On Wednesday I ran this article discussing what value I got from my miles and points in 2016.
One thing I didn’t consider was the substantial fall in the value of the £ over the last few months. The $ is now 25% below what I considered the ‘norm’ of $1.60 over the last few years. The Euro is off by 17% if you assume a recent ‘norm’ of €1.35.
Having just paid £8.92 for a cappuccino here in Dubai (the Dirham is pegged to the US$), I thought it was worth having a look at this topic in more detail.
How may the currency collapse have impacted your points collecting?
It is easier to look at hotel points rather than airline miles because the dynamics are more straightforward.
A few things can be stated as fact:
Hotels priced in $, Euro or indeed any other overseas currency (the Pound has overtaken the Argentinian Peso to be the worst performing global currency this year) are now more expensive to a £ earner than they were
Because the major hotel companies operate in $ or € (Accor), there is no pressure to revalue reward pricing
Because the UK is a small part of the global travel market, fewer UK tourist trips are unlikely to cause any fall in overseas hotel pricing
Your hotel points are therefore more valuable than they were as long as you redeem outside the UK because you are getting a more expensive room for the same number of points
These leads to other observations:
Hotel credit cards are now more attractive than they were compared to cashback credit cards since the value of the points has probably increased by 20%-25% (unless you only redeem hotel points in the UK)
If you earn the bulk of your hotel points via UK hotel stays, you won’t notice any benefit when travelling. This is because the points you earn are based on the $ equivalent of your room bill. Points may be worth more but you are receiving fewer of them with each stay.
If you earn the bulk of your hotel points via UK hotel stays, you are now worse off if you only redeem them for UK hotel stays. This is because you are earning fewer points per £ spent but the cost of UK hotel redemptions is unchanged.
What about airline miles?
The impact on frequent flyer miles is less clear cut. The number of Avios or other miles you earn is NOT based directly on what you paid for the ticket.
You won’t be earning fewer Avios for your flights, even though you will be earning fewer hotel points for your stays.
If the price of cash airline tickets from the UK continues to fall due to weakening travel demand (although incoming tourism may pick up the slack) then your points are worth less in comparison to the cash cost. Airline economics are far more complicated than hotel economics though – you have the impact of fuel ($ priced but cheaper than historical averages at present) and the cost of the loans or leases on the aircraft (usually $ based but interest rates are also at historical lows).
The easiest conclusion to draw is that the fall in Sterling has increased the value of your hotel points. It may make you want to reconsider whether you should prioritise them over your airline miles, which have not changed in value and will be worth less if cash ticket prices from the UK fall.
(Want to earn more hotel points? Click here to see our complete list of promotions from the major hotel chains or use the ‘Hotel Promos’ link in the menu bar at the top of the page.)