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American's New Hotel, Car Awards Offer Solid Value

Beginning today, members of American's AAdvantage program can redeem their miles, or a combination of miles and cash, for hotel stays and car rentals.

Non-flight awards aren't new. Since the beginning of frequent flyer programs, in 1981, they've regularly appeared in the airlines' rewards catalogs, only to disappear, and then reappear yet again.

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They've made a comeback in recent years, due in no small part to the airlines' ever-increasing difficulties in meeting the demand for free seats. Even as airlines have reduced the number of flights, the number of outstanding frequent flyer miles has soared. It's an unsustainable disconnect, and alternative awards are seen as one way to bring miles and awards back into better balance.

Hotel and rental car awards have been on offer from Delta and United for some time. So American isn't breaking any new ground here. In fact, the award-booking application American uses for hotels and car rentals looks to be a rebranded version of the same app already used by both United and Delta.

AAdvantage members don't care whether American was the first or last to expand its award catalog. What's important long term is the value proposition—the return on investment when AAdvantage miles are redeemed for hotel nights and car rentals.

Value Benchmarks

There are at least two ways of assessing that value: relative to the value of miles redeemed for free flights; and relative to the value delivered by Delta and United miles.

Today, by my calculation, the average value of a frequent flyer mile is approximately 1.2 cents. And, based on my own random sampling of test bookings, the value of miles redeemed for hotel nights is around half a cent using Delta miles and between three-quarters of a cent and a penny using United miles.

How does the value of AAdvantage miles stack up against those two benchmarks?

I used the new American app to test-book stays at three hotels—the Millennium Biltmore Los Angeles, the Hilton Times Square, and the Marriott Chicago Downtown—and compared the prices in miles to the rates quoted for the same dates on Expedia. The same night at the Biltmore would cost either $119 or 9,600 AAdvantage miles, resulting in a per-mile value of 1.24 cents. And for nights at the Hilton and Marriott, the per-mile values were 1.1 cents and 1.3 cents, respectively. (At least through the end of the year, AAdvantage elite members get discounts on the normal mileage rates, making their miles even more valuable.)

So, based on my admittedly limited sampling, using AAdvantage miles for hotel stays yielded almost exactly the same value as is received, on average, when miles are redeemed for free flights.

And compared to the value delivered by Delta and United miles for hotel stays, American miles offer significantly better value—more than twice the value in the case of Delta's miles.

In short, where some airlines' non-flight awards are clearly token gestures, offering nominal alternatives but little compelling value, American's new hotel awards offer solid value.

This is a real win for AAdvantage members.

Reader Reality Check

Is this an award option you would consider using?

How does this affect your view of American's AAdvantage program?

This article originally appeared on FrequentFlier.com.

(Editor's Note: SmarterTravel is a member of the TripAdvisor Media Network, an operating company of Expedia, Inc. Expedia, Inc. also owns Expedia.com.)

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