My Beginner’s Guide to Travel Hacking Part 2: Understanding the Value of Points and Miles

All points and miles are not created equal!!  Honestly this may be the single most confusing part of trying to learn Travel Hacking.  There is no universal number for how much a point or mile is worth.  But that is also the fun part of Travel Hacking is to see how much value you can get out of your points and miles. The whole idea of Travel Hacking is to get the best value possible when you redeem your points and miles.  I won’t say that I have perfected this by any means. But for one year into this new hobby, I think I have done pretty well so far.  I wanted to include the chart of the points and miles I have used so far to fund my trip to give you some real life examples of the different value of points and miles.

First of all, the far right column of the table shows The Points Guy July 2018 Valuation of point and miles.  As you already know, The Points Guy has been my expert teacher on points and miles.  So I used his monthly valuations of points and miles to judge to see if I was going to be using my miles/points wisely.  My goal was to beat the value that The Points Guy has set for each different brand.

Points and Miles Redemptions

Redemptions	Company	Points Used	Total Value	Points/Miles Value	TPG Monthly Valuation*
Manila to Cape Town in Business Class	Chase	45,000	$2,200.00	4.89 cents	2.1 cents
Champaign to Prague in Economy	American	30,000	$750.00	2.5 cents	1.4 cents
Cape Town to Buenos Aires in Business	United	50,000	$2,400.00	4.8 cents	1.4 cents
6 nights in Sharm el Sheikh	Hilton	25,000	$408.00	1.6 cents	.6 cents
3 nights in Cappadocia	Hilton	30,000	$156.00	.5 cents	.6 cents
5 nights in Dubai	SPG	19,000	$678.00	3.6 cents	2.7 cents
3 nights in Istanbul	Capital One	13,332	$133.32	1 cent	1 cent
2 nights in Skopje	Capital One	6,752	$67.52	1 cent	1 cent
1 night in Split	Capital One	5,961	$59.61	1 cent	1 cent
Dubai to Tokyo in Economy	Citi	31,328	$391.00	1.25 cents	1.7 cents
3 nights in Siem Reap	Marriott	30,000	$435.00	1.45 cents	.9 cents
Tokyo to Seoul in Economy	United	8,000	$191.00	2.39 cents	1.4 cents
5 nights in Singapore	Hilton	80,000	$880.00	1.1 cents	.6 cents
6 nights in Cape Town	Marriott	62,500	$754.00	1.21 cents	.9 cents
Johannesburg to Cape Town	Citi	8,168	$81.00	1 cent	1.7 cents
Da Nang to Phnom Penh in Economy	Citi	10,576	$132.20	1.25 cents	1.7 cents
1 night in Hanoi	Hilton	10,000	$95.00	.95 cents	.6 cents
3 nights in Tokyo	Hyatt	36,000	$690.00	1.9 cents	1.8 cents
2 nights in Osaka	Hyatt	16,000	$338.00	2.1 cents	1.8 cents
Totals		512,617	$10,839.65

*This was based upon The Points Guy July 2018 Valuation of points and miles

Now since I was a Finance Major and the dorky side of me secretly loves analyzing spreadsheets and numbers, let’s take a look at some of the takeaways from the chart:

Overview:

I beat or matched the Points Guy Valuation for 16 out of 19 redemptions.  For a beginner Travel Hacker, I am pretty proud of this.  It wasn’t necessarily difficult but it did require me to spend hours researching my different options and comparing the numbers of points/miles needed for each flight or hotel stay to make sure I was using my points wisely.  I will go into more detail on how to find the best redemption in Part 6  and 7 of this series.  Yes, I already have at least 7 parts planned!

Points Mistake??:

One of the three redemptions that I had for less than The Points Guys Valuation was the DoubleTree by Hilton Hotel Avanos – Cappadocia which I booked for 3 nights using 30,000 points.  This hotel only would have cost $156 for the three nights if I would have paid with cash or credit card.  Making the value .5 cents/point instead of .6 cents/point I should have received according to The Points Guy.  For me, this is a pretty tiny difference to fret about.

