Here's why you shouldn't buy hotel loyalty points right now

Many hotel chains are offering compelling deals on buying points, but this is perhaps the worst time to take them up on that offer

By Chris Chamberlin, May 20 2020
Here's why you shouldn't buy hotel loyalty points right now

Right now, Hilton, InterContinental and Marriott all offering attractive promotions on bulk purchases of hotel loyalty points – but should you dive in?

At Hilton Honors and IHG Rewards Club, the deals are as high as ‘100% bonuses’ – buy one point, get one free – while Marriott Bonvoy's 60% boost makes it the program’s most generous offer to date.

The specials see members parting with hundreds or even thousands of dollars now, to buy points which can be spent on business travel or a holiday trip later:

It's understandably tempting, but this is perhaps the worst time to be buying those points: here's why.

Foreign exchange rates eat into your savings

When you’re buying hotel loyalty points from the big chains, these transactions are always priced in US dollars.

Over the past few years, the Aussie dollar has weakened against the greenback by around 25%.

That means the actual cost of those points already puts you at a disadvantage, and puts a squeeze on any potential savings you could make by stocking up on points now and using them strategically later on.

We don’t know when travel will resume

While you might be tempted to buy a bundle of points to spend on a holiday or business trip once current restrictions are lifted and regular travel returns, it remains up in the air when and where you’ll be able to venture.

If you purchase points now, you may not be able to spend them in the way that you’d hoped.

As well, individual hotel chains may not have properties in the destinations you may be travelling to, so opportunities to use points could be limited while areas remain locked down.

Also read: PM outlines roadmap for return of domestic, overseas travel

The number of points you need can change

Throughout the year, the number of points you’ll need to stay at the same hotel can vary and be changed regularly. This reduces the value of any points you’ve purchased.

Programs like Hilton Honors rely on ‘dynamic’ reward pricing: members don’t know how many points they’d need for a booking until they’re about to lock down their reservation. Come back to make that booking a month later? The figure may have changed.

And while IHG Rewards Club charges anywhere between 10,000 and 70,000 Rewards Club points per night, the exact price per night may change throughout the year based on demand.

Marriott Bonvoy's approach is to publish a ‘redemption chart’ listing how many points are needed for a free stay.

That's more transparent, but the table contains 10 separate hotel categories plus three different pricing levels within each category – off-peak, standard, and peak – and peak rates can be up to double those on off-peak dates.

As well, hotels regularly shift between categories. Even if you buy points with a ‘travel goal’ in mind, you could be in for a surprise when it comes time to cash those points in, finding it would have been cheaper to simply pay for your stay rather than buying and spending hotel points.

The best points booking rates are only for basic rooms

When booking hotel nights using points, the most attractive rates are for standard, entry-level rooms, which are usually the first to fill up.

Once that happens and only higher-category bookings are available, the number of points required can jump significantly – wiping out any savings you’d hoped to bag by buying points.

At some hotels, even a city view or staying on a high floor can put a room above the entry-level category, further limiting the number of rooms available at those ‘standard’ rates.

When staying for more than one night – such as for a week-long holiday or business trip – you also need that entry-level room to be available on every single night of your stay: otherwise, you’ll again likely find that simply paying for a room would have been the most cost-effective option all along.

When does buying hotel loyalty points make sense?

Despite the reasons not to bulk-buy points, there are times where it can make sense: usually, when you have a specific itinerary in mind and are ready to book.

This allows you to compare the cost of paying for a room the ‘normal’ way versus how many points are needed to make the same booking – and what it’d cost you to buy those points.

Head to the website of your chosen hotel group, select the property you'd like to visit and the dates you have in mind, and then compare the cash rates and the number of points needed.

It's not uncommon to find that the cash price is cheaper. For instance, we searched for a three-night stay in late October at the waterfront Hilton Auckland hotel. This would cost either NZ$1,104 (A$1,027), or 144,000 Hilton Honors points.

Under Hilton’s latest promotion, the cost of buying 144,000 Hilton Honors points is US$720 (A$1,100) – slightly more expensive than paying for the room outright.

But if you do find a reservation where the numbers swing the other way, that’s when it makes sense to stock up on points and spend them on your next holiday or business trip.

Also read: Your fast-track to Marriott Bonvoy Gold or Platinum status

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

20 Oct 2015

Total posts 41

Sound advice Chris, the Hilton and Marriott offers certainly caught my eye but once you factor in the exchange rate and then check the cash vs points rates you are often no better off with points and a lot of the time you can be worse off.

Qantas - Qantas Frequent Flyer

06 Nov 2014

Total posts 345

That's why I never buy hotel points. Unlike airline points, which you almost guaranteed to get it cheaper if you fly premium cabins.

Only time I ever bought hotel points was during the once only SPG 50% discount. Used it for Marriott travel package, that was a bargain, unfortunately it is dead now.

04 Dec 2017

Total posts 46

As stated, these offers are almost always useless for us Aussies having to buy in USD. Pass.

Qantas - Qantas Frequent Flyer

25 Sep 2013

Total posts 1191

Moral of the story is: don't buy points/miles speculatively, only when you have a specific award in mind that you can book now and for which the maths work out.

QF

02 Nov 2012

Total posts 39

Nit to mention the credit risk if the chain was to fold.


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