 4, otherwise I use points qundo the cash cost is high and the points/euro conversion is advantageous.
This then leads me to evaluate a 500€ per night hotel room differently if I am asked for 40k Honors points or 40k Bonvoy points.
In my reservations, the base value, below which I do not go (almost never), is 8€ for 1000 points for Hilton and 10€ for 1000 points with Marriott, this is the minimum I take into consideration when evaluating the use of points. Of course, the conversion rate from MR points to program points also affects this. Hilton has a rate of 1:1, while Bonvoy has a rate of 5:4.
These are just the minimum prices, obviously you have to try to do better.
In the case of my reservation at the Hilton Amingiri in the Maldives, I got a value of over €18 for 1,000 points. When I stayed in The Ritz-Carlton Cancun I spent 50k Bonvoy points per night worth more than 15€ per 1000 points.
In conclusion
Using points to stay in hotels can give great experiences, but most importantly can translate into huge savings of even tens of thousands of euros.
I hope that even this installment of TFCanswers can help our readers better understand the use of points, best practices and mistakes not to make.