I had about 144,000 Hilton points to begin with that I knew I wanted to use for 5 nights in Singapore including over New Years Eve (80,000 points) and 6 nights in Sharm el Sheik for 25,000 points.  I still had 40,000 points to use and not many choices for low redemptions.  The Doubletree in Cappadocia is a Category 2 hotel and there weren’t many more of those along my route that I could stay at. Category 1 and 2 hotels always require the fewest number of points to book.  So even though one of my Hilton Redemptions was low, overall I got an excellent return on my sign-up bonus with 14 free nights!  I still have 14,000 points to use as well.

Best Redemption:

As you can see above, the value of my points ranged anywhere from .5 cents/point to 4.89 cents/mile.  This is a huge variance! The best value for the points that I redeemed was easily the 2 Business Class long distance flights which I got 4.8 cents per miles for each.  Now, I would never personally pay $2200 or $2400 for a one way airline ticket, but the luxury of getting to fly in Business Class for 14 hours+ flights was well worth the value of my points.  Using points for Business Class or First Class tickets is generally considered one of the best use for points to get the highest value for lowest number of points.

Miles Mistake:

We just looked at what a great value my miles were for Business Class flights but let’s look at some of the other miles I used for flight redemption.  I used 30,000 points American Airlines miles to book an Economy Ticket from my hometown of Champaign to Prague.  The Points Guy Values American Airlines Miles at 1.4 cents/mile so my redemption at 2.4 cents was a good use of my Chase Rewards Points but I probably could have used 10,000-15,000 more points to fly in Business Class which would have been a much better value.  This was my first booking of my whole trip when I was still very new to Travel Hacking at the time.  If I could go back, I would have used the extra points to fly in Business especially since I have 3 flights and around 17 hours of travel.  I would have enjoyed the luxury for sure!  I highly suggest when booking long international flights to fork out the extra points to fly in style in Business Class.

Great use of miles for short Economy Ticket:

My flight from Tokyo to Seoul was a mere 8,000 miles and gave me a value of 2.39 cents per miles.  This again is beating the value that The Points Guy has given us a benchmark and was a great use of my miles.  That flight is less then 3 hours so it makes sense for me to stay in Economy and not splurge using miles.  Overall you can see that all of the flights I booked using American, United, or Chase Rewards points were a great value.

Miles Failure:

The two flights that I purchased through my Citi card both came in at a value of 1.25 cents per mile which is the value that Citi sets if you book the flights directly with them rather then transferring the points to an Airline.  You may wonder why I didn’t transfer the points to an airline then to book.  1.  I had already booked my major airline tickets by the time I got my Citi Card and the bonus for spending.  2.  I looked at transferring points to airlines, but the flights were either no longer available to use points or they required a larger number of points then booking directly with Citi.  To be honest, I wouldn’t value Citi points as highly as The Points Guy does because they offer no option to transfer to hotels and the airlines that you can transfer to are limited.  I will use my Chase Sapphire card any day over my Citi card but I will go more into that in another post.  I have tried hard to use my Citi points wisely but I just couldn’t find a good way to spend them.  Considering, I beat The Points Guy valuation on every other redemption except one Hilton stay, I will have to just let this one go.

Valuing Credit Card Bonuses:

So when you look at credit card sign up bonuses, you want to take into account the value of points.    As seen above, hotel chains can vary greatly on the amount of points needed to redeem for a room.  For example, SPG starts redemptions at 2,000 points for a Category 1 Room and Marriott requires 7,500 points for a Category 1 room.  Category 1 is lowest amount of points needed for both brands.  SPG and Marriott have merged and if you want to transfer points between programs then you will get 3 Marriott points for every 1 SPG point and vice versa.  So when you are looking at the sign-up bonuses and Marriott offers 75,000 while SPG offers 25,000, you would think it is a no-brainer to go with Marriott but really the points are equal in terms of transferring from one to the other so you have to then look at the other perks that the card is offering to decide which is best for you.  Even more confusing is the fact that SPG and Marriott are merging into one program and revaluing almost all of their hotels at the end of August 2018.  Have I lost you yet?

Location Matters:

You should also take into consideration the locations of their hotels and the destinations that you frequent.  A sign up bonus might be highly lucrative but if there aren’t hotels that you want to actually want to visit then what is the point of getting that card?