Last May I wrote a four part series on the value of miles and points, which many found useful. I was planning on writing a follow up at the one year mark, though I’ve received dozens of requests for an update given how drastically the miles & points landscape has changed in the past year, with devaluation after devaluation. I’d suggest checking out the previous series before reading this one, so you can get an idea of where I’m coming from with valuing miles and points.
I’m also going to get much more detailed than I was in the past, by adding more programs, both on the airline and hotel front (like Southwest Rapid Rewards, Virgin America Elevate, Club Carlson, etc.). To start I’d like to make the same disclosure I did last time:
The reason I’m making an introduction post is because I want to explain the basis of my analysis. First let me make one important point, and I’ll make it in bold: I’m not for a second claiming everyone should value their miles/points the way I do, and you’re more than welcome to provide a million counter-examples of how I’m wrong.
We all fly for different reasons, with different goals, and with different valuations on comfort.
For example, say I value American miles more than British Airways points (which I do). Surely someone can come along and say “that’s hogwash, with British Airways I can book a one-way flight between Los Angeles and San Diego for only 4,500 Avios, while the revenue ticket would be $500 one-way. I value them at over 10 cents each.”
Therefore I’ll try to maintain a balanced approach to my analysis, though it’s worth noting my potential biases. For example, I often travel alone, so am sometimes only looking for one award seat when redeeming miles. Furthermore, I greatly value the ability to redeem miles for premium cabins, in particular first class. On the hotel side, I value the ability to redeem points for high-end properties that I otherwise couldn’t afford.
But my main point is simply that everyone’s valuation is going to be different, both in absolute terms and in relative terms. Disagree with my analysis? That’s great, and please let me know. This is just my opinion, and at the end of the day there’s no right or wrong answer. Some will say I’m valuing miles double as high as they should be across the board, while others will say they value them twice as high across the board. Some will say they value British Airways points double as much as American miles, while others will say they value American miles double as much as British Airways points.
Hopefully that’s sufficient disclosure (though I know it won’t stop at least some of you from tearing my numbers apart). 🙂
I think the one consistent trend I’ve noticed since the last time I valued miles and points is that airline miles have actually maintained their value pretty well, while hotel points have plummeted in value. As I set my new valuations I’m also quickly noticing just how volatile my valuations can be. For example, in June of 2010 I valued United MileagePlus miles at 1.3 cents each, while in May of last year I valued them at 1.8 cents each. Conversely in June of 2010 I valued Air Canada Aeroplan miles at 1.8 cents each, while in May of last year I valued them at 1.3 cents each.
The lesson that teaches us is that much like with the stock market, the value of miles and points fluctuates. The difference is that while the stock market appreciates in the long term, the value of miles and points only depreciates. So I think the key to successfully managing your miles and points is to both diversify them sufficiently and to never view them as a retirement account of sorts, as they’ll be worth substantially less in a decade than they are now.
That being said, you might just be surprised by how drastically some of my valuations differ from just 10 months ago.