How Do Hotel Points Work?

Have you ever wondered what it meant when you saw hotels marketing free nights and reward stays? Perhaps you've already signed up with a hotel rewards program for some free Wi-Fi, but you're not really sure what other things you can do with it. Maybe you're asking yourself, "What does it mean to earn hotel points?"

If any of these questions have been meandering through your mind, now's the time to figure things out. Let's take a look at how hotel points work.

Hotels are in the ever-competitive game to buy your business. They accomplish this through many means, including sales, high-quality rooms and offering excellent amenities. Another method? Hotel loyalty programs. These programs provide you with certain benefits for staying with the hotel, including earning hotel points, which act as a type of currency that you can spend within the hotel chain.

» Learn more: Best airline and hotel rewards loyalty programs this year

Like all reward programs, the value of each hotel point depends on the program. The criteria for valuing a hotel point varies, but generally, you'll want to consider:

• How easy it is to earn the hotel points.

• The simplicity of redeeming those points.

• How many points you'll need to redeem for a reward.

• The average value you'll get from each point when redeemed.

For example, NerdWallet values World of Hyatt points at 2.3 cents each, making them the most valuable hotel point around. Therefore a good rule of thumb is to always try and redeem your Hyatt points for at least 2.3 cents in value.

» Learn more: What are travel points worth and why do they matter?

You can get hotel points in various ways, but the most common strategies are staying at hotels or spending on the right credit cards.

Earn by staying

Generally, you'll earn hotel points based on how much you spend at a hotel. Standard charges that will earn you points include room rates and spending at hotel restaurants and bars.

Earning rates vary across brands and are typically affected by your status level in a hotel rewards program (if any) and the credit cards used in the booking (more on this below).

Earn with co-branded credit cards

You can also earn hotel points by using a co-branded hotel credit card. These cards will earn rewards based on your purchases.

You can get co-branded credit cards and earn hotel points on your spending with popular chains such as Hyatt, Hilton, Marriott, IHG, Wyndham and Choice.

If you want to build loyalty with a specific brand — perhaps to simplify your hotel searches or to work towards earning elite status — adding a hotel credit card to your wallet is a decisive step in that direction.

» Learn more: The best travel card sign-up bonuses right now

Earn through transferable point currencies

Flexible point currencies are also an excellent way to add to your balance. Rather than being tied to an individual brand, these points — also called transferable currencies — are designed to transfer to several hotels (or airlines) for redemptions. These are often run by financial institutions like Chase or Capital One and are associated with specific credit cards.

Points earned through these types of credit cards can be transferred to multiple hotel programs for reward redemptions. Point value varies by program, but you can transfer points with:

• American Express Membership Rewards.

• Chase Ultimate Rewards®.

• Capital One miles.

• Citi ThankYou points.

Earn by shopping

Have you heard of shopping portals? These handy websites track your online shopping, and in return, they reward you with points.

However, some hotels also offer their own shopping portals. Sites like Wyndham Rewards Shopping and the Choice Privileges Online Mall will award you points based on your online purchases.

Earn by dining

Good news for those who like eating out — you can earn hotel points simply by registering with a rewards program and using a registered credit card to pay for your meals. Marriott has an option for this, called Eat Around Town.

By simply adding your credit card to your account, you can earn points while dining at more than 11,000 restaurants across the country.

Buy hotels points

Hotel loyalty programs also offer the option to buy points. This is generally not a good deal, and the amount you can purchase each year tends to be limited. However, there are certain situations in which buying points make sense.

If you need just a few points to top off your account for reward redemption, purchasing points can be an easy way to acquire them. Hotel chains will also often have sales where you can buy points with a bonus or at a discount.

» Learn more: A beginner's guide to traveling on points and miles

Hotel points can be redeemed for several rewards, but a deeply discounted room is one of the most common. Hotel loyalty programs that will allow you to redeem award stays using your hotel points instead of cash include Marriott, Hyatt, Hilton, IHG, Choice and Wyndham.

It's best to familiarize yourself with the award booking process at your brand of choice. Though it will be roughly similar across hotel chains, there will be opportunities for optimizing based on your brand loyalty.

Here's a handy list of how to redeem hotel points, broken down by brand:

• Best Ways to Redeem Choice Privileges Points

• Your Guide to Booking Award Nights With Hilton Honors

• How to Redeem Your IHG Points

• How to Redeem Marriott Bonvoy Points

• How to Get the Most Value From World of Hyatt Points

• The Guide to Radisson Rewards Award Chart

• The Complete Guide to Redeeming Wyndham Points

You can also spend your hotel points in other ways, like transferring them over to partner airlines or redeeming them for unique experiences. However, you'll want to be careful with these redemptions — they are sometimes not a great value for your points.

We mentioned above that NerdWallet highly values Hyatt points because each point is generally redeemed for the most value.

These figures are based on our most recent deep-dive analysis of actual hotel redemptions.

However, indeed the most valuable point is the one you can spend. Although a lucrative program, Hyatt has a smaller properties portfolio than competitors such as Marriott and Hilton. Therefore, if your travels take you somewhere without a Hyatt hotel, all the points in the world won't do you any good.

This is something to consider when you're looking at earning hotel points. Although all programs are free to join, sticking with one program allows you to pool your rewards and benefits in one place.

» Learn more: How to choose the best hotel loyalty program for you

There are tons of hotel credit cards from which to choose, and the right one for you won't necessarily be the same for everyone. Ultimately, a smart money move is to pick a card that aligns with your brand loyalty.

Hilton Honors American Express Surpass® Card

For most people, middle-of-the-road hotel credit cards will offer the best value for an amenable annual fee. This includes cards such as the Hilton Honors American Express Surpass® Card.

The current welcome bonus is: Earn 130,000 Hilton Honors Bonus Points after you spend $3,000 in purchases on the Hilton Honors American Express Surpass® Card in your first 6 months of Card Membership. Terms Apply.

This hotel credit card charges a $150 annual fee but gives you Hilton Honors™ Gold Status and 12 points per dollar spent on Hilton purchases. Terms apply.

World of Hyatt Credit Card

The World of Hyatt Credit Card is another great option, offering Discoverist elite status and a free night each year for its $95 annual fee.

The card is currently offering new members a sign-up bonus: Earn 30,000 Bonus Points after you spend $3,000 on purchases in your first 3 months from account opening. Plus, up to 30,000 More Bonus Points by earning 2 Bonus Points total per $1 spent in the first 6 months from account opening on purchases that normally earn 1 Bonus Point, on up to $15,000 spent.

» Learn more: Best hotel credit cards today

Earning points is as easy as signing up for a hotel rewards program. It's completely free, and even if you don't travel often, the ability to earn points in a myriad of ways means you'll be on your way to reward stays in no time.