Is It Better To Pay With Points Or Cash For My Hotel?

If you have healthy cash and points balances it can be difficult to decide whether to pay with points or cash for your next hotel stay. In this post, we want to show you how to work out what option is the best value for you…

Do you have a ‘value’ for your points?

To have a good idea as to whether you are getting decent value when using your points you need to work out an approximate value of your points. Now there is a little bit of leg work involved but once you have your value you use it time and time again to work out the best value option for you. If you already have a value for your points skip the next heading!

How do I work out the value of my points?

There are many variables that go into deciding the value of your points (and we go into more detail about this in our Marriott, Hilton & Hyatt articles.) To keep things simple here we are going to assume that you earn your points through an American Express membership reward points credit card which all earn 1 point per £1 spent on general spend.

Please note…

This is my experience using the points system and is not a recommendation of any financial product. There are other credit cards that can earn you travel points including the Tesco Credit Cards (by exchanging Clubcard points for Virgin Points, hotel stays and more) & the Virgin Atlantic credit card. If you use my link for a referral to an American Express card upon you being accepted I will receive points, this varies between 9,000 – 18,000 depending on the card I refer you from

Get a referral for bonus points here – https://pointsuncovered.com/amex-referral-link-uk/

Don’t forget by earning points through credit card spend you are exchanging for them for a particular ‘point currency’ instead of other potential options. Whether that is instead of putting spend through a cashback credit card or redeeming for a different point scheme e.g. Avios or Nectar, there is always a ‘cost’ involved.

For example, rather than spending on an Amex membership reward card (1 point per £1), you could put your spending on a Chase debit card which earns 1% cashback on spending for the first year. This means you’d in effect be paying 1p a membership reward point.

Alternatively, you could put your spending on the Amex Platinum Everyday Card which earns 0.5% on spending up to £10,000 & 1% on spending above that. That means you’d in effect be paying 0.5p a membership reward point if you spend under £10,000 a year.

A third option you could compare to is the Amazon Platinum Card (potentially good if you shop at Amazon a lot), if you are an Amazon prime customer you’d receive 3 points per £2 spent at Amazon and 0.5 points per £2 elsewhere. 1000 points equal a £10 voucher which means by ‘choosing points’ you’d be missing out on 1.5p of Amazon credit per membership reward point on spending at Amazon and 0.25p worth on spending elsewhere.

If you are looking for a good comparison of cashback/reward credit cards take a look at Money Saving Expert’s guide here – https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards/

As we normally collect Avios and value them at 1p (How To Work Out Avios Point Value?) our valuation of hotel points stems from this. As membership reward points transfer 1:1 into Avios it means membership reward points are worth 1p to us and thus we have the following values for American Express Membership Reward transfer partners… (this is the value we are giving up when choosing to transfer to hotel partners instead)

Hilton

Membership reward points transfer 1:2 into Hilton, so as we get 2 Hilton points per membership reward point we’d value a Hilton Point at 0.5p

Marriott

Membership reward points transfer 2:3 into Marriott, so as we get 3 Marriott points per 2 membership reward points (divide 2 by 3) we’d value a Marriott Point at 0.66p

Radisson

Membership reward points transfer 1:3 into Radisson, so as we get 3 Marriott points per membership reward point we’d value a Radisson Reward Point at 0.33p

Remember…

Whilst you may have a perceived value of your points from this… it doesn’t mean you will ever ‘meet’ your valuation. Before you convert into any point currency from membership reward points you should always check the value you get from using your points compared to paying cash. If you value your points at 0.66p there is no point redeeming for them if you are only getting 0.3p value at a hotel.

Once you know the value of your points… here is how to work out if you should pay with points or cash…

Look up the cash and points rates for your location/dates. If you then divide the cash rate by the cost in points you will then have how much value you are getting per point. Here are some examples…

Lets start with the Hilton Sorrento Palace. A 3 night stay in September costs 180,000 Hilton Points or 957.65€ (£811.56.) If you divide the cost £811.56 by the amount in points 180,000 you will get 0.00450867 which equals 0.45p (roughly.) If you value your Hilton points at 0.5p you’d be better off using cash here (unless you are cash poor of course 🙂 )

Next lets look at the JW Marriott Venice Resort & Spa. A 3 night stay in June costs 210,000 Marriott Points or 2,795€ (£2,370.55.) If you divide the cost £2,370.55 by the amount in points 210,000 you will get 0.1128833 which equals 1.12p (roughly.) If you value your Marriott points at 0.66p you’d be better off using points here as you are recieving not too far off double your valuation.

Finally lets look at the Radisson Blu Edwardian Grafton Hotel, London. A 3 night stay in September costs 180,000 Radisson Reward points or £928.38. If you divide the cost £928.38 by the amount in points 180,000 you will get 0.00515767 which equals 0.51p (roughly.) If you value your Radisson points at 0.33p you’d be better off using points here are you are recieving roughly 50% more than your valuation.

Is there any easy way to do the calculation whether to pay with points or cash?

Yes! We have a handy calculator here that will tell you (based on the data you enter) if you will get better value using your points or cash. Feel free to bookmark it on your device for easy access!