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TPG reader Matt sent me a message on Facebook to ask about redeeming airline miles:
Frequent flyer programs offer a wide variety of ways to redeem miles. Aside from flight and upgrade awards, you can use miles to pay for hotels and rental cars, merchandise, experiences and more. That flexibility might seem like an asset, but while it’s nice to have options, the reality is that most of them offer pretty low value.
United’s MileagePlus Hotel and Car Awards provide a perfect example. A weekend stay in mid-September at the DoubleTree Hotel in Sonoma would cost you about 45,000 miles per night, or you could pay as little as $287 per night with the Hilton member discount. That’s a redemption rate of around 0.7 cents per mile, which is abysmally low.
To put this in perspective, you could book that same room through Hilton HHonors for 40,000 points per night, and in that case, you’d be eligible to get the fifth night free. As a rule of thumb, you’re probably not getting a good deal by redeeming airline miles when you could get the same room with fewer hotel points.
I list United miles at 1.5 cents apiece in my most recent valuations, so an average redemption of 200,000 miles should get you about $3,000 of value — and sometimes much more. In my experience, you’re not going to get anywhere close to that by redeeming miles for hotel rooms. You can get preferential rates for having elite status or holding a co-branded credit card, but even then I wouldn’t expect to get much better than around 1.1-1.2 cents per mile. You’ll get better value by redeeming miles for flights, especially long-haul premium awards.
As always, keep in mind that the best award redemption is the one that makes you happy, and not necessarily the one that gets you the highest return. If you’re absolutely drowning in miles and you don’t have another use for them, then booking hotel rooms is certainly better than letting them expire. Just be aware that you’re sacrificing a lot of potential value in the process.
For more on maximizing miles and saving on hotels, check out these posts:
If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.
Source: thepointsguy.com