This is about the math behind one of my hotel stays. But the same concept applies to all your hotel stays and flights when deciding between an award and cash.
This week I stayed in the Holiday Inn Express in Belgrade, Serbia. The hotel came to my attention because it was a PointBreaks hotel, which means I could buy points for about $29 and book it “for free” with those points. But I ended up paying $61 for a paid night instead to get a big bonus from the current IHG Rewards promo. Here was my thought process.
Free Now or Free Later
Occasionally this hobby requires a little math to figure out the best deal among several good ones. Don’t shy away from that math, and don’t expect anyone else to be able to do it for you since it often requires your personal valuation of miles and points. Luckily the math is always easy!
Here was my math.
I had 6,000+ points in my IHG account, enough for one free night at the Holiday Inn Express in Belgrade, which was 5,000 points per night because it was on the IHG PointBreaks list.
IHG also runs near constant promotions for bonus points on stays, and for the current promotion, here was my targeted offer.
That’s 6,000 bonus points on my first stay if it was by May 31–5,000 for me and 1,000 to share that I can “share” with myself. My stay was May 29.
On the night of my stay, the advanced purchase rate was 54.30 euros ($61)
The normal earning rate is 10 points per dollar at most IHG brands, including Holiday Inn Express, so my paid stay would earn 6,610 points between bonuses and normal earning.
So here’s the math: a paid stay costs me $61 more and leaves my account with 11,610 more points (6,610 earned plus 5,000 not spent) than a free stay. Which do I value more? If I value points at more than 0.525 cents each, the right move was to pay for the stay.
That’s almost exactly what I value IHG points at, 0.5 cents each. In the end, I decided to pay for the stay because not paying would have left me with 1,000 points in my account, and it’s really important to always have at least 5,000 IHG points to be able to use this trick to buy more points for 0.63-0.7 cents each.
Should you use cash or an award? Whether with airline miles or hotel points, it is a simple math problem adding up the costs of each in miles and points and applying your value for the miles or points.