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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Mark

Greg (and Nick) are the only guys who keep it real. And honest. And helpful. Always.

[…] What Are Hilton Points Worth?:  Hilton points are often overlooked because of the number of points required for award stays.  However, understanding what these points are worth and how easy it is to earn them, you may be swayed to use them more. […]

Merry Chris Moss

I’m going to stress you should definitely use taxes and fees at a minimum. Doing so doesn’t make the calculations more difficult but not doing so changes the valuation significantly. Like people think Warren Buffet said “Who do you think pays the taxes? The tooth fairy?*”

I’d assume a 10% minimum with 20% being closer in reality since you are using large city examples. The taxes alone increase the value to approximately ¢.44-¢0.48.

For resort/destination fees, I’d use $25-$50. Since this is a fixed amount, it’s more difficult as a percentage but assuming cash rates of $200-$300, you have an increase in value of ¢0.05-¢0.066 or an adjusted range of ¢.45-¢.466.

Add resort fees and tax then you have a range of ¢.495-¢.56. At that point, you’d most definitely consider buying points.

Valuations are typically a range. In this case, you have a range of ¢.44-¢.56. Low tax at non-resort? Use ¢.44. High tax and high resort fee? Use ¢.56. Otherwise, I’d use ¢.5 and always at least consider buying miles if paying a resort fee.

Of course you’ve got the points earning aspect and that’s way more complicated especially since Hilton is always running a promo (sometimes a fixed amount which is great for cheap stays and sometimes variable which is better for expensive stays) and status plays a large part in the Hilton earning structure. Although points do act like a discount, I’d say most of the time points earnings only partially cancel taxes and fees, so if you aren’t considering taxes or points earning, I’d definitely lean to the high end of your numbers.

I’d generalize and say discount the above by a minimum of 4% if no promo and no status. Big promo and high status? Discount 20%. That gives you a range of ¢.35-¢.54 with a mean of ¢.445. That gets us back closer to your ¢.4 but I’d say the typical value is closer to ¢.5 which is 20% higher. 20% is kinda high for a range but not unheard of. At a minimum, I’d go with your average rate of ¢42 but think the old ¢45 is a safe bet.

All that work and we are back to where we began at ¢.45.

As the old adage goes, you don’t know until you do the math.

*Buffet’s quote is actually not about taxes, but is about Capital Expenditures as it relates to EBITDA/EBIT.

Merry Chris Moss

And fifth night free increases value of all ranges by 25%. In that case, you’ve got a minimum of ¢.44 up to ¢.675. If doing five nights or more, you’d almost always consider buying miles.

Nick Reyes

I feel like the savings on taxes vs potential paid stay earnings close to cancel out. Hilton frequently offers promos where you can earn as much as 20-40 points per dollar before credit card earnings. Valuing those points at 0.4c each, you’re talking a rebate of 8-16% – pretty close to your proposed range for taxes. Obviously feel free to tweak the values as you see fit, but I think Greg was reasonable in leaving those opposing components out.

Merry Chris Moss

I don’t totally disagree with what you just said because the tax can cancel out, but probably not completely very often, so since you aren’t using a range, it would be best to slightly increase the valuation. I’d guess if you did a distribution, only about 30% would be offset. Since the mean was a little bit higher, I’d say the mean was a more reasonable value. I think the ¢.4 is a minimum. Would also love to see the min and max of value.

Taxes are typically higher in large cities and that’s what was used in the comparison, so I’d be inclined to say the valuation is even slightly lower. When you add resort fees though, which based on the cities used is likely for at least a few, then the two would not come close to being offset and the valuation would be significantly undervalued.

Just a point of consideration for folks to do like you said and develop their own values. I do think it would be good to expand on that topic a little more in the description since most people just use blogger numbers outright. A person who always stays at resorts could be making some very poor decisions if using a low valuation, even worse when not calculating in 5th night free.

Great article though.

A B

Likewise, international Hilton properties almost always give better values. Best example was when I stayed at the Ramses Hilton in Cairo for 20 nights… for 80,000 points total. The daily rate (not including fees) was around $120/night.

L K

Agree, big mistake to ignore taxes and fees. The numbers come up when you look at prices, and taxes, fees, and ‘resort/destination’ charges are high in many locations

SEAN

Thanks guys. These deep dives are well though out and helpful. Plus they make me feel better about getting way better value this summer :). Keep it up!

Luke Vader

Nice analysis, great post. By using Hilton points in conjunction with waived resort fees and/or 5th-night-free benefits, there are more scenarios where Hilton Honors points are worth closer to 0.5 cents each (which was the point of your evaluation).

And using Hilton points for stays at premium properties along with free award night certificates can stretch/enhance the utility of using either method alone.

Paul

this is very similar what I experience in reality in redeeming Hilton point. You may reach closer to 0.5 with taxes and resort fee, but otherwise, it’s about 0.4

Aleks

That is a good valuation analysis, and I concur on seeing similar values for many properties. Not completely agree on not taking taxes & resort fees on cash prices into account because you pay it, unless using points. Some places have ~30% taxes/fees on top of the bare room rate, and you would not be able to avoid paying them otherwise. So with that in mind, I keep HH point value at 0.5 cents.

Joe Schmo

I agree. Taxes & resort fees should be part of the calculation. That’s what I do.

Andre

I agree too. You have to factor in the taxes and fees because you have to pay them with a cash booking. I don’t get Greg’s logic on this one. But otherwise, a great assessment

stvr

Greg… this is incredible work. Super impactful, actionable, and useful. I’m glad you’re finally putting an end to this long-running miles/points world canard.

BlackHill

Wonderful analysis Greg, Its becoming more difficult to get > $0.005 especially in US. I have often seen good value when booking far in advance(which is not possible most of the time) and also while booking outside US.

Joe Scmho

Nice analysis, Greg, as always. I bought too many points years back at 1/2 cent. At least I’ve pretty much stopped accruing more though I’m still sitting on 1M pts. It’s far past time that i started burning those points!

Jake

First off, of all the points/travel blogs out there, FM is my favorite! It’s the most sensible, pragmatic, no nonsense, least “shilly” blog out there and the writing is humorous too!

I used to get great value with Hilton but the last couple years have definitely noticed the points almost always being pegged to 0.4cpp. There are still instances where I find value though, especially when using 5th night free or avoiding paying a resort fee. I also use points when I need a flexible booking, when the lowest rates are non-refundable. You are right though – in the US it’s really hard to get 0.5cpp or higher otherwise.

Grant

I agree with you, Jake.

Re: “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.” Since you can pay for awards with points (I think 1,000 point increments), this is less importantly, unless you can waive the resort fee on award stays paid 100% with points or for the 5th night free.