Because I have taken up travel lately and I have primarily been staying at Hilton brand hotels, I have been collecting quite a few HHonors Points. Enough that I applied for and got the HHonors American Express. I expect in the near future to have enough points for a decent vacation somewhere.
And every time I see the points pile up, I wonder "What are these actually worth in dollars?" Well, I think I have an approximate answer (although it varies from hotel to hotel).
Method
I needed a halfway reliable way to determine the average cost of a room at hotels, as obviously they change from season-to-season, by demand, and the type of booking (AAA, senior, etc). I decided upon using Yahoo Travel, which lists average price paid. From there, I looked up various hotels and found their HHonors point cost and ran a comparison.
Statistics
I sampled 25 hotels, all in different cities. I tried to mostly use the most populous US cities, although I will admit to probably having a Western US bias. Of my sample, 2 were Doubletree brand (because there weren't Hiltons listed in the city) and the rest were Hilton brand.
Here are the max/average/lows:
Points category: 6/4.72/2
Points Cost: 40,000/33,600/20,000
Yahoo Price: $280/$140.68/$68
Yahoo Reviews: 162/30.96/3
Results
Points per dollar
Average: 265
Standard Deviation: 87
Maximum: 515
Minimum: 143
So assuming it's a standard distribution, 95.4% of the hotels are between 439 points per dollar and 91 points per dollar.
Turning this into dollars per point (the inverse):
2 Deviations-: $0.01099
1 Deviation-: $0.00561
Average: $0.00377
1 Deviation+: $0.00284
2 Deviation+: $0.00228
Running with the average, what is the value of the Hilton HHonors American Express cash back? For the purpose of this post, I'm ignoring initial rewards and rewards earned from booking at a Hilton hotel.
"Earn 3 HHonors bonus points for every U.S. dollar (or U.S. dollar equivalent) charged for all other purchases anywhere American Express® Cards are welcome (less returns)."
3 x $0.00377 = 1.13% which isn't terrible.
When you look at special categories (grocery stores, drugstores, gas stations, restaurants, U.S. postal service, and for wireless phone bills) and charges at hilton hotels, you get 5 points or
5 x $0.00377 = 1.885%
Which is half decent,in my opinion.
Obviously these are rather quick and dirty calculations, but I suspect if you figure you're getting somewhere around 1/3 of a penny per dollar, you'll be pretty close.
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