Disclaimer: The article and product(s) that is/ are mentioned are non sponsored. All insights are based on personal opinions and researches done. The information would have been updated during the time you read this article. The resources are based on the day of this article being posted.
In the previous article of 5 easy ways to hit minimum spend, we briefly discuss about buying airline miles and hotel points. The main takeaway from that article is to buy miles/points only when we could receive values equivalent to or more than what we have spent.
During the Pandemic, a lot of airlines (mostly ended by now) and hotel chains have stepped up the Points Purchasing game by offering huge bonuses. This is definitely a great method for companies to generate more liquidity when the demand of travel is relatively low. The demand is low, but definitely not the itch of travel that we are longing to.
Is it really a catch for us when buying those points, right now?
In this article, we will separate the topic by Airline Miles and Hotel Points. With few catchy promotions available and comparisons.
A. Airline Miles
On the day of this article is written, the only promotion that is still available is from Alaska Airlines (till 31st May 2020).
Photo credit: Alaska Airlines
Why Alaska Airlines when based in Asia? Simply because it has various transfer partners over here from different alliances (One World, Sky Team and Star Alliance). Including Korean Air, Japan Airlines, Cathay Pacific, Hainan Airlines and Singapore Airlines.
The highest amount of miles could be purchased on one-time is 100,000 miles with 40% bonus. It costs 2,750 USD.
To calculate the "Worth It" value of buying Alaska Miles, we will compare two popular routes within Asia, from Bangkok, Thailand. In Business Class.
Photo credit: Alaska Airlines
A. Bangkok (Thailand) - Seoul (South Korea). 6 July - 8 July 2020.
With Alaska Airlines partnership, the flight will be operated by Korean Air.
Photo credit: Alaska Airlines
The miles required is 60k, with additional fee of 72.40 USD.
Now, compare to the actual price, if we purchase the same tickets on Korean Air website.
Photo credit: Korean Air
The lowest available price is 29,735 THB (approx 940 USD)
To purchase sufficient miles (60,200), it costs 1,182.50 USD.
The idea of mileage purchasing doesn't make any sense here. As we are paying more than what it is being sold.
This comparison of pricing might not be "apple to apple", as the the conditions of fares are different. Photo credit: Alaska Airlines
But "Money Value" is what we are focusing here.
B. Bangkok (Thailand) - Haneda, Tokyo (Japan). 8 July - 15 July 2020. (Operated by Japan Airlines)
Photo credit: Alaska Airlines
The miles required is 50k, with additional fee of 83.30 USD. A longer route with less mile required. A huge plus right here.
Photo credit: Japan Airlines
The best price from Japan Airlines' website is 54,460 THB (approx 1,700 USD) for the same itinerary.
To own 50,000 miles, the cost is 990 USD.
Quick Maths:
50k miles + 83.30 USD = 1,700 USD
990 USD + 83.30 USD = 1,700 USD
1,073.30 USD < 1,700 USD
In this case, buying points perfectly make sense.
Photo credit: Alaska Airlines
Don't forget, it make sense because of the promotion and mileage redemption is available.
Another great thing about Alaska Airlines is its super user-friendly website. It offers a clear view of reward availability, even for partner airlines.
Photo credit: Alaska Airlines
Earning points from credit cards is difficult (at least here in Asia, with limited Multipliers), but redeeming points is a lot tougher.
If you're into the points and miles game, this feature is highly appreciated. Most airlines publicise the reward charts, but not a lot of them showing reward availabilities as straightforward as Alaska Airlines.
B. Hotel Points
The same theory goes to hotel points purchase. It is only "worth it" when receiving a return higher than what is spent.
Hotel chains tend to offer a simpler module for points redemption, compared to airlines.
On the day of this article is written, major hotel chains are still having promotions for points purchase.
Hilton Hotels and Resorts: Earn 100% more points (Till 3 June 2020)
Marriott Hotels and Resorts: Earn 60% more points (Till 30 June 2020)
InterContinental Hotels Group: Earn 100% more points (Till 15 June 2020)
Let's take an example from Hilton Hotels and Resorts.
A trip to Maldives is definitely my go-to example when discussing hotels' points redemption. Not just because the place is stunning, but it is indeed pricy. Yes, pricy, a fundamental for getting the highest value from points redemption.
Photo credit: Hilton.com
The costs for 1-night-stay at Conrad Maldives Rangali Island on 13-14 April 2021 is 95,000 points or 902+ USD (1,117.88 USD) after tax and service charge.
To acquire 95,000 Hilton Honors Points, it costs only 480 USD.
The "Worth It" value of this purchase+redeem is definitely more than x2.
As staying with full points redemption under Hilton Honors, there will be no additional fee collected. Including "Resort Fee" from most properties in the States.
Photo credit: Hilton.com
However, there isn't always rainbow and sunshine for points redemption. As the value of Hilton Honors' point (required amount of points for redemption) varies by each properties, depending on the supply-demand. Unlike Marriott Bonvoy, it provides a fixed redemption rates for each category of hotels and resorts, in different seasons.
The statement above doesn't mean one is better than the other. The mechanism of redemptions are just simply different. Both of them have their strong points and own flaws.
That's when "Maths" comes in, to do all the calculations and evaluations.
Back to the quote: Earning points is difficult. But redeeming points is tougher.
Let's look at another example:
Photo credit: Hilton.com
To stay in Hampton Inn & Suites Los Angeles/ Hollywood, it costs 60,000 points per night or 241 USD+ (279.45 USD after taxes) in between 13-18 Sep 2020
A quick check for price of purchasing 60,000 points.
As mentioned, if the value does not equivalent or exceed the spending, it will never "worth it".
But.......
Photo credit: Hilton.com
Both Hilton Honors and Marriott Bonvoy offer a privilege of free nights when booking your stay for 5 or more nights consecutively. ("5th Night Stay Free" for Hilton Honors and Marriott Bonvoy's "Stay for 5, pay for 4")
With this benefit, the act of buying points back to be "worth it" for the focused service brand under Hilton Hotels and Resorts' portfolio. However, the value of points is not as high as Maldives'.
Bottom Line
Purchasing points is indeed an easy way to achieve instant ROI (Return on Investment), if we do it right.
There are countless of reasons buying points, including earning credit cards' points, hitting minimum spend and money saving for your next luxury travel.
From comparisons we have done on IPI, purchasing hotel points offer slightly greater value, compared to airline miles. The main reason is indeed the ease of redemptions, availability and expiration.
Most hotels points tend to last longer than most airlines miles. (except few airlines that miles will never expired)
The key difference between good and great redemption while purchasing points is the "value".
Never redeem flights/ hotels using purchased points when the actual price is lower than the money we had spent on points purchases.
Always keep in mind that, purchasing points is strategy for "short term". In order to build elite statuses with airlines and hotels, only the actual flights and stays count.
It's your turn, to do some researches on your favourite airlines and hotels, as well as destinations of your dream vacation after the Pandemic.
Optimise and utilise every cent you would spend.
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