Cash and points awards

  Hotel Strategies

Many hotel programs allow you to book rooms using “Cash and Points” awards. Rather than paying the full point cost for the free hotel night, you use a smaller number of points, along with making a cash payment. For example, you could book a room at a Category 4 Hyatt hotel for 15,000 points; or for 7,500 points plus $100 in cash.

In some cases, especially with Hyatt, Cash and Points awards let you get more value out of your points, and are a better deal than regular award redemptions.

Advantages of "Cash and Points" awards

Not every cash and points reservation is a good deal. But when they are, they give you more value from your points.

• Cash and points reservations essentially let you purchase points at less than they are worth. One way to look at cash and points redemptions is to consider the cash portion as the price to purchase some of the points you need for an award booking. For our example of a Category 4 Hyatt hotel, you are paying $100 to purchase the 7,500 points that make up the difference between the 15,000 points you would have needed for a regular award redemption, and the 7,500 points you need for a cash and points redemption. With some cash and points redemptions, the cost to purchase points is lower than the value of the points. In our example, Hyatt is letting you purchase points at 1.33 cents per point ($100 divided by 7,500 points), which is less than the typical 1.7 cents per point you’d expect to get from your Hyatt points, and much less than the 2.4 cents per point that Hyatt would normally charge to purchase them (and these points are not subject to the 55,000-point annual purchasing limit).
• You can get more value by using your points for substantial hotel discounts, rather than completely free nights. Another way to look at cash and points awards is that they are a way to use your points to purchase a discounted rate at the hotel.

In our example, let’s say that the Category 4 Marriott hotel room cost $300 per night. If you redeem your points for a free hotel night, you are paying 15,000 points to save $300, and getting 2 cents of value for your points. However, if you make a cash and points reservations, you are essentially using your points to book the hotel at $100 per night (instead of $300). You are paying 7,500 points to save $200 off the cost of your room, getting 2.67 cent of value for your points, instead of only 2 cents.

• Using Cash and Points awards, you can save money on a larger number of hotel nights. A third way to look at cash and points awards is that they let you get value from your points over a larger number of hotel nights.

Let’s say that you signed up for the Hyatt Rewards credit card and earned an 40,000 point signup bonus. Between the initial spending on the credit card, and some previous stays at Hyatt, you have a bit over 48,000 points. Over the course of the next few years, you expect to have some good opportunities to stay at least eight nights at Category 3 Hyatt Hotels where the room rate averages about $225 per night.

You could stay completely free for the first four nights, by using 12,000 points per night to make normal award reservations. You’d then be out of points, and you’d need to spend a total of $900 cash for the last four nights. Alternatively, you could use cash and points awards for all eight nights, paying a total of 48,000 points and $600 cash. With the cash and points awards, you would wind up saving $300 cash, over the course of the five stays.

When are Cash and Points awards a better value than regular awards?

Not every cash and points awards is a good deal, compared to a regular award redemption. To determine if a specific cash and points reservation is a good option, you need to compare the cash component to the value of the points you save. If the cash portion is lower than the value of the points you save, it is a good deal. If not, it’s not. How Much are Hotel Points Worth?

Just because a cash and points reservation is a better deal than a regular award reservation, doesn’t automatically mean that it is a better deal than paying cash, or staying at a different hotel. It just means that you wouldn’t take advantage of a regular award. You still need to compare the cost of the cash and points award to your other options.

Of course, if you are rolling in points, it can make sense to decline this opportunity to pay money to save points. If you always have enough points to take advantage of every good award opportunity, and your points balances are growing and growing, you shouldn’t pay cash to essentially buy even more points.

• With Hyatt, the rate you pay per point differs depending on the hotel category—for most hotels, the cash and points reward is a better deal. If you value Hyatt points at around 1.7 - 1.8 cents each, Cash and Points awards are a good deal at Category 2-6 hotels, but a little expensive for the lowest and highest categories.

Cat	Normal cost	Points + Cash	Cot per point
1	5,000	2,500 + $50	2.00
2	8,000	4,000 + $55	1.38
3	12,000	6,000 + $75	1.25
4	15,000	7,500 + $100	1.33
5	20,000	10,000 + $125	1.25
6	25,000	12,500 + $150	1.20
7	30,000	15,000 + $300	2.00

• With the new Marriott program, cash and points are basically never a good deal. Prices are reasonable in the middle tiers, but still higher than we would ordinary want to pay, unless we were trying to stretch our points.

Cat	Standard	Off-peak	Peak
1	1.38	2.00	1.09
2	1.00	1.20	.82
3	.89	.93	.82
4	.81	.90	.73
5	.78	.86	.79
6	.76	.92	.69
7	.83	1.00	.93
8	1.04	.93	1.27

• With IHG, you can always acquire points using the Cash & Points trick for .625 cents each. This makes any cash and points redemption that saves fewer than 20,000 points a bad deal. However, we would generally take advantage of offers to save 10,000 and 15,000 points, even though you are paying a slightly higher rate per point. Because, doing so, lowers the number of times we need to use the Cash & Points trick.

Point Savings	Cost per Point
5,000	.80
10,000	.70
15,000	.66
20,000	.625

• For Hilton, you never want to book with cash and points, unless you happen to be a little bit short on the number of points you need for the reservation. The cost per point when you use a cash and points is exactly the same as the value per point you would get for booking the entire reservation with points. For example, if the Hotel costs 36,000 points and has a cash price of $173, the average value you would get per point is .481 cents. Hilton will let you use anywhere from 1 to 36,000 points for the reservation, at the same value per point, and make up the difference in cash. If the value per point is high enough, you should make a 100% points reservation. If the value you are getting is not high enough, you should make a 100% cash reservation.
• With Choice, a cash and points reservation is always better than a regular award reservation. The “cost” for cash and points reservation points is always .75 cents each. And you shouldn’t be making an award reservation of any kind, unless you are getting at least this amount of value for your points.
• With Wyndham, a cash and points reservation is a better deal, than a regular award reservation, when the "Wyndham Daily Rate" is less than about $220. Cash and points reservations (Go Fast award) only require 3,000 points, rather than 15,000 points. The cash portion is based on 65% of the full-priced "Wyndham Daily Rate". At rates below $220, you are better off paying 65%, in order to save 12,000 points.

Award Nights 101: Using Your Hotel Points

Get Cheap IHG and Choice Points Using the Cash & Points Trick

Get More for Your Points by Using Them at Inexpensive Hotels

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