What is the value of 100,000 IHG points in $'s

Discussion in 'IHG | Rewards Club/Ambassador' started by daninstl, May 18, 2015.  |  Print Topic

  1. daninstl

    daninstl Gold Member

    Messages:
    1,288
    Likes Received:
    1,677
    Status Points:
    1,120
    So I used 100k in IHG points to book the SOHO Hong Kong HIX recently. Then just yesterday I got an email notice that I can book this hotel for $99 a night instead of 20k per night. Seems like I should cancel my reward nights and pay cash. I figure I'll earn points on the $99 for the hotel at Platinum status plus the extra for booking it on my IHG card and credit the nights for whatever run of the mill promo they are running currently. Tell me I'm wrong on this??? Talk me off the ledge.
     
    Newscience likes this.
  2. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,503
    Likes Received:
    20,197
    Status Points:
    16,520
    Do you foresee other stays with IHG where you could use those points to save more money?
     
  3. mattsteg
    Original Member

    mattsteg Gold Member

    Messages:
    3,276
    Likes Received:
    5,543
    Status Points:
    4,170
    How much can you normally redeem for? How much can you outright buy them for? How much do you value liquid $500 cash in hand vs points?
     
    daninstl, edekba and Newscience like this.
  4. edekba

    edekba Gold Member

    Messages:
    3,462
    Likes Received:
    3,783
    Status Points:
    2,145
    You can buy IHG points for $0.007 usually via the cash/point option. Seeing 20,000 = $140.00, i'd prolly pay the cash route to earn more points ... unless you don't have uses for IHG points (which I can't really see since they're everywhere) or you just would like to save the cash for something better...
     
    daninstl likes this.
  5. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    Mean cpp=0.661
    Median cpp=0.623
    75th Percentile cpp=0.773

    Not quite as solid numbers as the 0.7cpp to buy outright but I'd say "buying" the points by paying cash is probably a better rate overall in this case.

    That said, consider taxes which will skew the actual paid rate (for some reason I remember them being high in HK) and also I don't remember if the IHG CC has f/x fees or not.
     
    daninstl and traveltoomuch like this.
  6. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,503
    Likes Received:
    20,197
    Status Points:
    16,520
    It doesn't.
     
    daninstl likes this.
  7. traveltoomuch

    traveltoomuch Silver Member

    Messages:
    774
    Likes Received:
    912
    Status Points:
    795
    This is a borderline case. We just had a thread discussing Chase UR point values. If you chase down the links there, you'll see IHG point values estimated as $.05 to $.07, so this isn't a particularly good nor particularly bad redemption value.

    For me, it would depend how many IHG points I would have left and how often I might use them. I use perhaps one IHG award a year, often trying to seize on a Pointsbreak sale. So I would want to leave myself with 20-40k points. If I had 120k+ points, then I'd make this redemption. If you never use IHG rewards, then hoarding the points is doing you no good - just use them now. If you find that you make IHG redemptions regularly, then you can likely find opportunities for better value.
     
    daninstl likes this.
  8. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    Points cost too much to earn for one to use them on relatively cheap stays, which this stay is because a room for $99/night in HKG is a steal. For those who go by the value of points, your redemption value of $99/20K = 0.5cpp for this stay is not good. For IHG, it would be good if it were ~0.7cpp. As @edekba noted, it would be worth redeeming points for this stay if the room rate were at least $140/night.

    As for the earning side, for a folio of $99/night * 5 nights, you'll earn ~10K points as a platinum paying with a IHG co-branded CC and earning 20points/$ from all sources (excluding points from any promos that may be running and/or from incidentals)...
     
    edekba and daninstl like this.
  9. daninstl

    daninstl Gold Member

    Messages:
    1,288
    Likes Received:
    1,677
    Status Points:
    1,120
    All great advice. I have about 300k left in IHG points right now and used to earn tons of them through business stays but recently IHG promo codes have slowed the earning rates down quite a bit. I would love to use them on future trips to the UK, Europe or Hawaii (if only IHG had good properties in Hawaii). Like most of you said it's a close call. I think I'll have to go back and see what the effect might be on my targeted promo bonuses. That could be enough to put me over to the cash route.
     
    traveltoomuch likes this.
  10. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    If I can get 5cpp on a $99 stay and 2cpp on a $299 stay I'll use the points on the $99 room EVERY time.
     
    traveltoomuch likes this.
  11. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    It is not a close call at all. Let's convert everything to currencies that most are familiar with -- Hyatt GP & HHonors points. The equivalence (see Chart 2 at this link) between IHG and GP points is about 2:1 & between IHG and HH is about 1:1.5

    If you used Hyatt GP points
    : This would be equivalent to paying 50K GP points for a 5-night stay or 10K GP points/night for a room that would cost $99/night. The redemption value is $99/10K = 1cpp. Since GP points are valued @ 1.4 cpp, this would be a terrible redemption if you were using GP points. In terms of GP points, this redemption would be worth it if the room rate cost at least 10K * 1.4cpp = $140/night.

