Cost per Point (CPP) Hotel and Airline Point Redemptions
If you are in the point game, I’m sure you already track your CPP (Cost per Point). It’s a simple calculation where you take (the total cash cost of the stay) minus (the cash cost of the fees/taxes) and divide that by (the number of points needed). That gives you the cost per point
It would look like this: a hotel stay that cost $1,000 if you paid for it with cash and costs 50,000 points plus $50 for fees, the calculation would be ($1,000 – $50) / 50,000 = 0.019 which means your Cost per Point (CPP) is 1.9 cents.
Why do we care about CPP?
CPP is the value of your points as you are redeeming them, so it makes sense to care what value you are getting for all your hard work. However, CPP can be all over the map between the different Hotel and Airline brands. I have had some hotel stays that have been as high as 5.0 CPP and some as low as 0.4 CPP. The average is about 1.0 CPP, with Hilton averaging lower at around 0.6 CPP and Hyatt having a much better ratio at around 2.2 CPP. That’s a huge difference.
What is the best target CPP?
1 CPP is considered the basic redemption, less than 1 CPP is considered less than desirable, and 2 and over CPP is considered to be great. I will be honest though, for me if it I have only one choice for a hotel and I have the points and it is a low CPP, I still might book it. I believe in using my points, not hoarding them (although you wouldn’t know it looking at how many points I still have after all my travel to date).
Hotel branded SUBs vs. Flexible point SUBs
In some ways, when looking at the Credit Card Sign Up Bonuses (SUBS), it is clear why some brand point values are going to be lower.
Hilton SUBS are between 80,000 – 150,000 points where Hyatt is only 30,000 – 50,000 points when signing up for a new card. So when you look at the sign up bonus from a branded credit card, they equalize.
It’s when you are transferring your points from a flexible point currency like Chase URs (Ultimate Rewards) or American Express MRs (Membership Rewards), the point value will make a huge difference. Transferring 100,000 and getting only $1000 of value for a hotel stay at Hilton is a lot less desirable if you can transfer 60,000 for an equivalent $1000 hotel stay at a Hyatt.
That’s not the full story though as there are some times where the different brands, most recently Marriott, give a bonus for transferring from a partner like Chase. So in the latest case, you would get 50% more points making your transfer be 1 chase UR to 1.5 Marriott loyalty points. That makes transferring to Marriott worth a lot more during those bonuses.
Only transfer to branded programs when you are ready to book
Never transfer from a flexible point currency to a branded currency until you are ready to use the points. Some people want to take advantage of the bonuses like the 50% Marriott bonus, but that means you are locking those points into that brand without any real plan to use them. Costs of hotels continue to go up, and in particular the Hilton and Marriott points have gone up significantly in the last 12 months. Hyatt recently changed some of their hotel categories where some hotels are more expensive and some are less. With all that variability in hotel costs, it’s best just wait until you are ready and know how much you need to spend.
I know it’s tempting, but just hold off. You will be sad if you move points to one hotel but really need them for a different hotel and now you don’t have them.
Setup all your loyalty accounts early
It’s best to setup your hotel and airline loyalty accounts before you need them. Some airlines and hotels require you to be logged into their portals in order to see the point costs.
Award searching tips
tbd
My favorite and least favorite brands
Hyatt Hotels are by far my favorite brand for cost. There are some great hotels that are as little as 6500 points a night. I just booked one night at a Hyatt Place near Paris’s Charles De Gaul airport for 3500 points a night. I booked a beautiful oceanfront room in Carlsbad California at the Alila Beach resort for 35,000 points a night for a room that would have cost $1,250.
Hilton Hotels used to be my favorite brand. I was very brand loyal. After starting this points journey, I’ve been staying at all the brands (Marriott, IHG, Hyatt), and I’ve had better hotels at these brands than the more expensive Hilton brands. IHG tends to be in areas that are not as populated, but they still have nice rooms. So sorry Hilton, you are moving towards the bottom of the list, but definitely not the worst.
Choice Hotels are probably still on the bottom of the list as most of these are low end motel like places that are generally not in the best locations. I haven’t stayed in one for a while, but for now, Choice hotels is my least favorite brand.
