Easily the most frequently asked question I get, and probably one of the most difficult to answer. I’ve been mulling over recently why it’s so hard to give points a value, and I think it comes down to three things:
- Everyone has a different points ‘philosophy’: To give an example, let’s say you use 10,000 points to get a free flight in Business Class between Tokyo and Hong Kong. If Economy normally costs £500, and Business normally costs £1,000, how much are those 10,000 points worth? There’s probably three answers:
Not only do people have different views on which of three options they would pick, if you pick (3) then everybody has different views on how much they would pay for a higher class of service, nicer hotel etc. It sounds obvious, but whilst you can put a number on it, ‘value’ is a very subjective thing.
- “£500, because if I hadn’t used my points I would have flown Economy.”
- “£1,000, because i’m flying in Business and that would normally cost £1,000.”
- “Somewhere in between, because whilst I wouldn’t pay £1,000 for Business, I would pay a premium of £x”.
- Availability can play havoc with valuations: Example 2: You have 100,000 Avios points. In theory these points are worth a £2k return flight from London to New York during ‘peak’ season. If you need to fly during February half-term and can’t find availability, are your points still worth £2k? Some people would say ‘yes’, and that like cash just because you’ve haven’t spent it doesn’t mean they aren’t worth their face value. Some people would say ‘no’, and that the Avios are worth nothing if they can’t be spent when you want to spend them.
- Prices constantly vary and timing is a big factor: Example 3: You use 50,000 Hilton points for a room in a major city for a room in 6 months that at the time was priced at $120. A couple of months later, the hotel has a sale and the room is available for $110, and at the same time Hilton have changed the cost of the redemptions to 45,000 Hilton points. Do you revalue your points to reflect the new economics?
Hopefully the above gives some flavour as to why saying ‘a point is worth $xc’ is not easy!
The table shows the ‘actual’ value I’ve received for each point received, having redeemed well over a million miles. It also shows a ‘suggested floor’, which is the minimum I would accept for my points to justify a redemption. I’m doing OK against all of these with the exception of Virgin Australia. This average has been dragged down by what can only described as a moment of weakness, where after a particularly high-spending week I redeemed too many miles for too little cash saving!
Any questions on these valuations, don’t hesitate to get in touch.