Airline Miles Vs. Hotel Points: Which To Collect First?

I’ve been in Miles & Points for a long time, and it’s been a pleasure to be a part of Frugal Flyer for much of that journey.

When I speak about this hobby with family, friends, or new enthusiasts, the same question invariably arises: Should someone just getting started collecting miles and points turn their focus toward acquiring points in hotel loyalty programs, or is it better to prioritize airline miles?

Airline Miles Vs. Hotel Points: The Basics

The air miles vs hotel points question really cuts to the core philosophy of this hobby: how do you, as the consumer, get maximum value?

I’ll give you a short summary up front so we can explore this question together. If you’re going by the retail price, and so getting the maximum dollar value out of each point you redeem, then you should focus on airline miles. 

This is because you can use miles for international business class flights at fixed prices. For example, if you were to book ANA business class, you could receive a redemption valuation of up to 10 cents per point. There will still be lots of taxes and fees you’re on the hook for, though, as there are always out-of-pocket costs associated with award travel.

However, hotels have a different type of appeal: redemptions at hotels usually don’t require too much cash out of pocket (though there are exceptions at very exclusive resorts, or at resorts in North America that are still inexplicably allowed to levy bogus resort fees). 

Regardless of any fees, though, there are some hotels, such as the African safari experience of the JW Marriott Masai Mara in Kenya, that simply cannot be replaced with any other type of experience.

At the beginning of each priority section, whether for airlines or hotels, I’ll ask you some questions. If you agree with them, it’s probably best for you to focus on that category.

The Importance of Properly Managing Transferable Points Currencies

Before we continue further, I want to make a note of something: the best way to get points for either flights or hotels is typically via transferable points currencies, such as American Express Membership Rewards, both in its Canadian and American versions, RBC Avion Rewards, as well as US-only programs like Chase Ultimate Rewards and Capital One Miles. 

The points from each of these currencies can be transferred to a variety of airline and hotel partners, often at very favourable rates. While you can earn airline miles and hotel points from co-branded credit cards, it can be hard to earn at scale when compared to the opportunity of transferring points.

I need to be very clear on something right now: only ever make just-in-time transfers. Do not speculatively transfer points from one of these convertible currencies to a partner until you’re certain you’re going to book. While there are transfer bonuses that can run from time to time to give you even more value, you need to be certain that you can utilize every last point.

If you do choose to transfer points early and speculatively, you could potentially end up with points stranded in a situation where they can’t be redeemed, as there’s no award availability for the flights or hotels you wanted. This can then mean that the points devalue over time, or you need to use them for friends and family just to be rid of them (Frugal Flyer co-owner Josh did me a big solid this way with some orphaned Virgin Atlantic Flying Club miles). 

So remember: manage your transferable points currencies and only transfer them just before you’re ready to book!

When to Prioritize Collecting Airline Miles

I mentioned earlier I’d ask two questions at the start of each “Which should I prioritize?” section. When it comes to collecting airline miles:

1. Are you OK with points subsidizing your need to pay cash for flights, rather than mostly replacing it? 
2. Do you want to prioritize the comfort that comes from premium cabins?

If you answer “yes” to both of these questions, then you should definitely focus on acquiring airline miles. Do note you’re almost certainly going to be out of pocket for a variety of taxes and fees, and these can get quite hefty, particularly on airlines like British Airways.

Now, the first major reason to prioritize airline miles is simple: you can always use them to fly somewhere. In a moment, we’ll go into the mathematics of highest value redemptions, but let’s be real: airfare is costly. Almost everyone has a reason to fly at some point, whether it be for a Christmas vacation, a wedding, a funeral, or any other major life event that needs travel.

This means that airline miles are just easier to burn even if they’re sitting fallow. 

This takes me to point number two, and one that relates to my second question regarding how much you care about the comfort of each individual plane you hop on. Programs such as Air France/KLM Flying Blue, Air Canada Aeroplan, or British Airways Avios can give you the best value per individual mile you redeem. What do I mean by this? Let me show you.

Here’s an Aeroplan redemption on a long-haul business class flight on Swiss Air from Montreal to Prague via Zurich:

A cash price of $5,943? Ouch. On Aeroplan points, though?

Well, 70,000 points plus $147 in taxes and fees for that seems a lot more reasonable. This works out to over 8 cents per point (cpp). Not too shabby.

What about a flight for those with even loftier champagne tastes? Take a look at this Japan Airlines First Class flight from San Francisco to Tokyo:

$16,718 via an online travel agency of potentially dubious value? Or $19,723 when booked directly with JAL? That really hurts. But on Avios points?

103,000 Avios plus $202.40 in taxes. Granted, you have to book this flight a full 356 days in advance, but still, that’s a whopping ~18+ cents per point.

