There seems to be a lot of interest and effort in this forum to value points based on a comparison of the points cost versus the cash cost of hotel rooms. But successfully doing so would require some consistency in the points pricing of rooms. Looking to make reservation in New Orleans for next week, I tried it both ways with "flexible dates" at the New Orleans Marriott. The cash rates ranged from $94 to $219 per night depending on the date, while the points required were 40,000 regardless of the date. Thus, the points value ranged from .00235 to .005475. Like the rates, the difference is more than double. Is there any explanation for this? I guess what I'm most curious about is not how much the points are worth, but why the "points" rate never changes.
In a nutshell, it is "impossible" to value or cost points on a level platform as there are too many variables and assumptions that must be made to satisfy all conditions when assembling the primary data. It is even more difficult to compare points between MR and HH for example, as this adds more variables to the comparison.
However, my attempts in past posts to calculate the "cost" of points had to make several assumptions, the most important being that the member had top status (to earn maximum points), used the premium VISA (to maximize points), earned every mega-bonus, etc.- in short, a maximized point earnings calculation. Ditto for an HH earner. Even so, the "data cleaning" effort to make the HH/MR data points comparable were subject to challenges by other MRIs. (I limited the number of assumptions to what I believed were driving value within 2 standard deviations - even so, I had to eliminate some variables to have a reasonable and manageable data set and it was these outliers that were most challenged.)
Similarly, I attempted to value the points and found the most direct comparison on value to be the marketplace of each program where the number of points was compared to "purchase" identical gadgets. But of course, not all members use points to buy Weber Grills or Nikon DSLRs, etc. To address hotel spend value, I found the top 20 world destinations and used TripAdvisor to identify the top-rated hotel of each program in each city - an assumption that can also be challenged, but it was in my effort to normalize the data elements in a comparable fashion. I assumed also that the stay was for 10 days (to maximize the stay 4 get 1 free) while also crossing weekends (oftentimes more points) and during high season. This allowed me to compare top-rated hotels of each program during identical itineraries. Again, thinking I had normalized the data within 2 SDs, other MRI members challenged the assumptions.
I did my last comparison using the 20 most populous cities in the USA (my world-wide analysis was challenged) and used the same criteria as above hoping to normalize the data. Again. MRI members challenged many of the assumptions and had pointed out that several "important" assumptions were not evaluated or included in my population of data. (Those may be important to some individuals but I thought I had found enough data elements to account for 2 SDs of value drivers.)
IN SUMMARY - I have over 60 hours in gathering and analyzing of data in my previous posts in an attempt to statistically assign points a cost of acquisition and a spend value, but not all MRIs agree with the methodology or assumptions. I am glad to report they liked my analysis, but too often challenged the data - enough so that I do not want to spend the time to provide an updated analysis, because as you say, Is it really possible to value points? No.
Of course it is possible to value points, but it depends on what hotels/services the person would use, and on all sorts of other variables. Eg, imagine a business traveler who stays at a particular Marriott hotel on a recurring basis. The price of the hotel will vary based on the day of the week, but even then he may know that he is staying 50% of the time on Monday-Wednesday and 50% of the time on Saturdays, and can make the adjustment in the calculations. If the person stays at no other Marriott properties, it is easy to determine a value per point with and without a credit card, or with a certain elite status. And calculating all statuses, or for international hotels, or for many other circumstances, may be moot. It is also easy to see the value of calculating points, as it impacts decisions. As by pingreeman above, it can become infeasible to determine the value of a point for travelers in complex circumstances.
To the OP, the points rate might not change for many reasons. Eg, for clarify in obtaining clients to their rewards program. How do you advertise to prospective travelers if the point value varies? Another possibility is that the points redemption is based on the more expensive night, eg the $219 instead of the $79, which benefits the company.
But for the specifics you give, if you had no other use for the points then you might as well use them. If you were planning on using them for another purpose, and you calculated the value of a point for your situation, then you could determine whether it was worth it to use points instead of cash.
It is possible to value points, based upon what one might spend for a room, typically, versus, what it costs, in terms of points..
