Home Points & Miles Why Looking At Cents Per Point (CPP) Is A Horrible Way To Value Your Award Points

Why Looking At Cents Per Point (CPP) Is A Horrible Way To Value Your Award Points

by joeheg

Many people who collect miles and points to book “free travel” have a desire to put a value on each “currency.” Several websites publish guides listing these values and announce updates when a currency changes value due to a change in the loyalty program. These guides provide those who are just starting an idea of if they are getting a good value for points when making an award redemption.

I’m all for this because everyone needs a starting place. There’s no market where you can look up what a point in Delta SkyMiles, Alaksa Mileage Plan or Hilton Honors is worth. The award programs have made it more difficult to determine value since they can change an award’s cost whenever they want.

The universally accepted valuation is Cents Per Point or CPP. It’s an easy calculation where you take the cost of a travel reservation (in cents) and divide that by the number of award points required to make the same reservation. If a cash booking costs $100 or 10,000 points, you’d be getting a value of 1 CPP. $100 x 100 cents/dollar /10,000 points.

The issue I have with this points valuation method is that it doesn’t take into account if the cash price of your award is artificially inflated.

For example, we stayed in New York City over Thanksgiving in 2018 and we got a value of 2.25 CPP for our Marriott Bonvoy points. That’s because the hotel we were staying at was charging between $499 to $699 a night for the duration of our stay. If I didn’t have points, would I have paid that much for a room at a Residence Inn? Probably not.

Since I was able to get this value for my points for one reservation, do I expect to get this value for every Marriott Bonvoy redemption? Of course not, but it was nice to know I saved a bunch of money by using points.

I was reminded of this constraint of valuing points when booking our flights home from Japan. As I wrote in this post, we had several choices for flights at differing point values.

A non-stop business class ticket from Osaka to Los Angeles would have cost 60,000 American AAdvantage Miles or $3,765.

Using a simple CPP calculation, each American mile would be worth 6.275 CPP.

If we chose to fly on Asiana from Osaka to Seoul to Los Angeles in Business Class, we’d have to pay $2,397 or 88,000 United MileagePlus Miles.

That’s only a value of 2.72 CPP and might not even seem worthwhile to redeem points for the flight.

However, the opposite is true for a flight on ANA First Class from Osaka to Tokyo to San Francisco.

With a cost of $12,741 or 121,000 United miles, this redemption is worth 10.5 CPP. This is the type of redemption you read about on other sites that claim an 80,000 point sign-up bonus is worth up to $8,000 in airfare. It’s not a lie. If you find a hyper-expensive First Class fare, you can get that value for the points.

However, would you ever pay $12,000+ for a single flight? If you would, then I doubt that you’re spending time reading websites about how to earn points with your credit card spending.

Do I think any of these options are “wrong?” No, I don’t. It’s up to you to figure out what to do with your points. All a website can do is guide you and even that is often relative.

Full disclosure, I paid 121,000 points each for two First Class tickets on ANA. There were several reasons behind my decision to spend that many points on a flight, but the fact I’d be getting the best CPP value for that flight wasn’t one of them.  In fact, if all things were equal I would have booked the non-stop from Osaka to LAX for 60,000 AAdvantage points.

This situation is one of the motivations I had to start the website and why its name is Your Mileage May Vary. It didn’t take me very long to realize that what I wanted from travel wasn’t always the same as what I was reading on popular websites.

Use your rewards points in whatever way you want. Someone who used to spend 200 nights a year in hotels pre-COVID-19 will have a different idea of what makes a good redemption from someone trying to maximize every dime they spend on a credit card to have enough points for one flight.

If you’re happy with how you used your points, then it was a good redemption.

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This post first appeared on Your Mileage May Vary

6 comments

Glenn (The Military Frequent Flyer) January 14, 2021 - 7:16 pm

Comparing the value to what you would pay is a false argument that I see all the time. The value is what you are getting for “free” that someone else would pay that much for. In your example, other people did pay that much for that hotel room, but you did not therefore that price was the value you received for your points.

I mean there are many people in this hobby who would just sit at home if they didn’t get free travel. What is the value of saving that money and dying without the experiences you receive from points and miles?

Reply
Gilbert January 15, 2021 - 4:46 am

Great article. I think too little attention is paid to the fact that if you weren’t willing to pay in the first place, you can’t claim something as savings, but rather an opportunity.

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joeheg January 15, 2021 - 10:48 pm

Thanks. Every once in a while I have to “Get Real” about travel awards. I love your comparison of savings vs. opportunity.

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Making Kids Do Hard Things While Traveling, Do Citi ThankYou Points Suck and More - Miles For Family January 15, 2021 - 10:10 am

[…] Looking at CPP Is a Horrible Way to Value Your Award Points: This is a thoughtful post on Your Mileage May Vary about how to look at the value of your miles and points. Some hobbyists place a lot of emphasis on […]

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Clyn6 January 15, 2021 - 1:41 pm

Great Article! Thank you for posting this. I often get bashed on travel sites because I do not earn a high income, so I can’t earn points nearly as quickly as some people. I am thrilled to have enough money for a flight to Florida in the winter. There are a lot of people that work a public service type job like myself that can still get great benefits from travel hacking, it just takes us longer to get there. And some of us would rather take 2 or 3 flights in economy that one 1st class flight to halfway across the world. I had not flown anywhere for a vacation for 10 years before starting this hobby. I am incredibly grateful I have found this hobby and for all the wonderful tips and suggestions I have gathered on travel blogs. I am proud of the redemptions I have been able to take by using points. What is valuable and enjoyable to me may be quite different than someone else. That is perfectly OK, there is no need to belittle someone for having different goals and priorities than yourself. I read your comment rules and am very happy you are excluding the hateful\spiteful comments. It’s more work for you, but it sure keeps this a more enjoyable experience. I found your blog from a link from “Miles for Family”.

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footballfan412 January 15, 2021 - 4:10 pm

Thank you for this. I burned off my last United points by buying a flight to the east coast to see a good friend I haven’t seen in years, and then burning the remaining points on my best friends wedding in California.

I had a BLAST on both trips.

Personally, I think I got 50 billion CCP for my miles.

But that’s just me.

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