You’ll still be on the hook for the taxes and fees, and you need to keep your eyes peeled on long-haul premium cabin award availability, but for the value of each individual point, it’s hard to beat redemptions such as this. And, as always, you don’t have to book such cabins: there’s no shame in flying once a year to see grandma, no matter what certain Oscar the Grouch re-enactors may assert.

When to Prioritize Collecting Hotel Points

Alright, let me ask you another two questions:

1. Do you want to stay somewhere truly remarkable?
2. Do you want to spend as little out of pocket as possible on lodging?

It’s going to sound counterintuitive, but when it comes to using your points for hotels, you should prioritize points in programs such as World of Hyatt, Hilton Honors, or Marriott Bonvoy only if you are both OK with not focusing on airline miles, and answered yes to one of the last questions.

Maybe you think I’m crazy. Let me explain.

Hotels are an investment because, unlike airline miles, you may have no reason whatsoever to expend them. While you can always find someone to fly and visit, be they family or friends, hotel points are only useful if you have enough of them to stay at the properties in your intended destination. It’s harder to use hotel points if you’re going to crash with friends or are OK with paying out of pocket for lodgings. 

There are also economies of scale to consider. For a family of four, flight tickets will always have individual costs, whereas all four can potentially stay in the same hotel room. This makes not focusing on hotels a no-brainer for larger groups.

But, and it’s a big but: hotel points are amazing at two separate things. On the one hand, you have your redemptions at destinations that are truly inspiring and impossible to replicate. Not everyone can go to a luxury Maldives resort in their lifetime, but with a lot of points, you will be able to. You’ll still need to pay for the seaplane, but you’ll be getting an experience few others could afford. Let’s take a look.

With the Marriott Bonvoy benefit of “pay for four nights on points, stay for five”, you’re going to be able to reserve this luxury resort on a private island in the Maldives for only 288,000 Bonvoy points.

The cost in cash? $4,345 USD, or about six grand Canadian. Even considering the approximately $800 USD in seaplane fees for two adults, that’s about $6000 CAD less than the other guests you’ll be rubbing shoulders with are paying. While the value isn’t as high as airlines, the experience is something that few will get.

There is an opportunity cost to this, though: if you use points on luxury redemptions, it becomes a bit harder to save them for sweet spot redemptions. These are when you use your points to stay at hotels that might have very high cash costs, but a relatively low points price by comparison, meaning that you get to have high-class lodgings for $0 (or as close to it as you can manage) out of pocket.

I’ll use an example of a hotel I stayed at recently, the W São Paulo.

As we can see here, the price is a pretty staggering $538 USD per night, or about $3,700 CAD. The opportunity to redeem five nights for 179,000 Bonvoy gives us a cent per point value of above 2 cents per point. Because each night costs about 45,000 Bonvoy points, these sweet spot hotels are a great place to use free night certificates from products such as the American Express Marriott Bonvoy Card.

Because the best properties often cost the most points, I’d recommend prioritizing earning hotels for a specific purpose: to either go for the big, luxe redemption, or to try and use them for these better value-proposition redemptions. 

One unfortunate reality of the current hotel landscape is that large properties in major metropolitan areas in North America, Western Europe, and Japan are often very overpriced on both cash and points, unlike my Brazilian example.

On a final side note: many hotel points can be transferred to frequent flier programs, albeit at suboptimal rates. This means if you ever made a major error and find yourself sitting on too many, you can transfer them out.

What’s The Verdict on Airline Miles vs Hotel Points?

To sum up, I think that it’s generally better to prioritize gathering airline miles than it is to gather hotel points. However, this shouldn’t be your strategy if you really want to stay at a luxurious property or want to pay as little out of pocket for your room as possible.

None of this means that you should be married to only collecting hotel or airline points; what this does mean is that if you’re getting into the game, I’d recommend prioritizing your airline miles first, and then worrying about hotels a little later. You don’t have to have only one point currency; if you can find a way to earn large quantities of many, you’ll be golden in this hobby.

Finally, and I’d like to emphasize it once more: convertible points are the most valuable of all. Don’t transfer them to your program of choice until your finger is on the trigger and you’re ready to book!

Conclusion

To wrap up, I think that generally airlines provide a better value, and it’s always nice to come out of the other end of a 10+ hour flight feeling rested and fresh. On the other hand, it’s nice not to have to pay for hotels, and it’s even nicer to be able to treat your new spouse to a magical honeymoon, or your children to a once-in-a-lifetime resort.

Only you can determine whether to prioritize airline miles or hotel points more, but I hope that today’s article has helped show you why one might be preferable to the other, and to allow you to ask the questions that will help you determine what your specific, tailored travel needs are.