Point values by hotel category

Discussion in 'IHG | Rewards Club/Ambassador' started by Wandering Aramean, Feb 17, 2015.  |  Print Topic

  1. Wandering Aramean
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    Wandering Aramean Gold Member

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    Would you be surprised to learn that IHG points are, on average, worth more at lower-end hotels?

    [​IMG]

    Less surprising is that PointsBreak properties represent the best value the IHG program has to offer, assuming you get lucky and there is one available where and when you're going. Even there, however, the average cash rate per night is also typically rather low. And that often makes it harder to convince yourself to redeem points rather than just paying cash.

    Realizing >1cpp is mighty hard to do in general and the frequency with which is it possible seems to decrease as points/night required increases, at least from the ~70k data points I analyzed.

    Bigger image and full breakdown of the numbers in my blog post: IHG Rewards Club Point Value by Hotel Category
     
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  2. WhiteDesert

    WhiteDesert Silver Member

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    I read your blog post yesterday with great interest, and then followed it up by reading the previous SPG post on the same topic.
    The SPG data mirrored (and verified) the trend that I thought I had seen in my own SPG award night recons over the last several years. But the part of the post that I found most interesting was the C&P trend (I didn't have a rough trend in mind for those data the way I did for full-on award nights). I found it entertaining that the C&P trend goes so far against the prevailing wisdom that one hears spouted on the blogs and forums.
     
  3. Wandering Aramean
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    Wandering Aramean Gold Member

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    For IHG the C&P numbers are very clear: Points costs 0.7--0.8 cents each. when bought under normal circumstances. When you see that the average redemption rates offer a negative return even on that the pricing makes a bit of sense. For SPG the C&P numbers used to be a lot better; the numbers changed somewhat recently.

    But, yes, the numbers are different from what most people are talking about. I'm trying to change that conversation a bit.
     
  4. Bay Pisco Shark
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    Bay Pisco Shark Gold Member

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    But the simple fact for many is not cents per point or mile. The simple fact for many is "I'll spend $100 for that hotel room and save my points" and "I'll blow out the account for that $400+ per night room that I'd never otherwise stay in."
     
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  5. NYCUA1K

    NYCUA1K Gold Member

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    Agreed. I rarely consider the "value" of a flight or stay in terms of cpm or cpp in making decisions about whether to use points/miles or cash. Early on, my goal is to requalify my hotel/airline elite status. Large spend brings in more points/miles so I invariably pay cash when I am still pursuing status, with the only metric in mind being how many points or miles the spend would bring in to get me closer to my second goal of accumulating enough points/miles to afford a Big-time Redemption at the end of the year. For one-night stays related to connections that are so long they are stopovers, I would use points, preferably cash+points. Only after I have requalified status and done my big yearly redemption do I start to deliberate a bit more about whether to use points/miles or cash, but not in terms of the value of a mile or point but what makes intuitive sense at the time...
     
    Last edited: Feb 18, 2015
  6. Wandering Aramean
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    Wandering Aramean Gold Member

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    Indeed...irrational behavior makes the programs more profitable to the hotels & airlines rather than more valuable to the consumer.

    I am hoping that sharing some of this data helps people to reconsider those actions and choose a more rational approach. But I'm betting against that working too well.
     
  7. Bay Pisco Shark
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    Bay Pisco Shark Gold Member

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    It is not a "less rational approach" to not redeem by a strict monetary formula. Well, if you're buying points for a stay, that's a different story, but I find it quite rational to pay for, i.e., 6 $100 stays, getting 6 stay credits (even though I could have stayed for free for X thousand points) instead of paying for one $600 stay (at a place I wouldn't spend that kind of $ but want to stay there) even though it may cost me X+Y thousand points.

    My time is too valuable (including my down time) to obsess about the best value per point I get for each redemption. The "what makes intuitive sense at the time" so eloquently stated by NYCUA1K, supra, makes the most sense to me. If the shareholders of IHG or another program ends up with another 25 centavos in profit because of our conduct, mazel tov.
     
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  8. Wandering Aramean
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    Wandering Aramean Gold Member

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    If you place a value on stay credit then that becomes part of the formula as well. But saying that the value of the points has no bearing on behavior is the very definition of irrational behavior. Of course the points have a value. Claiming that it is all "free" is quite silly.

    But this is, at its core, irrational financial behavior. And I see more than a bit of irony in such from a community so focused on maximizing points. Saying that redemption is only considered after qualification is achieved might mean paying more for the status than it is worth in the long term. Or at least more than necessary. A bit of foresight and planning can make a huge difference in value realized.
     
