One United Mile Equals 0.87 Ultimate Rewards Points

UPDATE: Since there appears to be some confusion about my intentions with this post, allow me to clarify that it is not meant primarily as a criticism of Chase or Ultimate Rewards. I find their advertising language amusing, but I find lots of things amusing and it’s only meant as a personal comment by way of introduction to the main topic: the results of the poll. I could edit out the first half of the post, which is mostly commentary and opinion, and it would not change the ending, which is that the average respondent to my poll would accept a discount if were possible to redeem United miles in reverse for Ultimate Rewards points.

So, I apologize for (1) the initial mistake with the headline, since corrected, and (2) my apparent mistake in including an opinion on Ultimate Rewards’ choice of marketing language. In the interest of transparency I’m not trying to hide those mistakes. But if you can over look those, the rest of the post is quite harmless. It provides the results of a poll, helps assign a specific number to the premium Ultimate Rewards points ought to receive for their flexibility, and reminds readers that one should think carefully about which transfer partner provides the most utility for their Ultimate Rewards points. END UPDATE

A little over a month ago I was debating with myself — and some readers — on the new value of Ultimate Rewards points after several devaluations by their airline and hotel transfer partners. You guys raised a lot of good points, and I’m going to revisit the question, but today is just a fun little math exercise.

I find it hilarious that Chase advertises its Ultimate Rewards program as letting you transfer points at “full 1:1 value.” How much is a point worth? One point. Well, how much is that one point worth? One point. The only thing worse than marketing spin is meaningless marketing spin. I couldn’t care less if I get one point for another point. What I care is what I can do with my points.

Ultimate Rewards ad

And this is where things get tricky. You can transfer Ultimate Rewards to lots of different programs, but each of those programs has, in turn, loyalty currencies of different value. 100,000 points transferred to United Airlines will get you a round-trip business class ticket to Europe on Lufthansa — if you book today. Or you could transfer the same 100,000 points to Hyatt and get 5 free nights at a Category 5 hotel. After February 1st you’ll have to transfer 140,000 points for the same award flight. But you can still get 5 free nights at Hyatt for just 100,000 points.

Did the value of Ultimate Rewards points go down? Stay the same? It clearly depends a lot on what you want to do with them. I don’t even have to transfer them if I don’t want to. Ultimate Rewards points by themselves are worth 1.2 cents each for a flight booked through their travel agency.

So, points do not transfer at equal value, regardless of what Chase says. There are generally two ways of valuing Ultimate Rewards points. The first is to assign them the value of the most valuable transfer partner. If a Hyatt point is worth 1.5 cents and a United mile is worth 2 cents, then I’d say an Ultimate Rewards point is worth 2 cents. Transferring points to United actually increases their value. The second way is to assign a slight premium, say 2.2 cents, because Ultimate Rewards points are flexible. I can’t turn a United mile into a Hyatt point, but I can transfer my Ultimate Rewards points wherever they have the most utility.

I am in the first camp. I value them pretty much the same as the most valuable transfer partner in most cases. However, given a choice I will obviously choose Ultimate Rewards points. That flexibility has value. It just doesn’t have very much for me because I only ever transfer to Hyatt or United and already have lots of both.

So I set up a question for my readers: How many United Airlines miles would you exchange for exactly 1,000 Ultimate Rewards points? If you said 1,000, it means you assign equal value. If you said 1,001 (like me) it’s probably because you assign equal value but are willing to part with a symbolic mile to gain the extra utility of Ultimate Rewards points. And if you said 1,100 or more, it’s because you believe that United miles are discounted relative to Ultimate Rewards points — you would give up United miles for the flexibility of Ultimate Rewards points, even if that flexibility means you might end up transferring them back to United some time in the future (and ending up with fewer miles than you started with).

I collected over 300 votes. Here’s how they were distributed:

UA Miles for UR Points

As I suspected, a plurality said 1,000 (equal value), a few would offer the symbolic 1,001, and another large portion offered 1,100 (a slight discount). But a not insignificant number were willing to depreciate their United miles by 33% by offering 1,500 or more for only 1,000 Ultimate Rewards points. “Depreciation” assumes you’ll be converting them back to United eventually. You may have tons of United miles and want to do something else with them.

