This article looks at whether it is worth using your Avios points to book a hotel.
The “Avios Redemption University” series is a good starting point for beginners, although I hope everyone will learn something from it. Click here to see the other “Avios Redemption University” 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.
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.
You can book a hotel with Avios miles via this page at ba.com (log-in required).
As an experiment, I randomly picked four hotels in four cities for Saturday 17th October 2020. This is what I found, pricing up a four star hotel for two adults. I took the top ‘Best Sellers’ option in all cases. Cash prices included all taxes.
- Hamburg – NH Hamburg Mitte – 31,600 Avios or ‘7,900 Avios + £120’
- London – Hilton London Paddington – 34,900 Avios or ‘8,750 Avios + £135’
- New York – Crowne Plaza Times Square – 74,500 Avios or ‘1,000 Avios + £370’
- Singapore – Grand Copthorne Waterfront – 27,100 Avios or ‘6,800 Avios + £105’
10 seconds with the calculator shows that these all give you a value per Avios of around 0.50 – 0.51p.
It is not quite that simple, of course.
Is the underlying price charged by BA Hotels competitive?
Is the ba.com ‘cash price’ fair? I turned to Expedia to check, adjusting the Avios price to assume 0.50p per Avios. The results were interesting, especially as Expedia provides the bulk of the hotels booked via BA Hotels:
- Hamburg – Avios price £160, Expedia price £135
- London – Avios price £178, Expedia price £195
- New York – Avios price £375, Expedia price £368
- Singapore – Avios price £135, Expedia price £135
As you can see, there is often little resemblance between the Avios price and Expedia’s cash price. This means that you could be getting a far better – or far worse – deal by using Avios depending on how the cash price compares.
When the Avios price, adjusted for 0.5p per Avios of value, is the best price you can find, you should still take the option which minimises the Avios used.
Take the London example above. Your three options are £195 Expedia, £135 + 8,750 Avios via BA or 34,900 Avios. The best deal here is £135 + 8,750 Avios. Taking the 34,900 Avios option means that you are ‘selling’ an extra 26,150 Avios back to BA for just £135. This is a bad deal, getting you just 0.5p each.
Should you book hotels with Avios?
Based on the hotel prices at ba.com, you get 0.50p per Avios when you book a hotel with them.
It is worth noting that the result is noticeably worse this year. For the last 4-5 years, when I have done the same analysis, it has been around 0.55p-0.56p per Avios. There has been a clear 10% devaluation in what you get per point.
But is 0.50p per Avios a good deal?
If you earn your Avios points from credit card spend, converting Tesco points etc, then you are unlikely to find 0.50p acceptable. Your Avios were not ‘free’ – you could have used a cashback credit card or redeemed for a different Tesco Clubcard offer – and you want to be getting nearer 1p per Avios when spending them. My ‘what is an Avios worth?’ article (click here) shows how 1p is easily achievable.
If, however, you earn all of your Avios from business travel then you have no ‘opportunity cost’ for your Avios. You may find a hotel redemption worthwhile if you are struggling to find suitable flights even if you know it isn’t the best possible deal.
Here is one final point to consider. Redeeming Avios for a chain hotel via ba.com, or paying for one via Expedia, means that you will not earn hotel points from your stay. You will also not receive any status benefits unless the hotel is feeling generous. You should bear this in mind when booking, especially if your status would otherwise get you free breakfast or an upgrade.
Want to learn more about how to maximise your Avios redemptions?
(Want to earn more Avios? Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)