As I mentioned yesterday, loyalty programs love to sell points. Usually, they sell the points to merchants, who pass them on to you as rewards for purchases, but occasionally, they’ll sell to you directly. But there’s a problem, of course. Not for the company. For you, the consumer.
Bottom Line: If they’re selling, you don’t want to be buying.
Hilton Honors Points Offer
Yesterday, I received an offer from Hilton to buy points directly from them. No staying at a hotel, just whipping out the credit card. As an added bonus, they’ll double the amount of points that I purchase. That’s right, for a limited time, you’ll get two points, not one, for each unit of currency. It sounds like an infomercial.
I’ve always valued Hilton Honors points as worth 0.4 – 0.5 cents per point.* And clearly, I was on the high side. If they’re willing to sell me points at 0.5 cents each (160,000 points for $800), I know that those points are worth less than that number. Why? Because Hilton surely isn’t going to sell me points for less than they’re worth. They don’t even have an incentive to sell me points for fair value, since they eventually need to reimburse properties when I use those points. If they’re going to sell points, they’ll be sure to make a profit on it.
I’m keeping an eye on Hilton. The elimination of their award chart will eventually lead to a devaluation. The Hilton 100,000 point credit card offer looks as good as the Marriott 100,000 point credit card offer, but it isn’t, since Marriott points generally get you more bang for the buck than Hilton. Program cuts happen over time, not all at once. Keep your eyes open.
*Beginner’s Hint: While I often go to great lengths to determine a fair value “per point,” it’s generally not as easy as I make it out to be. For a bit more on the subject, read about the impact of substitution.
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