If I spend 160,000 pints for a stay that would have cost me $2000 dollars, then I can reasonably value a point to be worth one and one quarter cents. Look at these kinds of figures for a few stays and I know what a point is worth to me.
However, since different travelers qualify for different special rates, travel to different places at different times, and use different amenities, the math will work out differently for each individual. Nevertheless, careful selection of when and where to use points, will change the results.
One time when I checked in at a Renaissance property, the desk person commented on how many points I had and went on and on about spending some. Then she asked me to come around and look at her screen and it showed a dollar value of my points. It was a long time ago and I don't remember but I think I had around 1.5 million points at that time and the value was a few thousand dollars. So I guess my point is that all of our personal calculated values would differ but Marriott seems to have a dollar value of our points.
Marriott must put a value on the points - even if somewhat arbitrary. According to FASB (accounting rules), these points are a "deferred revenue" to Marriott and must be assigned a value to show on the balance sheet. A good synopsis of the requirements can be found here: Rewards programs face new reporting rules
It is possible, but I find it to be a personal valuation that doesn't necessarily fit a standardized formula. TPG's valuation currently has Marriott points listed at $.007, but I have not nor would ever redeem for that exchange rate. In planning vacation spots for 2016, I was looking at redeeming 160,000 points for a five night, $2400+ stay at JW Marriott Los Cabos beach, but I'm much more learning towards a paid rate of $107 with a $50 per-day room credit from CasaMagna Marriott Puerto Vallarta (Cat 7 - 35,000 points per night). There a Courtyard I hit every few months in RTP, and I gladly exchange my 10,000 points for a $125 stay. Finally found a place where I can not forget to use my annual certificate, as well.
When I look to redeem, I'm looking for $0.012-$0.015 of value in return, $.01 at the absolute minimum. Any less than that, and I pay cash.
CasaMagna Marriott Puerto Vallarta is a great place -- the hotel is a little older but really well cared for. The hotel Staff could not be nicer and the sand dollar special ( 50 dollars credit per day ) makes it very hard to pay points. Wife and I stayed for a week recently very nice upgrade for platinum and had a great stay --I would highly reccomend CasaMagna Marriott Puerto Vallarta
Well since it is possible to redeem 30,000 points for a $60 night, or 45,000 for a $900 night, values appear to be anything between 0.2UScents and 2.0UScents! So, f you choose one, then yes it's possible to give a precise value, but pretty pointless. Instead I set a value matrix. When looking at a leisure trip I will always consider the possibility of redeeming and:
1. I always redeem at 1UKpenny (1.5UScents) or more.
2. I never redeem below 1UScent
Between these two I look at my situation. Are funds a bit low? If so I'm more likely to redeem at the softer end. Are points a bit high? Last year I had about 800,000 points sitting in my account which leaves me uncomfortably exposed to devaluation. As a result when considering my US Roadtrip I decided on redeeming for the vast majority of nights. Some nights were 1p, others only 1c, my overall redemption value for the trip turned out at 1.3UScents/pt. My remaining 360,000 points I redeemed for a 7 night cat 8 TP with 120,000 miles, which I've used for my delayed honeymoon to Miami redeeming for a total of $8,000 worth of flights and hotels, a value of 2.2UScents per point. Arguably, that's my best value ever but $6,000 is tied up in a first class flights and I'd never pay that much, but want to do it for our honeymoon. So was that redemption really worth 2.2c?
So, no, in my opinion it's not possible to place a value on a point. What I can say however is that by following my redemption strategy I've never been caught out with large amounts of points in my hands at the time of a significant devaluation and I've always been able to redeem easily at decent rates.
Perhaps my original post should have stated, "Is it possible to value points using criteria in which everyone would agree?" No.
Everyone has their own angle on what makes their points valuable based on different criteria, desired usage, points redemption preferences, etc. So as the posts here demonstrates, there are too many variables to attempt a valuation analysis in which someone, some place, somehow, will not argue. As such, I do not waste the time doing my bi-annual analysis on points value any more.