Earlier I wrote about tips on how to determine whether or not to pay money or redeem miles for flights, and on this submit I wished to try tips on how to determine whether or not to pay money or redeem factors for lodge stays.
I typically see individuals on the fence about whether or not they need to pay money or redeem factors for lodge stays, particularly as lodge loyalty packages more and more transfer nearer to being income primarily based. Whereas the maths is typically easy, different instances it isn’t. So let’s talk about a number of the issues that you must take into account.
Redeeming factors vs. paying money for a lodge keep
Admittedly in some circumstances the choice of whether or not to pay money or redeem factors for a lodge keep is apparent.
In fact you must redeem 30,000-40,000 World of Hyatt factors for an evening at Alila Ventana Large Sur, if the keep would in any other case price $2,000+ per evening. Different instances the maths isn’t so easy. For instance, must you redeem 80,000 Hilton Honors factors for an evening on the Waldorf Astoria Bangkok, if the speed can be $400 per evening?
Let’s go over a number of the issues that you must take into account when making an attempt to determine.
How a lot would a lodge keep price whole?
The very first thing to contemplate is the full quantity a lodge keep would price you if paying money. This may sound apparent, however there are some things to contemplate:
- Take a look at the taxes, charges, and repair costs, as these are typically charged if paying money, however not if redeeming factors; some locations have taxes & service costs approaching 30%, so in these conditions that would vastly change the maths
- Take into account any resort charges or vacation spot charges being charged by inns; some lodge loyalty packages (together with Hilton Honors and World of Hyatt) don’t cost these when redeeming factors
For instance, say you wish to ebook the Ritz-Carlton Cancun for one evening, and it prices 59,000 Bonvoy factors.
The money price is $451, so that you’re getting “simply” ~0.77 cents of worth per level.
Nonetheless, in case you then take a look at the full costs, you’ll see that after taxes and repair costs, the keep would price $589 if paying money. You’re now getting ~1.0 cents of worth per level, which is significantly better.
How a lot do you worth factors?
I’ve shared my valuations of the most important lodge factors currencies. I completely don’t declare my valuations are right, however I feel everybody ought to take into account how a lot they worth factors primarily based on their very own scenario.
In case your reply is “I acquired factors for subsequent to nothing, and that’s additionally what I worth them at,” that’s completely effective. At a minimal, I do know it’s helpful for individuals to a minimum of hear somebody’s valuation as a place to begin for tips on how to determine whether or not to pay money or redeem factors.
What number of factors are you forgoing in case you redeem?
Calculating how a lot worth you’d get out of your factors with a lodge keep isn’t simply so simple as dividing the income price and the factors price. Once you redeem factors, you even have to contemplate the factors that you simply’re forgoing by redeeming factors relatively than paying money.
For instance, as a Marriott Bonvoy Titanium member with the Marriott Bonvoy Sensible® American Specific® Card (overview), I earn 23.5x Bonvoy factors per greenback spent with Marriott:
- I earn 10x Bonvoy base factors per greenback spent with Marriott
- As a Titanium member I earn a 75% factors bonus, which is an extra 7.5x Bonvoy factors per greenback spent
- For paying with the Bonvoy Sensible Card, I earn an extra 6x Bonvoy factors per greenback spent
I worth Bonvoy factors at ~0.7 cents every, so to me a return of 23.5x factors per greenback is equal to a ~16.5% return. This all assumes that there aren’t additional bonus factors alternatives, as the most important international lodge teams generally have additional promotions.
Utilizing the identical Ritz-Carlton Cancun instance above, if I have been to pay money I’d earn a complete of ~11,500 Bonvoy factors (23.5x factors on the $451, plus 6x factors on the $138 in taxes & service costs), which I worth at ~$80. In different phrases, I’d take into account that lodge keep to actually price me $509 relatively than $589.
What are you giving up by redeeming factors?
These days most lodge teams are good about honoring elite advantages and awarding elite nights for award stays, so there’s not often going to be an enormous distinction on that entrance in terms of paying money vs. redeeming factors.
If you happen to’re staying at a high-end lodge, one other consideration is whether or not your keep would qualify for a program that provides extra perks on paid stays on the versatile price. For instance, this might embody every thing from Amex Fantastic Resorts & Resorts, to Hilton Impresario, to Hyatt Privé, to Marriott STARS & Luminous, to Virtuoso.
Let’s use the identical Ritz-Carlton Cancun instance above. The Marriott STARS price can be $460 per evening, and for reserving that you simply’d obtain a $100 lodge credit score as soon as per keep, every day complimentary breakfast (which Marriott Bonvoy Platinum members and above don’t in any other case obtain at Ritz-Carlton), a room improve, and extra.
Everybody will worth these perks in a different way, however these might add fairly a little bit of worth, and will make paying money the higher worth.
What are you giving up by paying money?
Whereas there are some benefits to paying with money, there are additionally conditions the place there are additional advantages when redeeming factors.
For instance, World of Hyatt Globalist members obtain free parking on award stays, however not when paying money (this additionally applies to Visitor of Honor bookings).
Past that, loyalty packages like Hilton Honors and Marriott Bonvoy provide a fifth evening free on award redemptions, whereas that’s not typically supplied when paying money. So that you must also issue that math into the general equation when deciding what represents a greater worth.
Backside line
There’s no absolute proper or mistaken reply as as to if paying money or redeeming factors is the very best worth for a given lodge keep. Basically, I like to recommend evaluating the all-in price when paying money (together with taxes & service costs) to the factors price, then deciding how a lot you worth factors, after which subtracting the factors you’d be forgoing in case you redeemed factors.
There are another potential issues, like in case you’re staying at a luxurious lodge, the place a program might rating you further perks with out it costing you further, when that’s not doable for these redeeming factors.
What’s your method to deciding whether or not to redeem factors or pay money for a lodge keep?
