What are Hilton points worth? And, should we buy points?

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Hilton has a weird hybrid approach to free night awards.  Like IHG, they no longer publicly assign hotels to categories and can therefore dynamically price award nights.  But they don’t.  Not really.  I mean, they do dynamically (over) price premium rooms, but not standard rooms.  Behind the scenes, they maintain a categorization and assign standard room award prices to each property (or to each category… or something).  They seem to also maintain an internal peak/off-peak type of approach in that some properties have different standard award prices at different times of year.  Due to category-ish award pricing, it’s possible to get outsized value from Hilton points when cash prices are high compared to their relatively fixed award costs.  That’s the good news.  The bad news is that it’s not likely to happen by chance.  On average, Hilton points are worth a bit less than we’ve previously reported…

At some very high end properties like the Conrad Bora Bora, shown above, it’s possible to get far outsized value for your Hilton points, but most properties offer less than half a cent per point value.

For years, our Reasonable Redemption Value (RRV) for Hilton points was 0.45 cents per point.  This was based on data collected by a website called Pointimize which stopped operations in 2018.  And so, with data 3 years old, it was far past time to come up with a new RRV.

In order to determine the value of Hilton points, I collected real-world cash prices and point prices.  As I’ve done previously in analyses of other hotel loyalty programs, I examined 7 major hotel markets in the U.S. (Chicago, Denver, Houston, Los Angeles, Miami, New York City, and Seattle).  Within each market, I identified the top 3 TripAdvisor ranked hotels that are bookable with Hilton points, and I recorded both cash and award prices (standard room awards only) for three dates each: a weekday, a weekend, and a holiday weekend.

  • Why U.S. only? U.S. consumers are known to spend most of their points and miles on domestic travel.  Since the majority of this blog’s audience resides in the U.S. we opted for a U.S. centric view of point values.
  • Why TripAdvisor? The goal wasn’t to find the 3 best Hilton hotels in each market. Instead, the goal was to find the 3 Hilton bookable hotels that are most popular.  Which ones are people really likely to book?  Since many people use TripAdvisor to pick hotels, this seems like a good way to identify those hotels.
  • Which paid rates were selected?  I always picked the best refundable paid rate shown on Hilton’s website, but without applying any discounts like AAA, military, government, etc.  These were almost always “Honors Discount” rates available to anyone with a Hilton Honors account.
  • What about point earnings on paid rates? An ideal analysis would include the value of point earnings on paid rates.  For simplicity, this was not considered in this analysis.  This decision has the effect of over-valuing Hilton points.
  • What about taxes and fees? For simplicity, taxes, resort fees, and other fees are not included in this analysis.  This decision has the effect of under-valuing Hilton points.  Since Hilton does not charge resort fees on award stays, the under-valuation is much larger for properties that charge high resort or destination fees.
  • Which specific dates did I use?
    • Weekday: Wednesday September 15th
    • Weekend Day: Friday October 15th
    • Holiday Weekend Day: Friday July 2nd.  If that date wasn’t available for both points (at standard award pricing), and cash, the plan was to look next at Saturday July 3rd, and if that wasn’t available I would look at Friday November 26th (Thanksgiving weekend).  All of the properties I looked at were available on July 2nd at standard award pricing, so this was never an issue.

Results

May 5th 2021 Analysis
Point Value (Median) 0.40 cents
Point Value (Mean) 0.42 cents
Cash Price (Median) $225
Cash Price (Mean) $251
Point Price (Median) 60,000
Point Price (Mean) 58,730

The median observed point value was 0.40 cents per point.  This means that half of the observed results offered equal or better point value and half offered equal or worse value.  Another way to think about it is that without trying to cherry pick good awards, you have a 50/50 chance of getting 0.40 cents or better value from your Hilton points when booking free night awards.

Buying Points for Half a Cent Each

Hilton puts their points on sale for a half cent each so often that it would be crazy to buy points for more than that.  If there isn’t a sale going on when you need the points, wait a minute or two to see if one pops up.  But even then, is it a good deal?

If you have a specific award in mind where points are worth more than a half cent each, then it makes sense to buy points for that award.  The question I wanted to address here was whether it makes sense to buy Hilton points prospectively just to have enough around for whatever you need.  The answer seems to be no.

Value when buying points at 0.5 cents each Percent
OK Value: Percent greater 0.50 cents per point 16%
OK Value: Holiday Weekend percent greater than 0.50 29%
Good Value: Percent greater 0.60 cents per point 3%
Good Value: Holiday Weekend percent greater than 0.60 5%

In the table above, I showed the percentage of observations where the observed awards offered OK or good value if you had purchased points at half a cent each.  I defined OK value as anytime the award offered better than half a cent value.  In other words, if you used your purchased points for these awards you at least wouldn’t have lost money on the deal (and maybe you’d come out ahead if a cash rate would involve high resort fees, for example).  And I defined good value as anytime the award offered better than 0.6 cents per point value.

As you can see above, only 16% of awards offered OK value and only 3% offered good value.  The numbers were slightly better if I looked only at holiday weekend numbers where cash prices tend to be higher.  In that case, 29% of the awards offered OK value and 5% offered good value.

No matter how you slice it, the chance of randomly getting good value from purchasing Hilton points at a half cent each is very low.  Of course, those who cherry-pick their use of points can do much better.

New Reasonable Redemption Value

Our Reasonable Redemption Value (RRV) for Hilton points was previously set to 0.45 cents per point.  RRV’s are intended to be the point at which it is reasonable to get that much value or better for your points.  Therefore, I believe that the median observed value is a good choice for our RRV…

Reasonable Redemption Value for Hilton: 0.4 cents per point

Conclusion

Based on the latest analysis, I’ve dropped our Hilton RRV to 0.40 cents per point.  The idea is that you have equal chance of getting that much value or more from your award stays.

Additionally, my usual recommendation against buying points without a plan for using them has been strengthened considerably.  The chance of randomly getting much better than half a cent per point value from Hilton points is much lower than I would have guessed.

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