Use Cash and Points Awards to Get a Better Deal When You Redeem Hotel Points
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.
Not long ago, Cash and Points awards were often a better deal than regular free night awards. However, in 2017-2018, the major reward programs changed their rules. Cash and Points awards are still available, but now they are almost never a good deal.
Basics of "Cash and Points" awards
Cash and Points awards reduce the number of points you need to redeem an award night, but add a cash surcharge. For example, a Category 5 hotel in the Marriott program normally requires 35,000 points per night. But, with a Cash and Points award you can use 17,000 points plus $140 instead.
- Cash and points reservations essentially let you purchase some of the points you need for a reservation. One way to look at cash and points awards is to consider the cash portion the price to purchase some of the points you need for an award booking. For our example of a Category 5 Marriott hotel, you are paying $140 to purchase the 18,000 points that make up the difference between the 35,000 points you would have needed for a regular award redemption, and the 17,00 points you need for a cash and points redemption. If the cost of purchasing the points is lower than the value of the points, the cash and points reservation is a relatively better deal than the regular award reservation.
- Another way to look at Cash and Points awards is that they let you use your points for a discount on the regular room rate. In our example, you would be using 17,000 points to be able to book the room for $140, instead of the normal price. If the amount of the discount is more valuable than the points, the Cash and Points reservation is worthwhile. But, if the amount you still have to pay is more valuable than the value of the extra points needed for a regular award reservation, the regular reward reservation is still a better deal.
- Cash and Points reservations can save you money, when you don't have enough points to make a regular award reservation. Sometimes, you may simply not have enough points to make a regular reservation, but hotel prices are high, and you have enough points to make a Cash and Points reservation. In that cash the Cash and Points reservation will often be a better deal than purchasing the points you need.
Cash and Points awards are almost never a good value
Cash and Points award were often a good deal for hotels in the Hilton, Marriott / SPG, and Hyatt programs. But, each of these programs changed their Cash and Points rules during 2017 and 2018. As a result, Cash and Points awards are almost never an attractive option.
- 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.
- 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 Hyatt Cash and Points reservations usually don't make sense. If using points (at all) is worthwhile, you are better off using the full amount of points to avoid the full amount of the room rate. If using points is not worthwhile, it doesn't make sense to use half the number of points to save half the rate. Even worse, the 50% you pay is based on the "regular room rate", not the discounted rate you'd usually wind up paying.
- With IHG, you can always acquire points using the Cash & Points trick for .575 cents each. Technically, unless the Cash and Points rate saves 20,000 points for a cost of $115, you are better off finding another hotel that has that rate available, making a Cash and Points reservation, cancelling the reservation, and then paying the full point cost for the hotel you want. However, we are willing to pay a small premium just to book the hotel directly. As long as the Cash and Points surcharge is below .6 cents per point, we will pay the surcharge.
- 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 usually a better deal, unless prices are high (or very low). As long as the rates are between appriamately $30-50 for Category 1 hotels, $60-100 for Category 2 hotels, and $120-205 for Category 3 hotels, you are better off using 20% of the miles to get 30% off the room rate, rather than 100% of the miles to get 100% off the room rate.
For example, lets say that a Hyatt hotel costs $150 per night or 10,000 points. Making an award reservation would save you 1.5 cents per point. If that is below your value per point, it doesn't make sense to spend 5,000 points to save $75. That's the same 1.5 cents per point.
On the other hand, if the room costs $300 per night, the award reservation will give you 3 cents per point. In that case, it doesn't make sense to pay $150 to save 5,000 points. You'd be essentially buying points at 3 cents each.
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