Avios Redemption University – Lesson 3 – Is it worth using Avios for hotels redemptions?
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This is Part 3 of ‘Avios Redemption University’ series on Head for Points. Click here to see the other articles.
Is it worth using Avios for hotel bookings?
I generally try to stay away from the eternal question of ‘what is an Avios worth?’. Because, at the end of the day, it is a 100% personal decision. It is a decision based on numerous factors – where you fly, what cabin, whether you normally use a 241 voucher and (the one rarely considered) what class you would pay for if Avios flights were not available.
Click here to read a post which is my best effort at answering the ‘what is an Avios worth?’ issue.
What you can do, though, is put a floor of the valuation of an Avios. One way of doing this is to look at what they are worth if you redeem for hotel bookings, since this is an easy way to cash out of your Avios pile if you had to.
Booking hotels with Avios points has only been available since the November 2011 scheme changes. Many people are therefore not familiar with it, or what value it offers.
You can book a hotel with Avios miles via ba.com or avios.com – the avios.com page is here.
As an experiment, I randomly picked five hotels in five cities for 5 May 2013. This is what I found, picking a random four star hotel for 2 adults. I took the top ‘recommended’ option in all cases. Cash prices included all taxes.
- London – Holiday Inn Commercial Road – 17,050 Avios or £99
- Bangkok – Rembrandt Hotel & Towers – 7,950 Avios or £46
- Moscow – SkyPoint Hotel – 11,900 Avios or £69
- New York – Staybridge Suites (Times Square) – 37,250 Avios or £216
- Madrid – Best Western Arosa – 21,550 Avios or £125
10 seconds with the old calculator shows that these all give you a value per Avios of 0.58p.
It is not quite that simple, of course.
Is the avios.com ‘cash price’ fair? I turned to Expedia to check. The results were interesting.
- London – avios.com price £99, expedia.co.uk price £145!
- Bangkok – avios.com price £46, expedia.co.uk price £62!
- Moscow – avios.com price £69, expedia.co.uk price £57
- New York – avios.com price £216, expedia.co.uk price £280!
- Madrid – avios.com price £125, expedia.co.uk price £74 (avios.com includes breakfast, Expedia does not)
These results were, frankly, amazing. I expected the price to match, but Expedia prices varied from 46% more expensive to 41% cheaper! (You would also get cashback of up to 10% via quidco.com when booking a hotel on Expedia, which is not factored in here.)
Finally, I went direct to the hotels websites:
- London – avios.com price £99, priorityclub.com £145 (same as Expedia)
- Bangkok – avios.com price £46, hotel site Bht 3,009 inc tax (£61) (same as Expedia)
- Moscow – avios.com price £69, hotel site Rub 3,000 (£60) (£3 more than Expedia)
- New York – avios.com price £216, expedia.co.uk price $ 448 (£279) (same as Expedia)
- Madrid – avios.com price £125, bestwestern.com €91 (£74) (same as Expedia)
(It is worth noting that the London and New York hotels would actually be free if you booked directly! This is because Priority Club has a ‘best price guarantee’ and if you ring within 24 hours of booking to say you found a cheaper rate elsewhere, the first night of your stay is then free – even if you are only staying one night. This is a subject for another post, though.)
So …
What we have seen here is two things:
1. Based on the hotel prices at avios.com, you get 0.58p per Avios when you book a hotel with them
2. The prices charged at avois.com, though, bear no relation to those charged by Expedia or by the hotels themselves, and are often substantially cheaper. (However, as avios.com lets you book hotels either for cash or for Avios points, the 0.58p metric is still valid.)
At the end of the day, then, you can never argue that an Avios is worth less than 0.58p. Now, if you earn your Avios points from credit card spend, converting Tesco points etc, then you are unlikely to find 0.58p acceptable. If, however, you earn all of your Avios from business travel then you have no ‘opportunity cost’ for your Avios and you may find a hotel redemption worthwhile.
As an example of when a hotel redemption could be useful, imagine if American Express had a 50% conversion bonus on Membership Rewards points to Avios. On these numbers, you would be getting 0.87p per Membership Rewards point even if you ended up redeeming them on hotels. This is far better than, say, redeeming them for gift cards via Membership Rewards when you only get 0.5p.
(One final point. Redeeming Avios for a chain hotel via avios.com, or paying for one via Expedia, is likely to mean that you will not earn hotel points from your stay. You may also not receive any status benefits. You should bear this in mind when booking, especially if your status would otherwise get you free breakfast or free internet.)
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