  9. NYCUA1K

    NYCUA1K Gold Member

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    I love "calculators" as much as anyone, but the notion that one is not "rational" unless one constantly relies on one is bizarre, especially when it comes to estimating something like "value", which is often inherently subjective. I described my "guiding principle" and I am not likely to trade it in favor of micromanaging the "value" of points or miles, which in this case is more like cost or price than "value." If what you claim were the wisdom of the century, then folks would always buy the cheapest car or shoes or plane ticket, but they seldom walk away with the cheapest item. Why is that? Because people who know the cost or price [objective] of everything but the "value" [subjective] of nothing are seldom happy! It is called the "calculus of felicity"...;)
     
    Last edited: Feb 17, 2015
  10. Wandering Aramean
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    Wandering Aramean Gold Member

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    If you pay more for a car or shoes typically you get a different car or shoes. If you pay more for points and end up with the exact same "asset" at the end of the transaction that's quite different.

    And if your travel patterns show a mix of stays at various hotels then you've already chosen the products you are going to buy. At that point paying extra for those products would be irrational behavior. Paying for the cheap nights in cash and the expensive nights in points may make intuitive sense but it is less likely to make financial sense.

    As for value being inherently subjective, that is easier to believe when the product in question (points this time) is not only fungible in a narrow, specific manner.
     
  11. NYCUA1K

    NYCUA1K Gold Member

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    Clearly not true and not even the point. I am in NYC and I use my points to stay at the W=A rather than at the DoubleTree down the street on Lex Avenue, that is the same as paying more to get different shoes, and the point you are not getting is the subjectivity of my choice to pay more for that stay. It has nothing to do with cost or price, which I am well aware is higher at W=A or for one type of shoes. It is the subjective "value", also known as satisfaction, that I get out of it that is the ultimate determinant of the choice.
    You still do not get it. See above.
    A distinction without a difference. The calculus is the same even for different products and the objective is to get the most satisfaction. If one has to pay more than one can afford in order to derive satisfaction, then their satisfaction would be "tainted", thereby diminishing the [subjective] "value" of the purchase. The inherent assumption in all of this, therefore, has to be one can afford to make the more expensive choices. If they cannot, then that is when the behavior can be considered "irrational" because the consequences of living beyond one's means can be dire.

    That pretty much covers it all.

    G'day...
     
    Last edited: Feb 18, 2015
  12. Wandering Aramean
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    Wandering Aramean Gold Member

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    Let us play with this specific example; I'll put some numbers in just for fun...

    W=A: $299 or 70k points/night
    TreeTree: $149 or 60k points/night

    Which is a better financial value??

    Those are real numbers for a weekend in March.

    The other thing to consider is that there are different types of value. I'm speaking of financial value as the points truly are fungible. If you make the conscious choice to spend them at a less than ideal financial point because of other reasons that's OK, but not necessarily a rational financial decision.
     
  13. NYCUA1K

    NYCUA1K Gold Member

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    The costs are W=A: 4 cpp/night; DT: 2 cpp/night but you still don't get it. It has nothing to do with financial or economic value!!! Those are the relative costs and not the "value". The DT is a dead, boring place whereas the W=A is a lively place where I'd like to spend every evening in "Bull & Bear"....

    P.S. The bar at W=A NYC, now linked, is "Bull & Bear" and not "Bulls & Bears"...
     
    Last edited: Feb 18, 2015
  14. Wandering Aramean
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    Wandering Aramean Gold Member

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    And I'd just spend my time at the bar I enjoy better (unlikely to be in a NYC hotel, FWIW) then go to sleep in the cheaper room. Two wins. :)
     
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  15. NYCUA1K

    NYCUA1K Gold Member

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    At long last we agree about the meaning of "value". It is in the subjectivity of it all!
     
  16. Wandering Aramean
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    Wandering Aramean Gold Member

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    Not really, but sure. :)

    I don't think it is reasonable to disagree over the "value" of dollars used to buy a hotel room. One might decide it is worth spending more of them for some reason - property location/quality, dates, etc. - but that doesn't mean the dollars have a different value for the different transactions, just that a choice was made to spend them that way.
     
  17. NYCUA1K

    NYCUA1K Gold Member

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    Definitely and that was my argument, which was also advanced by @jbcarioca in a somewhat related context:
    In short, cheap is not always best "value". Good service, esthetically appealing decor, good location and much much more -- ..much of it highly subjective -- are determinant of "value"
     
    Last edited: Feb 20, 2015
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  18. NYCUA1K

    NYCUA1K Gold Member

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    BTW, this is apparently what the NYT says about the "Bull & Bear" bar at NYC W=A, according to the citation on the bar's webpage: "The New York Times cites the mahogany bar at Bull and Bear as one of the world’s three greatest. Sip libations at one of the most historic and well-recognized bars in New York City."

