Also see:

• Just booked: A ~$20,000 Dollar Trip to Paris for FREE? You betcha!
• Hawaii: 10 Days and 3 Islands for $100 a Day
• Trip Report: Lufthansa First Class YYZ-MUC
• My Top 5 Hilton Category 2 Hotels for Award Stays

Correct me if I’m being thick because I definitely have my “forest for the trees” moments.

I read an article on Point Me to the Plane about a flight that got 2.5 cents per Delta mile.

Then the comments read: if you wouldn’t pay cash for the flights, that’s not how much the points/miles are worth.

But… I use points and miles for flights and hotels specifically because I won’t pay cash for them.

In fact, I’ve planned entire trips (like Hawaii, Paris, RTW/Australia, and Eurotrip 2014 in Lufthansa First Class) that I would’ve never paid for if it weren’t for points and miles.

I thought… that was the “point” of points and miles? 

Targeting aspiration AKA value

I always check the cost of my flights before I book with miles.

Why?

To make sure I’m getting at least 2 cents per mile/point in “value” (a dubious little term).

If it’s anything below that, I’d rather pay.

To people who ask, “What would you pay for that flight/hotel?” my answer would be… nothing. Or at least very close to zero. I simply wouldn’t take the trip if I had to pay. I’m never willing to pay for $10,000 flights… but I’ll pay 45,000 miles for it.

There has to be a value threshold

I use retail price because it’s tied to supply or demand.

I have a trip coming up that I actually have to take, (and pay for). But I still checked to see if I can use miles to bring the cost down. Even if it’s just using Avios on a connecting flight.

When I noticed the Hyatt House in town was going for $200 a night or 5,000 Hyatt points… I chose to use Hyatt points (and got 4 cents of value per Hyatt point).

I guess this is the rare case where I would have paid if I’d had to and didn’t have any points. But I did, and they were a better value… and a no-brainer. So does that mean the points are then “worth” that amount? Because I’d be willing to pay?

If the same Hyatt House was going for $100ish a night or 5,000 Hyatt points… I’d pay the ~$100. And save the Hyatt points for another time. Because I want them to be “worth” a certain amount.

That’s the same criteria I used to value the current 75,000 Hilton points sign-up bonus on the Citi Hilton Visa. Using points to stay at hotels I wouldn’t pay for.

What other marker do I have to use aside from the retail cost of the hotel?

Another misunderstood term

Travel Is Free put up an interesting post today about opportunity cost. And how that term is also misused.

I get the logic, but also think that this hobby is saturated with so many choices it’s possible to become paralyzed with indecision.

If I click on the AA portal to get 2 AA miles per dollar on $100, instead of clicking through a 5% cashback portal, I’m losing $5 but gaining 200 AA miles.

I’d say the AA miles are worth $4, so I’m getting less – and I know that – but the actual work of getting AA miles into my account is pretty hard to do if I’m not otherwise flying. Getting cash into my account is something I have more control over. So I take the AA miles. Is that an opportunity cost? Absolutely.

But so is everything. Every choice you make means you’re actively not choosing something. Even not making a decision *is* a decision.

Also, if I have 1M AA miles, I might rather take the $5… it’s all relative, isn’t it?

Very personal

I love this hobby because there are so many opportunities to personalize. That’s what makes it great. And it comes down to travel philosophy.

Agree or not with my ideas (or anyone else’s) about value and opportunity cost, it really doesn’t matter. We all earn our miles in similar ways (running money through a credit card, clicking on a portal, flying). But how we arrive at all of those things, and how we use the miles – and value them – is always going to be different. Sometimes radically so.

Whenever a friend flashes their PNC Travel Rewards card (useless, by the way – don’t get it!), I cock my head and think, “You’re literally carrying around a piece of plastic garbage.” But they love it. And can’t understand why I’d ever pay $95 for the privilege of having a Chase Sapphire Preferred (a piece of expensive metal garbage, to them).

I can tell them they could pay $95 and get 40,000 points instantly worth $400 – at a minimum. Nope. They’d still rather have PNC points. (This is an extreme example, but you get it.)

I wrote a post (going back to value) about a $20,000 trip to Paris.

• I priced out the flights – thousands of dollars each way
• Stayed at the (just OK) Hyatt Vendome
• Just points for the Hyatt Etoile

I didn’t actually “save” $20,00 because I’d never pay that to begin with. So how much would I pay for that trip? Probably $2-3K.

But the flights I took would have cost much much, and my hotel stays definitely had a retail price on them… that people pay all the time.

There are a finite number of flights, seats, and hotel rooms. And they have real prices associated with them.

Is taking a trip that would cost $20,000 retail “worth” that much if you use your points?

Even considering annual fees on the credit cards ($95 for the Chase Hyatt Visa, and $95 for the Chase British Airways Visa), the time I took off from work, and the “opportunity cost” of missing other potential work, etc… it still doesn’t begin to touch the $20,000 mark.

I think the idea of “value” has too many factors entangled into it to say that anything is really “worth” any amount, period. But there has to be some kind of basis.

I mean, would you blow 100,000 Chase Ultimate Rewards points on 2 flights that would cost $300 each? What about $3,000?

This is why I base points of the retail cost… and assign them a value. It’s my own personal valuation.

And it’s great how customizable and personal this hobby is. I love hearing the counterpoints, even if I don’t agree with them – or in some cases, even understand them!

Bottom line

Is some of it sensational and overblown? Yes.

Is some of it misunderstood? Yes.

But there are kernels of truth in everything and I think it really comes down to personal philosophy. Knowing the alternatives adds to the fun/debate, but at some point, a value has to be assigned to everything. And I don’t necessarily think it has to do with what you “would” pay for something.

But that’s just me. Everyone has their own way of understanding and thinking about miles and points, and the opinions on it are absolutely fascinating.

That people go out of their way (literally) to earn points and miles shows me that they must be worth something.

Would love to hear your take on the idea of “free” travel, value, and opportunity costs.

What’s the threshold you cross to redeem your miles? Do you have a set of criteria? Is it tied to the retail cost – or your own personal valuation (or something else)? 

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