Southwest Airlines used to be my nightmare airline. Not having a seat really stressed me out. I’m a large plus size woman, so the smaller seats and lined up way they board was just too much stress. Until… I learned about their Customer of Size policy. You can get an extra seat for free (you place a seat reserved sign they give you onto the seat) and you can pre-board with one person. This means you and your other can get a row of three and have the seat in between you empty. Also, when I board, I ask for a seat extender and they are always so nice and it is never an issue. I’ve had issues with United and American Airlines in the past, enough to make me break down crying. Southwest has made flying possible without being in or paying for first class. Their routes aren’t the best, but it is working well. Adding to that, I was able to successfully get the Companion Pass at Southwest for January 2022 through December 2023. That allows me to bring one person with me for virtually free on any Southwest flight I take. So yes, Southwest Airlines, you are now my favorite Airline.
Alaska Airlines is a close second as for my favorite Airlines. Again, this is more of a short haul airline, but they have always been really nice and it’s easy to upgrade to first class. First class on short hauls don’t make big difference, mostly just width of the seat, so having upgrade options that are pretty cheap is a great way to be comfortable. We have had some great flights with them
American Airlines made me cry once, so they definitely are probably my least favorite airline that I have used. We were on a flight and I needed a seatbelt extender so I asked nicely when boarding, the flight attendant said they’d bring it to me. I waited and waited, then they didn’t come so I asked again. Nothing. Pushed the button to ask before we had to depart and that flight attendant was not nice and said they ran out and huffed and puffed. Eventually they gave me the one from the safety presentation. There was more than the flight attendant issues (my family was not being supportive or nice), an even larger man sat next to my son, so it was a miserable start. One of the flight attendants was actually nice and asked us if one of us wanted to move to a seat with an empty seat next to it. I took it and found myself crying for half the flight. Ok, it wasn’t 100% AA’s fault, but the flight attendants definitely did not seem to be prepared and made me so embarrassed. Anyways, that’s why Southwest’s Customer of Size policy is amazing and all their staff have been trained well.
And that’s about it
I hope this article helped you in even a little way. Like I’ve said in my earlier article about building and using points for travel, this credit card point game isn’t for everyone and it really isn’t a one size fits all. if it doesn’t fit your lifestyle, no worries. But at the minimum, learning about it
AI Article
Well, after writing the above article, I decided to have some fun and try to see what ChatGPT would write about this topic. I thought why not see what a computer can say. It probably wrote a better article than I did! Either way, time to learn how to use these new tools. My prompt was this:
Write an article about what CPP (cost per points) is in relation to using points for travel and how to determine a good CPP value
And this is the response:
Cost per point (CPP) is a common metric used in the travel rewards world to determine the value of points or miles earned through loyalty programs. CPP represents the cost, in dollars, of a single reward point or mile. It is calculated by dividing the cash price of a travel booking by the number of points or miles needed to redeem it.
For example, if a flight costs $500 or 50,000 points, the CPP value is $0.01 ($500/50,000 points). This means that each point is worth one cent. Generally, a CPP value of at least 1 cent is considered good, but values above 1.5 cents are excellent.
Determining a good CPP value is important because it helps travelers maximize the value of their reward points. By calculating CPP values for different redemption options, travelers can make informed decisions about where to redeem their points for the best value.
There are several factors that can influence CPP values, including the type of travel, the loyalty program, and the redemption method. For example, redemption options for flights, hotels, car rentals, and other travel-related purchases may offer different CPP values. Some loyalty programs may also offer higher CPP values for certain redemption options or for booking through their own travel portal.
To determine a good CPP value, it’s important to compare the value of points across different loyalty programs and redemption options. One way to do this is to use a travel rewards calculator, which can help calculate CPP values for various travel bookings. These calculators may also factor in any additional benefits or perks associated with the redemption option, such as free checked bags or room upgrades.
It’s also important to consider the opportunity cost of using reward points. For example, if a traveler has the option to redeem 50,000 points for a $500 flight or use those points for a $50 statement credit, the CPP value for the flight redemption may be higher, but the statement credit option may provide more flexibility and value in the long run.
In summary, CPP is a useful metric for determining the value of reward points in travel loyalty programs. By comparing CPP values across different redemption options and considering the opportunity cost, travelers can make informed decisions about where to redeem their points for the best value.
ChatGPT