    Don't you want to sip your cheap beer, which they serve, in such a "historic" place when in NYC as a tourist? For me that is the higher "value" of the W=A over the DT...;)
     
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  19. mattsteg
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    mattsteg Gold Member

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    Paying for "cheap" vs "expensive" nights, assuming all out of pocket, isn't a particularly rational approach. Neither is the opposite. Figure out what points are worth to you (I won't redeem unless above your averages anyway) and pay whatever makes sense on a case by case basis, resources as well as relative costc onsidering relative scarcity of both as well as how much you personally value that stay vs. other options - of course consider independents and other lodging absent a compelling reason not to. There are lots of factors to temporarily skew numbers at all categories - E.g. if staying at a ski property off-season or early season, almost always pay dollars. If in peak season, generally points are the way to go. Others have less seasonal variability, of course, but points have greater value when they can be used in high demand periods as their pricing less elastic than cash rates.

    I'd be interested in median, 75th percentile, 90th percentile etc. for each category - would be interesting to see what value one could expect to get if choosing between the "top value" 5, 10, 25% in each category. Could consider this an approximation of what is the "best value" one could likely to obtain without undue hassle from a scarce resource, or I guess what someone who really valued award stays and was willing to "follow the deal" might achieve. It does not make sense to just spend points blindly by category.
     
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  20. NYCUA1K

    NYCUA1K Gold Member

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    ...was captured in this:
     
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  21. mattsteg
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    mattsteg Gold Member

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    If someone can't afford to pay for an expensive stay, they probably can't afford to pay even more additional out of pocket split between a series of cheaper stays.

    More important is the cost ceiling effect of points, outside of devaluation events. Space available, peak times may become an option where they would otherwise be too expensive.
     
  22. Bay Pisco Shark
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    Bay Pisco Shark Gold Member

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    I can afford both. But I typically choose not to spend the $ on the fancy places. Also, for many, the low/mid accommodations are the business stays, and the high end are the leisure stays.
    I've been at this "game" since probably the OP was learning how to read. I've got my sense of value. There were no internets, I didn't own any computerized devices (well, except my fancy IBM typewriter with memory, but no screen), there were no blogs, it there was anyone who profited from FFP advice, I certainly wasn't aware of any. Yet, somehow I developed my sense of value, along with when and how I want to spend my money, or points y miles. And, I started this game while a student who couldn't afford the expensive stays, and could barely afford my paid stays and flights.

    If I'm missing out because I could hoard more cheap soap and shampoo instead of cleansing myself less frequently with Orgasmica Delight body wash at the Opulent Splendor Palace, so be it.
     
  23. NYCUA1K

    NYCUA1K Gold Member

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    Precisely. Not going for the cheapest option is "irrational" if one cannot afford the more expensive options. Therefore, the assumption must be that folks can afford their choices, in which case choosing an expensive choice when there are cheaper ones becomes primarily a subjective judgement of "value".
     
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  24. mattsteg
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    mattsteg Gold Member

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    I would also say that lower priced hotels are more likely to be appropriate for business stays, and such stays - whether self-funded and tax deductible or reimbursed - often cannot be properly accounted for on point redemptions, so points may be off of the table.

    When staying anywhere on leisure, I always check cash rates as well as points and spend points if the value is there and my supply is not too low. Percentile data would be useful to gain insight onto how high I could/should push that threshold given my travel patterns. There are not typically enough properties at the bottom end of programs to spend a majority of points there, even though such use would be beneficial.
     
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  25. mattsteg
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    mattsteg Gold Member

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    Long experience just means more chance to develop no-longer-accurate preconceptions. A lot has changed over even the last decade or so, dramatically moving value sweet spots.

    that, and you're significantly misinterpreting the OP'ss point. For self-funded stays at a prechosen selection of properties taken at random, it will give the lowest expense, on average, to redeem for the lower end properties first, and use whatever points are left along with cash to buy the rest, for the same set of properties. This does not necessarily mean staying cheap more frequently, but rather that, statistically, there is not the same jigh end sweet spot as there may have been historically.

    If you habitually redeem points for high end stays, ignoring the value proposition, and pay cash for low category stays, you are paying more out of pocket for the same thing vs. Doing the opposite. If you never stay in and don't care to stay in low category places, then there's not really anything for you in this analysis.

    Of course the real solsolution is to make the choice on a per-stay basis anyway.
     
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