What is Award Travel
Almost all airlines and hotels have loyalty programs that allow customers to accumulate points or miles. Award travel is redeeming these points and miles for free flights or hotel stays. For example MileagePlan is the loyalty program of Alaska Airlines and one of my favorite loyalty programs! You can use Alaska miles to book flights on their own aircraft.
But if the airline or hotel has partners, you can also book partner or same alliance partners with their miles! In the case of Alaska Airlines, which is part of the the OneWorld Alliance, we can book partner airlines like Japan Airlines.
What’s so great about it
Well why should I care about some measly points? The real magic of this is that with the right strategies, you can redeem these points and miles for insane value. We’re talking about 5 star hotels costing up to $1000 a night like the Park Hyatt Tokyo or international first class flights costing up to $20,000 like Emirates First Class or Singapore Airlines Suites all for “free” using these points or miles.
Wait…but wouldn’t it take me forever to even have enough points to even book one of these amazing luxuries? The amazing thing is that the answer is a resounding no! If you stick around, I’ll show you just how attainable these dreamlike experiences can be.
How to calculate value
Before you get too excited and hastily redeem your points or miles for any award, you need to understand how to calculate what a “good” redemption is. The standard way of calculating value is by using cents per point (CPP). The baseline value is 1 CPP so 1000 points would equal $10, 10,000 points would equal $100 etc. The way we calculate CPP is by taking the cash price of the award we want and dividing it by the number of points it would take to book that same award.
For example, if my flight in cash costs $500 and costs 25,000 points, the CPP we would get on this redemption is 0.02 or 2 CPP. As a good rule of thumb, anything greater than 1.5 CPP is a good value redemption. In most situations you should be hesitant of booking anything <1 CPP and consider using cash instead. Obviously there are still some caveats to this as well.
It’s important to remember that unredeemed points have no value. So if you get too hung up on trying to get that “perfect” redemption with max value but never book anything, you have gotten no value from those points. Or on the flip side, even if you get a “suboptimal” booking, you have still redeemed a “free” award and gotten value out of it.
There is a fine balance between these two sides which is why the motto is always earn and burn. Points and miles constantly get devalued over time. For example, an award booking that costs 50,000 miles may increase to costing 65,000 in 3 years. If possible, you should always redeem your miles as fast as possible if you can so that you aren’t affected by these devaluations.
Value also means different things to different people. There are folks who would prefer using their points to get more flights in economy while some folks would rather have fewer flights but in more premium cabins like business or first. There’s no “right” answer here and it all comes down to the individual and what their goals are. For the purposes of this blog, we will be primarily focusing on premium cabin redemptions like business class and first class.
