Travel Rewards Program Analysis - August 25, 2011
Just about every major airline and hotel chain has its own rewards program and a credit card that can help you earn more currency in that program. These programs and cards are a great way to earn free stuff for things you’re already doing, but it’s often hard to determine the real value of the rewards you earn since they are usually given in points or miles. To help eliminate the guessing game we researched some of the top travel reward programs from the major airlines and hotels to see what the point or mile bang for your buck value was. The details and rankings for our study are below.
A summary of the travel rewards program values appears in the chart below. For the full context and explanation, see the detailed reviews beneath the table.
|Dollar Value per Point|
|Starwood Preferred Guest®||$0.012||$0.021|
|Southwest Rapid Rewards®||$0.017||unknown*|
|American Airlines AAdvantage®||$0.009||$0.010|
|Continental Airlines OnePass®||$0.009||unknown*|
|Marriott Rewards®||3.46 points = 1 airline mile||$0.008|
|Hilton HHonorsSM||8.33 points = 1 airline mile||$0.005**|
*We were unable to accurately determine this value.
**The value of a Hilton HHonors point is equal to $0.01 with the use of the Citi® Hilton HHonorsSM Visa Signature® card, as users earn 2 points for every dollar spent.
Starwood Preferred Guest® Starpoints offer more value than the other programs we looked at. Their worth of $.021 per point for hotel stay redemption is the highest point value we found in our study. While their value for flight redemption was a bit lower at $.012 per point, we’d note it is still higher than some airline rewards cards.
Starwood Preferred Guest® Card from American Express® users can rank up a hefty 4-5 points per $1 spent at Starwood hotels and 1 point per $1 spent on all other purchases. The general 1 point per $1 value means that cardholders can effectively earn $.021 for every dollar they spend with the card assuming they use their rewards for hotel stays. This is the highest value we found for any hotel or airline reward program. An additional perk is the ability to get the third night free at participating Sheraton Hotels.
Flight Point Redemption = 0.012/point
Members can use Starpoints to purchase flights on a large variety of partner airlines, including Alaska Airlines, Hawaiian Airlines, US Airways, United and Virgin Atlantic. Basically when users book flights on the Starwood site, their Starpoints are being exchanged for miles on the airline of their choice. Almost all airlines offer a 1 to 1 transfer ratio of Starpoints, except United and Continential who require 2 Starwood points for every mile. Starwood also provides a helpful chart of how many points are required for a flight based on the ticket price. At $0.012 per point, the actual point value was relatively equivalent to the point value Starwood claims ($0.014). It was also on par with the airline based travel cards we reviewed.
Hotel Point Redemption = $0.021/point
Hotels in the Starwood quiver include Sheraton, The Westin, W, Le Meridien and the St. Regis. Each of these hotels fits into a category ranging from 1 to 7 based on decor, amenities, prestige and destination. Starwood lets customers know upfront the number of points required to receive a free night based on the category the hotel falls into. Category 1 hotels cost between 2,000 to 3,000 points a night while Category 7 hotels are 30,000 to 35,000 points. We found their published point costs to match the actual point costs when booking a room, coming out at a very favorable $0.021 per point.
Coming in at number 2, the Southwest Rapid Rewards® program genererously rewards users with almost 2 cents per point value for flights. We were not able to determine the redemption value for hotel stays, but the high point value of $0.017 makes this rewards program an excellent choice for frequent Southwest fliers.
Southwest Airlines Rapid Rewards® Plus Card from Chase users will earn 2 points per $1 spent on all Southwest flights, and 1 point per $1 spent on everything else. At 1 point per dollar for general purchases, users will enjoy a dollar value of $0.017 per point on Southwest flights. Users also earn a free flight with their first purchase.
Flight Redemption = $0.017/point
With the Southwest Airline Rapid Rewards Cards you are limited to flying Southwest Airlines for domestic flights, but the dollar value for their points is high enough to rank them towards the top of the reward cards. Southwest eliminates the mystery behind what you'll get for your points by publishing the point conversion ratios on their site. Happily, we found their claims to be true in our real-life scenarios, and at $0.017 per point users will enjoy a higher value than many other airline cards.
Hotel Redemption = ?
Unfortunately, we were not able to detemine the hotel redemption point value.
The United MileagePlus® program offers members a fairly generous 1.1 cents per point payout on free flights, ranking them at number 3 in our countdown. Although the value of redeeming points for free hotel stays was slightly lower at $0.007 per point, this program is stilll a very strong choice, especially for users who like to fly United and want the option of staying at a variety of quality hotels.