I went ahead and calculated a weighted average of these responses to determine the value of an Ultimate Rewards point with respect to United miles. Because you can’t calculate a qualitative answer like “more,” I lumped this group in with “1,500.” The result is 1,146 miles. Turn it around the other way, and 1 Ultimate Rewards point is worth only 0.87 United miles 1 United mile is worth only 0.87 Ultimate Rewards points in the eyes of the average person polled. Hardly a 1:1 exchange.

Of course, many factors go into determining the value of miles and points. A fixed-value rewards program like Southwest Rapid Rewards tells you X number of points times Y valuation = Z dollars toward your next ticket. Zone- and category-based awards used by most airlines and hotels say you can fly a certain route or stay at a certain hotel for X number of points, but the actual cost of that flight or hotel room may vary widely. And almost any time you book award travel, you are giving up some flexibility and sacrificing any additional points or miles you could have earned on a booking paid with cash.

Week in Review: January 5-11
Bitcoin? PointsHound Offers a New Kind of "Cash Back"
  • Food Wine and Miles

    I think you’ve got that flipped. If it takes 1146 UA miles to be “equivalent” to 1000 UR points, then each UA mile is worth a little less than each UR point. 1 UR point is equivalent to 1.146 UA miles; ~0.87 UR points equivalent to 1 UA mile. No?

    • Kris


      • Scottrick

        Yup. My proofreader is no mathematician.

  • Kris

    Note that “1,000 Ultimate Rewards points always equal 1,000 miles/points toward any partner program.” There is nothing tricky about it, it is quite simple. While the actual analysis of what 1UR equates to in MP miles may have *some* basis, using it to argue that 1:1 value isn’t true is completely flawed.

    • Scottrick

      It’s not tricky to transfer points. And I’m not saying that the marketing language is tricky.

      I’m pointing out that the marketing language implies the points have equal value whatever you do with them (“full … value” however they choose to define that value), and that’s not quite true. I bet you they chose those words very carefully to be technically correct and satisfy lawyers who think like you.

    • Scottrick

      To clarify, my complaint is that “full 1:1 value” overlooks what that value represents when it changes from one point to another point. One could also argue that you can transfer one USD to one HKD at “full 1:1 value”. You are still getting 1 dollar for 1 dollar, but those dollars are worth very different things.

      If they just said “transfer points at a 1:1 ratio” I’d have no complaint. Words like “full” and “value” have additional meaning, both quantitative and qualitative, which don’t always agree.

  • disqust101

    If someone would trade me 1000 URs for 1100 UA (let alone 1:1), I’d take that deal in a heartbeat.

    • Scottrick

      I made the same offer and created the survey after no one could convincingly argue how much more a UR point was worth. (Not just “more.” I wanted a number.) Not everyone’s actions match what they say…

  • Piet

    These posts are making me stop reading your blog. Seriously, I see absolutely nothing incorrect about Chase’s marketing language. Often, marketing language is misleading – in this case it is not. It is exceptionally correct marketing language in my opinion. Why are you having such difficulty with simple math/economics? Yes, UR points are worth more than other points because of their flexibility. It gives you an option, and an option cannot have negative value, only zero or positive. And to have zero value it would have to be an option that under no circumstance you would exercise it. In this case, as you often point out, you transfer UR points to different programs all the time, so the option has value. How much? Look up the Black-Scholes equation and figure it out!

    • Scottrick

      I got the headline switched around and fixed it as soon as I could, but other than that, I don’t think the math is horribly incorrect. Looking past the headline, it’s clear that everything else in my post said that there is value to transferring Ultimate Rewards points to more than one program. How much? It depends on the person’s individual circumstances, so I ran a poll to find an average number.

  • hansmast

    1:1 advertising is not meaningless marketing spin. Try transferring flexible points to HHonors, LAN Kilometers, or Virgin America Elevate. Shoot, just transfer SPG to about anywhere! That’s not even touching upon various flex points that are worth 1 cpm, 1.33 cpm, 1.25 cpm, 40k = up to $400, etc, etc. It’s a confusing landscape of value out there (as you so ironically pointed out in this very post) and the simplicity of 1:1 is attractive.

    • Scottrick

      The simplicity of 1:1 is attractive. But it doesn’t mean you’re getting the same value wherever you transfer the points.

      • LarryInNYC

        I think you’re making a mountain out of nothing.