    If you used HHonors points: This would be equivalent to paying 150K HH points for a 5-night stay or 30K HH points/night for a room that would cost $99/night. The redemption value is $99/30K = 0.3cpp. Since HH points are valued @ 0.4 cpp, this would be a bad (not terrible) redemption if you were using HH points. In terms of HH points, this redemption would be worth it if the room rate cost at least 30K * 0.4cpp = $120/night.

    We skinned that cat different ways, the result is the same.

    QED

    BTW, note also how loyalty points are exactly the same if they are converted so that they are in the same units. Although Hyatt GP are worth 1.4 cpp and SPG points are worth 2.2 cpp and HHonors points are worth 0.4 cpp, they are worth exactly the same if one takes into the earning side of things.

    I earn 3 times more HH points a clip than I do GP points and 6 times more HH points than SPG points so that
    • in terms of GP points, HHonors points are worth 0.4 cpp * 3 = 1.2 cpp (vs. 1.4 cpp)
    • in terms of starpoints, HHonors points are worth 0.4 cpp * 6 = 2.4 cpp (vs. 2.2 cpp)
    • in terms of IHG points, HHonors points are worth 0.4 cpp * 1.5 = 0.6 cpp (vs. 0.7 cpp)
    No difference at all, which makes sense because like for real currency similar items should cost about the same. Therefore, the next time you hear or read a blog post claiming how starpoints are the most valuable currency because they are worth 2.2 cpp (vs. e.g. 0.4 cpp for HH), remember this simple demo. ;)
     
    Last edited: May 19, 2015
  12. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    This may have something to do with the subjectivity of "value" because the reason one room may cost $99 and the other $299 may be that the latter is much "nicer", as subjectively defined or perceived (it could be a standard room vs. a suite, e.g.)...
     
    Last edited: May 19, 2015
    uggboy likes this.
  13. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    Not really. The OP has decided to stay at this particular property and at that point it is a matter of comparing the rates on offer. I'm doing the math based on the presumption that I'm going to stay there anyways.

    Booking at a worse rate with points just because the ticket is more expensive has a net negative impact on the overall ability to maximize the travel opportunities available based on the combination of cash and points available to you.

    It is also unclear to my why you derailed the discussion by switching to HGP & HH points when this is a thread about IHG value. :confused:
     
    traveltoomuch likes this.
  14. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    I think that we came on the same side. You would pay cash for this stay because it is cheap, as I would, but also based on looking at the "value" of the redemption in terms of IHG points as well as in terms of other more familiar "currencies"....
    Call it "derailment" if you wish but I am not very familiar with the IHG currency so I did say why I "derailed": "Let's convert everything to currencies that most are familiar with -- Hyatt GP & HHonors points." At the same time, I thought it would be a good opportunity to demonstrate the equivalence among loyalty points when they are adjusted for the relative earning potentials...
     
    Last edited: May 19, 2015
  15. mattsteg
    Original Member

    mattsteg Gold Member

    Messages:
    3,276
    Likes Received:
    5,543
    Status Points:
    4,170
    Just a hunch, but I suspect everyone here is very familiar with USD.
     
    traveltoomuch likes this.
  16. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    Your comment about point value implies that you would pay cash even if it was 10k points rather than the 20k it is because $99 is too low a cash price to justify paying with points. I'm saying that's a bad plan and ultimately makes for a less optimized travel spending plan. Especially in the variable revenue-based programs (of which all major hotel programs are far more than most airline programs) there is a bias in the data which gives a higher valuation to redemption on cheaper rates. For IHG there is a 15-30% bump over average by going with Cat1/Cat2 redemptions and an even greater skew for PointsBreaks.

    [​IMG]

    So if I could get something up above the 0.7cpp rate I'd very much be looking to redeem, even if it is only a $99 rate.

    And, FWIW, the same applies to the TrueBlue program which is probably the largest fully variable revenue-based airline program:
    [​IMG]

    It is a much better deal to redeem on those cheap flights.
     
    traveltoomuch likes this.
  17. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    The truth of the matter is that I often decide whether to pay cash or with points on a case by case basis because my mile/point game is subsidized by my business travel and, thus, I usually have quite a few options. So, for example, if I had set a goal for how many points I need to accumulate for a planned redemption, then I may pay cash even if the rate in points is dirt cheap. I may also need to earn base points to requalify my status so I'd pay cash. Therefore, my spreadsheet generally tells me how to go. But in this case, under OP's parameters, I would pay cash when I am in "redemption mode" and everything is on me because the stay in $$ is too cheap. I would use my points for more expensive award stays. As an exercise, point valuations are fine, but each of us has a sense for what we need to do to meet our goals based on individual circumstances.
     
  18. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    No doubt, but when it comes to loyalty "currency" bloggers would have you believe that some currencies are more valuable than others when that is clearly not true if one accounts for how easy or though it is to earn that currency in the first place...
     
    Last edited: May 19, 2015
  19. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    The value for which something can be redeemed is not tied to the cost of acquisition.