United MileagePlus® Explorer Card members earn 2 points for every $1 spent when they purchase tickets from United or Continental, and 1 point for every $1 they spend on everything else. The 1 point per $1 spent general earning means users can redeem their points for a $0.011 value. Extra card benefits include priority boarding privileges, the ability to check your first bag for free on United and Continental flights and 2 annual complimentary passes to the United Club.
Flight Redemption = $0.011/point
The United MileagePlus® program lets users book travel on both United and their Star Alliance partner airlines. We only looked at United flights for this analysis, but you can also use their award points to travel on a myriad of other airlines, including Air China, Air New Zealand, Continental, Hawaiian Airlines and US Airways.
The point cost for United flights varies by whether it is a "Saver" or a "Standard." Saver awards are available for a limited number of seats per flight, while Standard awards enable you to fly whenever seats are available for the flight and class of service you want. This did affect some of the flights we booked, as flights during prime holiday season cost more than the same flight booked during the off season. Overall United MileagePlus® came out with a very respectable $0.011 per point.
Hotel Redemption = $0.007/point
The MileagePlus® program lets users book free hotel stays at a vast array of hotels. There doesn't seem to be any particular sort of affiliation, and during our research we noticed hotel options ranging from the Hyatt Regency, Four Points by Sheraton and the Westin to the Holiday Inn and Best Western. However, at slightly under a cent a point, you may not get the best payout for your points by using them to book free hotels.
At a cent a point value for hotel stays and almost a cent a point for flights, the American Airlines AAdvantage® program offers a solid payback for members.
Citi® Gold/AAdvantage® World Mastercard® users earn 1 point per $1 spent on all purchases, which translates to a solid point value of $0.01 for hotel stays (and a slightly lesser value of $0.009/point for flights). The only downside is that users don't have the opportunity to earn extra points for American Airline flight purchases. Something else to consider is that users max out at earning 60,000 points per year.
Flight Redemption = $0.009/point
American Airlines AAdvantage® members can redeem their AAdvantage points for travel on American Airlines and their partner airlines. Our study is based on American Airline flights, but users can also book flights on a number of other airlines including British Airways, Japan Airlines, Quantas, Alaska Airlines and JetBlue. The AAdvantage program posts its point conversion information here.
AAdvantage offers 2 different redemptions options: Miles SAAver and AAnytime. Miles Saver tickets are subject to special limitations on seating availability and may be subject to travel embargo dates on some participant airlines. AAnytime tickets are more flexible and are available on any unsold seat on any day. During our research we weren't able to find any Mile SAAver tickets available, so our calculation of $0.09 per point value is based on the AAnytime ticket prices.
Hotel Redemption = $0.01 / point
With the AAdvantage program we were able to book free hotel stays at a multitude of hotels at different price points. The AAdvantage terms and conditions don't indicate an affiliation with any particular hotels, but when we were booking our stay we saw hotels ranging from The Westin, Fairmont and Hyatt to Holiday Inn and Best Western. And at one cent per point you'll get a fair trade for your miles.
Delta Skymiles members will enjoy a solid 1 cent per point value redemption for free flights. However, members can only use their points on flights as there are no hotel options available.
Platinum Delta Skymiles® from American Express® users earn a straightforward 1 mile per $1 spent, which translates to a point redemption value of $0.01 for free flights. We found it a bit disappointing that there were not extra rewards given for booking flights on Delta, which is a feature most of the other travel airline cards offer. It also includes bonuses like an annual complementary Delta companion ticket and the ability to check your first bag for free on Delta flights. The downside to this card is that members are unable to book free hotel stays.
Flight Redemption = $0.01 / point
Delta Skymiles members can book free flights with their points on Delta, Delta Connection, Hawaiian, Alaska, KLM, and Air France Airlines by using the Delta.com website. Or they can book with theirairline partners by calling in. Our research showed that the cent per point value was in line with their published reward charts, a strong value.
Hotel Redemption = n/a
Delta Skymiles can only be used to book flights, not hotel stays.
Continental OnePass points have point value of slightly less than a cent for free flights. We were unable to determine the hotel stay point value.
Continental Airlines OnePass Plus Card users earn 2 points for every $1 spent when they purchase tickets from Continental or United and 1 point for every $1 they spend on everything else. The general redemption value of the 1 point per $1 spent on the card is $0.009 per point. Frequent Continental fliers might also enjoy the extra perks; users get 2 annual complimentary passes to the United Club, priority boarding privileges and are able to check their first bag free on Continental and United flights.
Flight Redemption = $0.009 / point
Members can book their free award flights on Continental Airlines via the Continental website. They also have several (unnamed) international partners, but those flights have to be booked over the phone. There are two prices of seats available, "EasyPass" and "SaverPass." EasyPass seats are limited and subject to capacity controls, and seats may not be available on certain flights where demand is high. SaverPass seats are generally more available, but cost more and still may be limited to seasonal availabilty and capacity controls.
