IHG hotels: Points or pay - the analysis
I have spent several days working on the blog itself but I am finally ready to pick up where I left off with my IHG Rewards point analysis.
Last week, I wrote that I was considering whether to buy a package of IHG Rewards points for hotel stays this fall when I travel to Georgia Tech away football games. The points, available through a deal at Daily Getaways, could make my hotel stays cheaper as well as spreading my travel spend, typically at peak in the fall, to other times in the year when I have fewer travel expenses. Today, I will use Georgia Tech's game at Duke University in Durham, NC on September 26 to illustrate my analysis and the decision I reached as to whether buy any of the Daily Getaways offers.
Because I don't yet know what time that game will kickoff and because I have friends in Raleigh-Durham that I try to visit when I am in the area, I am planning to stay in North Carolina both Friday and Saturday night. For games against the Triangle ACC teams, I generally stay somewhere near High Point or Greensboro on Friday nights, head to Raleigh-Durham Saturday morning and then stay in town on Saturday night.
Identifying possible properties
Possible IHG properties for Friday night
Since I don't spend much time at the hotel on these trips, I simply need a clean, comfortable room with few perks. A Holiday Inn Express typically provides a good balance of amenities and price, but I am open to any IHG property. I did a search for the Piedmont Triad (includes Greensboro and Winston-Salem) and identified several possibilities. (Note: I have generalized the names of the properties to maintain privacy. I don't need throngs of autograph seekers meeting me when I arrive at the hotel! ;) ) I have listed both the AAA rate and the rewards points required for one night.
(A quick aside on why I have listed the AAA rate rather than the cheapest rate. I never book nonrefundable hotel rooms. Because I actually enjoy the travel planning process, I routinely refine my trip itineraries and, as a result, often rebook hotels. While the AAA rates aren't the absolute cheapest, they tend to be the lowest refundable rate. The money I save with these rates alone more than cover the reasonable annual membership fee. Unless you have so many hotel points that you never pay for lodging, I strongly recommend you look into a AAA membership.)
Comparing apples to apples
Now that I have shortlisted three properties, I need to ensure that I am comparing rates and points on an apples-to-apples basis. Because I would be using points purchased for $0.006 each, I do all rates/points conversion using that factor. The steps are:
- Convert AAA rate to equivalent points value.
- Factor in IHG points rebates: Since I hold the IHG Rewards MasterCard from Chase, I get 10% of my redeemed points rebated up to 100,000 rebated points annually. This reduces the effective number of points required for a reward night. I simply multiply the quoted points for the night by 0.9.
- Convert the effective number of points for a reward night to dollars.
These conversions are shown below.
Rates and points on an apples-to-apples basis
Depending on how precise you want your analysis, there are other factors you could include. Working in analytics, I did include these in my model, but I omitted them here for the sake of clarity.
- Adjust the paid rate for the value of the points received for the stay. Don't forget to include rewards earned from using a rewards credit card. With my IHG Rewards MasterCard, I receive 5 points for every dollar spent with IHG.
- Reduce the paid rate or points required by other rebates, e.g. portals like Ebates.com
Finally, it is worth noting that IHG offers the option to reduce the points required for a reward stay by using cash as follows:
- $40 for 5,000 fewer points ($0.008/point)
- $70 for 10,000 fewer points ($0.007/point)
Based strictly on value, these points cost more than I could pay to Daily Getaways so this option was not attractive to me for this trip. Had I wanted to split my lodging spend and spent some now for points packages and some later by paying the $40 or $70 at the time of my trip, I might have been willing to pay the slightly higher price/point.
Pay or points?
So do I book a room as usual or do I go with an award night? Based purely on value, the best choice is the Holiday Inn Express south of the Triad. The net points for the reward stay would have been 13,500. The second choice was a paid stay that had an equivalent points value of 15,675. Ultimately, I opted for the paid stay at the Holiday Inn in the central Triad due to the better location for my trip route. I thought that a premium of 2,175 points or $13,05 was justified.
I did a similar analysis for the second night of this trip and other trips. I did find enough cases where the rewards night was more attractive, so I did buy 40,000 IHG points from Daily Getaways. At a price per point of $0.006, the discount to the $0.007 value by The Points Guy was not enough to entice me to speculatively buy points, But by finding specific opportunities where I could save money by buying points and booking rewards night, the Daily Getaways offer was a no brainer.