Gary wrote a post today comparing the Starwood American Express card and Citi Hilton HHonors Reserve card, both of which are phenomenal credit cards with great offers right now. I have them both and I think they’re both an important part of a well balanced mileage “diet,” which Gary and I both agree on.
But there’s one major point that Gary and I disagree on. Gary writes the following:
Simple value proposition: 1 Starpoint is worth more than the 3 Hilton HHonors points per dollar that the Hilton Reserve Visa earns on un-bonused spend. The basic value on a non-bonused dollar of spend is higher with the Starwood card.
Starwood points are the single most valuable points currency. I value a Starpoint at somewhere between 2.2 and 2.4 cents apiece. Lucky thinks a Hilton point is worth 0.8 cents apiece (so each dollar of spend on the Hilton Reserve Visa would be worth 2.4 cents). I disagree — I value a Hilton point somewhere between 0.5 and 0.6 cents each.
Gary and I are in similar camps as far as our valuation of Starpoints goes. I value a Starpoint at 2.2 cents per point, while I value a Hilton point at 0.8 cents per point (you can find my valuation of hotel points here). In other words, I value three Hilton points slightly higher than one Starpoint. This is a pretty important distinction, since the Starwood American Express offers one point per dollar spent on everyday purchases, while the Citi Hilton Reserve offers three points per dollar on everyday purchases. So Gary and I are on opposite sides of the equation as to which card to use for everyday purchases (though it’s somewhat of a moot point for me, since I go with the third option — gift cards!).
But let’s go with Gary’s scenario for a minute. Averaging his valuations, he values a Starpoint at 2.3 cents per point, and a Hilton point at 0.55 cents per point. So he values one Starpoint at roughly 4.18 Hilton points. I’m in a generous mood, so let’s call it one Starpoint per four Hilton points.
Hilton and Starwood have two of the best award redemption values in the entire industry. Starwood has Cash & Points, while Hilton has AXON awards. These are available to those with a co-branded Hilton American Express credit card, including the Hilton Surpass American Express card (which I no longer recommend since I think the Citi Hilton Reserve card offers a better value proposition for the annual fee) and the no annual fee Hilton American Express card, which I think everyone with Hilton points should have. Through an AXON award you pay a total of 145,000 Hilton HHonors points for a four night award stay at a category 7 (Hilton’s top category) hotel. Usually I’m not a huge fan of these “package” awards, since I don’t want to stay in one place for so long. Starwood offers the fifth night free on award redemptions, and Marriott has some great vacation packages for seven night stays. Five nights in one place is pushing it for me, and seven nights is really pushing it. But I think just about all of us wouldn’t mind staying in one place for four nights, and that’s usually what I aim for when I’m on vacation anyway.
So back to the AXON award. 145,000 points over four nights translates to 36,250 Hilton points per night. Let’s look at a few of the hotels you could redeem an AXON award at:
You could stay at the Conrad Koh Samui in an oceanfront villa, where the cheapest refundable rate is $805USD per night including tax.
Or you could stay at the Conrad Maldives in a king beach villa, where the cheapest refundable rate is $1,092USD per night including tax.
Or you could stay at the Conrad Tokyo, where the cheapest refundable rate is $610USD per night including tax.
Or you could stay at the Conrad Hong Kong, where the cheapest refundable rate is $560USD per night including tax.
Or let’s tone down the “aspirational” level of these awards (in terms of only looking at exotic destinations) and look at the Hilton Trafalgar London, which is probably Hilton’s nicest property in London. The cheapest refundable rate there is $450USD per night including tax.
I could go on and on, but here’s my point. For a four night AXON stay you’re paying 36,250 Hilton points per night. Gary values roughly four Hilton points at one Starpoint, meaning the above hotels would be valued at ~9,000 Starpoints per night. You can’t find a single hotel in any of the above cities (with the exception of the Sheraton London Heathrow) for that number of points. Heck, in Koh Samui for example, the cheapest points rate at the W Koh Samui (the most comparable property) is 60,000 Starpoints per night!
Starwood actually charges 10,000 points per night for their category four hotel, which includes such exotic properties as the Sheraton JFK, Element Arundel Mills, Sheraton Mahwah, and Four Points by Sheraton Dubai. I don’t know about you guys, but I’d rather spend the equivalent of ~9,000 Starpoints at the Conrad Koh Samui than ~10,000 Starpoints at the Sheraton JFK.
To be clear, I’m not staying Starpoints aren’t valuable. They’re incredibly valuable for Cash & Points redemptions, and I’ve made many Cash & Points bookings with them. I think Gary is spot on in his valuation of Starpoints. I just believe that he’s substantially undervaluing Hilton points, and that my valuation of 0.8 cents per point is a conservative one. I think Hilton is leaps and bounds ahead of Starwood when it comes to redeeming points for aspirational properties (which, last I checked, both Gary and I are into), while Starwood is way ahead of Hilton when it comes to mid-range properties.
And for the record, I’m arguing that one Starpoint is worth roughly 2.5 Hilton points.
So, who’s side are you on?
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