    SPG points in like quantity are worth more than HH points. Even when HH points are easier to acquire. Doesn't mean that 10,000 SPG points is worth more than 40,000 HH points (that's roughly a draw IMO) and everyone has to decide if they can accrue one versus the other at a multiple to beat the redemption value spread based on their personal accrual methods. But that doesn't change the per point value at redemption time; it just changes the cost of acquisition.

    Glad that works for you. The data suggests it to be a bad approach to maximizing value.
     
    traveltoomuch likes this.
  20. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    "SPG points in like quantity are worth more than HH points", you mean like $1,000US are worth more than 1,000 South Korean Won, until one realizes that $1US = 1,000 South Korean Won?

    The fallacy, created and perpetuated in the travel blogosphere, is clear. Fortunately, the math is simple and the evidence crystal clear. You go to a bar where they accept only loyalty points. You purchase exactly a pint of the same lager. You can pay for it with 1 starpoint or 6 HH points, and it would be exactly the same thing because I earn 6 times more HH points than SPG points for the same spend. Again: $1US = 1,000 South Korean Won. Like I said, the math is simple and the logic easy to grasp.
    LOL. It has been working for me for years! It may be a "bad approach" for your circumstances but it is perfect for mine. Really...I modeled it fully and I maximize my points based on my priorities as I indicated above.
     
    Last edited: May 19, 2015
  21. traveltoomuch

    traveltoomuch Silver Member

    Messages:
    774
    Likes Received:
    912
    Status Points:
    795
    NYCUA1K, please stop railing against those who blog.

    Whether on blogs on in posts here, I welcome the wisdom of my fellow travelers. Sometimes they'll see the world in slightly different ways, and I appreciate hearing those different perspectives.

    I think Wandering Aramean deserves some extra appreciation for engaging here (with data, even!!!) and not just posting on his blog. I wish we saw more from gleff, mommypoints, and other bloggers here on MP, too.
     
  22. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    Precisely.

    Once you have a pile of points there is a value to them and they are not equivalent across currencies. How you acquire them and the cost of such is a separate discussion. But the value really is different.
    It is only identical if your acquisition costs really are identical and the pricing happens to match. That is rarely the case out in the real world.
     
    traveltoomuch likes this.
  23. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    I just may suspend "my crusade" -- for that is what it has been -- against the many myths that have proliferated in the travel blogosphere because there now seems to be a bit more nuance in expressing claims that used pass for established dogma. What I will do is to be more selective in what I "rail" against. How's that? BTW, I've been "railing" a lot more out there (e.g., gleff's blog) than I do in here, since I found out about what passes for dogma...

    On the other hand, if you like to hear different perspectives, than surely you'd want me to express mine, no?;)

    Cheers, mate!
     
    Last edited: May 19, 2015
  24. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,209
    Likes Received:
    61,737
    Status Points:
    20,020
    I don't mind if you paint me with that same broad brush; it just shows that you have no idea what I write about or the facts I present.

    I also don't mind you sharing your opinion and defending it, but at some point there has to be a common conversation rather than just talking past one another. You've stated multiple times now that a $99 room night is too cheap to spend points on. I disagree and have much data showing that you're likely to get a better RoI spending $500 cash for 2 nights at $250 and points for 5 nights rather than $500 cash for 5 nights and points for the 2 nights based on average redemption values. You still get to spend $500 at hotels so earning in that context is identical. And you still get 7 nights in hotels. But I'd bet that, on average, you finish with more points in your account and/or less cash spent the way I'm endorsing because of the way the point redemption values work. And I've got a couple million rows of data spanning multiple programs, locations and dates I'm basing that on.
     
    traveltoomuch likes this.
  25. NYCUA1K

    NYCUA1K Gold Member

    Messages:
    4,739
    Likes Received:
    5,086
    Status Points:
    4,270
    Precisely. It is not easy to have a "pile" of SPG points in the real world. You'd go broke first because it takes 6x the spend to accumulate the same number of Starpoints as I do HH points.

    HH AMEX Surpass: 12 points/$ for on-property spend, 6 points/$ for gas, supermarket, restaurant, 3 points on everything else.
    SPG AMEX: 2 points/$ for on-property spend, 1 points/$ everything else.

    To accumulate 1,000,000 points through only on-property-spend:
    HH AMEX: 1,000,000/12 = $83K
    SPG AMEX: 1,000,000/2 = $500k (you're broke!)

    The 6:1 ratio actually scales regardless of the origin of points. And as I showed earlier, all the currencies are the same when one accounts for the earning potential and that is NOT by accident. It is by design to make sure that the currencies are equivalent.

    Cost of top category Hyatt property: 30K points
    Cost of top category HH property: 95K points
    I earn 3x more HH points than GP points 95K/3=32K (it is actually closer because the ratio is ~3.2:1)
    The top rates are equivalent for the two programs.

    When the equivalence is broken, it means that awards are either extremely expensive or extremely cheap, which is why SPG is the costliest program in the business for the top-tier hotels...
     

Share This Page