I have booked on numerous occasions a Marriott-brand venue when across the street was a Hyatt, Hilton, or Starwood that was likely of the same quality of room/service yet less expensive. Having made this choice (a poor economic choice?), I invested extra dollars to stay at Marriott; my reward? Marriott points as I am a points-hoarder and driven too often to earn points versus rational monetary thinking. (Can other MRI readers say the same?)
Therefore, I postulate the following:
Loyalty points should be valued at acquisition cost rather than redemption cost.
Have some fun - play along with me and see if you come up with the same results ==> I logged on to TripAdvisor and investigated the following:
I found the hotel at which I will be staying in mid-March (a Hilton Garden Inn) which is rated 4.5 bullets, is #8 of 98, and is priced at $159 per night. Within a half-mile is a Courtyard/Residence Inn combo venue which are both rated 4.5 bullets, are #1 & #4 respectively of 98, and are priced at $159/$209 per night. Consequently, I have a choice between brands located at approximately the same part of town and rated by hundreds as essentially the same quality.
Currently, under both MR and HH programs for top-tiered members, over five nights, the following:
Hilton: 15,900 points and $795 pretax
Residence Inn: 9,938 points and $795 pretax
Courtyard: 20,900 points and $1045 pretax
How to value the points:
Hilton cost same as RI, so the 15,900 points cost zero cents when viewed against folio cost
Courtyard cost $250 more that Hilton, consequently the 20,900 points cost 1.196 cents each
Residence Inn: since CY:RI has a 20,900:9938 ratio (2.103), then the 9938 RI points cost 1.196 X 2.103 = 2.516 cents each
At the end of the stay, my Hilton points were freebies as for me to have earned CY points would have cost me $250 to do so; had the stay been at the RI where folio costs were the same, those points would have cost the most at over 2 1/2 cents each.
Finally (and hypothetically), Priceline may have found me "Stay Cheap Hotel" a 3-bullet hotel a few miles away (less convenient and not as highly rated and no points earned) at 5-nights for $350; consequently the points cost for all venues would have been:
Hilton cost $445 more than SCH, so the 15,900 points cost 2.799 cents each
Courtyard cost $695 more that SCH, consequently the 20,900 points cost 3.325 cents each
Residence Inn: $445 more than SCH,consequently the 9938 points cost 1.196 X 2.103 = 4.478 cents each