Airlines and hotels have frequent sales of miles and points. These offers try to lure customers with bonuses ranging anywhere from anywhere 30% to as high as 200% or even more. Usually, these sales have different tier so that the more points or miles you buy, the bigger your bonus. But are these sales ever worth it? The short answer is: almost always no. But let's look into the reasons why, and what you should consider the next time you see a points sale.
Why do loyalty programs have points sales?
Loyalty programs are extremely valuable for airline and hotel companies. Loyalty programs offer companies another method of earning revenue as companies sell their points to partners who in turn issue those points in exchange for certain consumer activity. The biggest–and perhaps most profitable–example here is of course co-branded credit cards. Card issuers pay huge sums of money for the right to issue a credit card that earns an airline's or hotel's points currency. Loyalty programs have become so valuable that American Airlines even put up its AAdvantage program as collateral for a government loan in 2020.
Another method of generating revenue through a loyalty program is offering points for sale. When a customer pays an airline for points, that airline generated revenue with minimal effort. The airline didn't even have to fly a plane to earn that money! The same goes for hotels, who can generate revenue from a customer without the customer ever walking into a hotel room. So even with huge bonuses to entice customers, airlines and hotels still earn a pretty penny from selling their points and miles in exchange for minimal effort.
Reasons not to buy points speculatively
Buying points without a specific redemption in mind (and availability for that redemption) exposes you to many risks. Perhaps the biggest risk is devaluation. Devaluations are a natural part of loyalty programs. Every so often, airlines increase the cost of award flights and hotels increase the cost of award nights. Just like inflation, devaluations increase the price tag for a redemption while your points balance remains the same. So the points you had to cover one night at a St. Regis now is barely enough for a Sheraton.
Another risk is simply the fact that airline and hotel products change and may no longer become available. If you buy Marriott points because you want to some day stay at the St. Regis Maldives and that hotel decides to leave the Marriott Bonvoy program, you'll be stuck with those Marriott points. Or that hotel may close for renovations when you're finally ready to book.
Also remember that our travel plans and preferences change, and so does our ability to actually travel. You may think you want to go to Southeast Asia next summer but then you learn about a cool destination in South America you want to see instead. If the airline or hotel program you bought points from doesn't serve South America as much, you're stuck without many good options. This is exactly why we value transferrable currencies so much more than airline or hotel points.
Bottom line: if any of the risks above materialize and cause your travel plans to change, you'll be stuck with points from a specific airline or hotel that you may no longer have use for.
So next time you see a big points sale, ask yourself what do you plan to do with those points. If your answer begins with “I could…”, then that sale isn't for you. If your answer instead begins with “I will…”, then buying those points could make sense. Just remember to also check for award availability.
So when does it make sense to buy points?
Buying points could make sense is when you have an immediate use for those points and you know you can use them right away. For example, say you want to fly to Europe in business class and Aeroplan launches a big sale. You found an award flight through Aeroplan that costs 70,000 miles. But then Aeroplan offers a big bonus on purchased miles that would effectively bring the cost of that same flight to $1,000. $1,000 for a business class flight to Europe certainly isn't a bad deal.
Another scenario is when you're just shy of having enough points for an award booking. If you just need a couple more thousand miles for that business class flight, it will likely be cheaper to buy the points than booking the flight with cash. Again, just make sure you see availability for the award you want before buying the points to top off your account.
Final Thoughts
Buying airline miles or hotel points without a specific redemption exposes you to many risks. Loyalty programs change (often through devaluation), hotel properties can close or switch companies, and airlines can change or cancel routes and the aircraft used on those routes. Also, our own ability to travel can change, and so can our preferences. On top of that, the pandemic showed us that anything involving travel can change quickly and drastically. All this change means risk for your points balances. So unless you can redeem those points right after purchase, we do not recommend buying points.
Have you ever purchased points? Did you have a specific redemption when you did it? Come share your thoughts in our Facebook group!