In our real world test, SaverPass seats were the only ones available during high season, while we were able to book a less expensive EasyPass in the off season. Overall we found the point pricing equal to their advertised reward chart, and the almost one cent per point value put them on par with many of the other point programs.
Hotel Redemption = ?
We were not able to detemine the hotel redemption point value.
The Marriot Rewards® program offers its members a decent point value of $0.008 for free hotel stays, but the exchange rate for flight points gets a bit confusing and seems to lose value.
With the Marriott Rewards® Credit Card from Chase users earn 3 points for every $1 spent at Marriot locations and 1 point per dollar for all other purchases. The 1 point per dollar spent redemption value means users will enjoy a value of $0.008 per point, when using those points on hotel stays. Users also earn 22,500 bonus points after their first purchase.
Flight Redemption: 3.46 Marriot points = 1 airline mile
Marriot Rewards users have to exchange their Marriot points for airline miles in order to books flights. There is a vast array of Airlines to choose from, including Alaska Airlines, Continental, Delta, Hawaiian, Southwest, United and Virgin. However, the exchange rate for airline miles is rather poor and it takes 6 weeks for the exchanged miles to be posted to your airlines frequent mileage account so that you can use them to book flights. Overall, this particular portion of the card doesn't seem like a good deal.
Hotel Redemption = $0.008 / point
It's easy to book free hotel stays with your Marriot Rewards points through the Marriot Rewards website. Members are able to choose from free nights at any Mariott brand hotel or resort, including the Ritz Carlton. The point cost depends upon the "category" or "tier" the hotel falls into, with pricier hotels tending to cost more points. The hotel rewards chart they publish matched up pretty well with our real-life finding, and overall the point value was almost a cent. Not fabulous but not shabby either, especially if you are a frequent Marriot guest.
The Hilton HHonors program came in on the low side of point value at $0.05 per point for hotel stays, approximately half the value most of the other cards offer. In addition the unfavorable point exchange rate for airline miles and 8 week delay before you can use these miles doesn't make for an overall high value program.
Citi® Hilton HHonorsSM Visa Signature® allows users to earn incredibly generous points for their purchases: 6 points for each $1 spent at a participating hotel within the Hilton Worldwide portfolio, 3 points for each $1 spent on purchases at supermarkets, drugstores and gas stations and 2 points for each $1 spent on all other purchases. Card holders also acquire Hilton HHonors Silver status for as long as they remain a cardmember. Although the Hilton HHonors point value is a bit lower than the other card we reviewed for both flights and hotels, users of the Citi Hilton HHonors Visa Signature card enjoy a high point earning. After you do the math, card users end up with closer to a $0.01 value on hotels.
Flight Redemption: 8.333 Hilton points = 1 airline mile
Similar to the Marriott card we reviewed, users have to exchange their Hilton points for airline miles in order to book flights. Hilton has a number of partner airlines, including Air China, Alaska Airlines, Delta, Hawaiian Airlines, JetBlue, Southwest, United and Virgin. However at an average of more than 8 Hilton points required for every airline mile, the published exchange rates are steep and the up to 8 week delay until the exchange goes through means no instant gratification.
Hotel Redemption = $0.005
Members can book free hotel stays at a number of hotels in the Hilton brand, including Waldorf Astoria, Hilton, Hampton Inn and Homewood Suites. The number of points required to book a room depends on the category the hotel falls into (see published rates). The categories range from "1" to "7", with 1 being the lower end of the price spectrum and 7 representing the high end hotels.
We used real-world scenarios to determine the dollar value of each reward program.
First we looked at what it cost to book hotel stays with each program. We did this by comparing the standard prices of hotels in San Francisco, Los Angeles and Washingon D.C. at different times of year with the number of points required to book a free stay. We used the same dates and locations for each program, and picked dates in the high summer season and less traveled fall season to account for seasonal fluctuation.
Next we employed the same real-world type of test to determine the point exchange value for free flights. We booked flights through each rewards program website, then compared the number of points required to book an economy flight with the actual dollar value of the flight. The dollar value of the flight was obtained by matching up the exact same flight with the cost on the actual airline site. We booked roundtrip flights from San Francisco to Honolulu and Los Angeles to New York in both the summer and fall, and used the same criteria for each program.
|To calculate the actual point value, we employed a simple formula. We took the dollar value of the reward and divided it by the number of points required to purchase that reward.
Point Value = Reward Price / Number of Points Required to Purchase
For efficiency purposes, we use the term "points" to descibe the rewards earned, even though programs members can earn either miles or points. The final point value is displayed in U.S. dollar currency ($x.xx). You can see the point values in the results section above.
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