        The rate at which UR points transfer to various programs is an important contractual issue between Chase and their customers. Not all similar programs use a 1 to 1 rate for all programs you can transfer into. The fact that Chase states this outright makes it clear what you’ll get when you transfer their points. The 1 to 1 ratio isn’t particularly _interesting_ (since it’s what one would reasonably assume would happen), but it is important.

        Believe me, if tomorrow Chase were to attempt to change the transfer ratio to 3:2 you wouldn’t be looking at the publicized 1:1 ratio as meaningless marketing speak.

        I don’t think there’s any intent on their part to establish some kind of value comparison between UR points, Hyatt points, United miles, and so on. Those valuations are very subjective. Once the points have left the UR program, they have no meaning in comparison to UR points. The comparative “value” of programs in different points is a topic for the mileage obsessed, not for the average Chase cardholder.

        • Scottrick

          The post really isn’t about Chase. it’s just an introduction to the results of the poll.

  • omatravel

    I just reread your article and the comments. I can understand the confusing part because if you take everything out you get “transfer at full value” where obviously the $ value is more when transferred from one program to the next. For those of us who are compelled/obsessed to calculate the value per point of various programs, we know that statement to be incorrect.

    For the masses out there who simply look at it as “I need 1000 UAL miles so I can transfer 1000 UR points” that is full value compared to transferring them at a 3:2 ratio or something else.. In that context there’s nothing wrong with the marketing statement.

  • McT

    Scott – seems like you got some interesting feedback from this post. I for one think it is a good one and thought provoking. The 1:1 in the advertising is true but in this case it doesn’t work in both directions — ie it fails the transitive property. However, just as in finance where “options” have inherent value one would have to believe a discount would be required to compensate for that transferability. One thing that wasn’t mentioned is that IMO UR are easier to obtain that UA miles and thus one could argue that would then offset any option value (discount). The size of your UA (or UR) balances should never come into the analysis [in theory] but of course in the real world we value less the more we have.

    • Scottrick

      Thought provoking is all I’m going for. I like to let my mind wander, and sometimes I write it down.

      If Ultimate Rewards points are easier to obtain, that would alter their cost but not their utility. Whether that’s relevant depends on if you choose to use cost-based pricing or price-based costing. (In other words, do you assign value based on how what it took to obtain it in the first place, or based on what you can do with it? Anyone can buy IHG Rewards points for 0.7 cents each, but some people will redeem them for more expensive award nights than others.)

  • Karl

    Scott, in your survey you have to ask the inverse question as well, i.e. how many UR would you exchange for united miles. People are inherently biased on what they own vs. what they can get ( Then you can take the average of the responses to arrive at a value, what would be a decent valuation.

    Nevertheless, I hate all this talk about valuation. Inflexible and in-exchangable goods’ values depend highly on their volume. Here’s a simple question to your readers, would you buy 100k UR points for $1000? Would you buy 10M UR points for $100k?

    • Scottrick

      I’m not sure the inverse question has the same meaning. I’m trying to set up a hypothetical situation where UA miles can be exchanged for Ultimate Rewards points, and other than removing the 1,000-point intervals, I’m leaving the other rules intact. That means you can still redeem 1,000 Ultimate Rewards points for 1,000 United miles, and no one would have an incentive to pay more than 1,000 UR. You lose flexibility AND value. My poll asks the reverse: Would you be willing to give up some value in exchange for flexibility (in effect, putting a price on that flexibility)?

      I’m very familiar with loss aversion since despite my obvious lack of economic training, I am trained as a psychologist. Your point with respect to the final question is well put, though maybe not as you intended.

      As I said, I don’t assign much of a premium to Ultimate Rewards points because I already have many United miles and Hyatt points, enough so that I don’t need such flexibility that a few tens of thousands provide. Similarly, while I might pay $1,000 for 100K UR points, if I had $100,000, then I might not have much need for Ultimate Rewards points at all since I could just buy a ticket without worrying about award space.

  • Dad

    I propose a variation of your experiment, although it’s likely impractical (like may experiment proposals). Limit your sample to people who have lots of UA miles, but want to go on a non-UA trip. How many UA miles would they give to get x AS (for example) miles when they want to take an AS trip? That leaves UR out of it in a way, but that’s the value of the UR points: They can be transferred when you need them to where you need them.