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BIG NEWS: Marriott Bonvoy is introducing dynamic award pricing

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Marrriott Bonvoy came out with a lot of announcements yesterday, all of which are important. We have split them into two articles – click here to read about how your Marriott Bonvoy status and any outstanding vouchers will be treated.

The really big news is here. Marriott is joining Hilton and IHG in scrapping its reward chart in favour of what it is calling ‘Flexible Point Redemption Rates’.

The change means that redemption pricing will now be driven by the cash cost each night. Fixed peak and off-peak pricing has been scrapped, effectively eliminating sweet spots where the cash price is high but the cost of a redemption is capped.

Marriott Bonvoy is introducing dynamic award pricing

In many ways it was just a matter of time before Marriott Bonvoy followed Hilton Honors and IHG Rewards, which have switched over to the pricing method in the past three years.

There are pros and cons to this approach but, if done badly (there is no sign that Marriott is doing it well) it signals the end of ‘aspirational’ redemptions.

In truth, IHG doesn’t have many ‘aspirational’ hotels so their move to revenue-based redemptions was less of an issue. Marriott has a huge luxury portfolio and this could get messy.

How will Marriott’s flexible pricing work?

To recap, here is the current Marriott Bonvoy award chart, which is still valid until March 2022:

Marriott Bonvoy Award chart

Marriott Bonvoy is phasing in the new pricing over the next two years.

Stage 1:

In March 2022, the transition to flexible pricing will begin. The existing award chart will be retired.

For stays during 2022, almost all hotels (97% apparently) will offer reward pricing within their current price bands.

For example, Category 8 hotels currently cost either 70,000 or 85,000 or 100,000 points per night. For bookings made from March 2022, the price will – in 97% of cases – be somewhere between 70,000 and 100,000 points.

The net result should be modest for most people.

Stage 2:

From 2023, reward pricing will vary even further.

The exact wording we were given is:

“For stays in 2023, members can expect to see rates that will be both above and below a hotel’s 2022 range.”

There will no longer be a maximum redemption price – prices are not capped – and will “closely follow” the cash price.

It isn’t clear if this pricing will come into effect immediately in March 2022 for stays from 1st January 2023, or if it is something that will begin to appear later in 2022.

Marriott Bonvoy is introducing dynamic award pricing

Let’s take St Regis New York, above, as an example of how things could go. We tend to value a Marriott Bonvoy point at 0.5p so let’s assume this rate remains.

Taking 11th May 2022 as a random example, a room costs 100,000 points as a Category 8. For cash, it is $1,361.

Assuming 0.5p per point, we can expect the room to increase to around 200,000 points.

What are the benefits of the new Marriott Bonvoy reward pricing?

Marriott is claiming that the move to dynamic pricing will increase reward availability:

“Flexible point redemption rates will mean that more rooms overall will be available for redemption stays because our hotels will be able to better manage room inventory.”

It is not clear, exactly, how or why this would work.

Marriott does not pay the hotel a fixed fee for each redemption. Instead, the money a hotel receives is dependent on how busy it is.

If the hotel is empty then Marriott will pay the hotel just enough to cover the costs of your stay – usually $25 to $150 depending on brand. It is literally meant to cover the cost of cleaning your room, bathroom amenities etc.

If the hotel is operating at a high capacity then Marriott will pay a much higher amount – closer to the cash rate during your stay – as you could be displacing a full-rate customer.

This model means that the hotel is fairly compensated during busier periods – when it could sell a room for cash – whilst also increasing occupancy during its quieter periods when it can up-sell you at its restaurant or bar.

Unless Marriott is going to pay the hotels more money for redemption bookings when they are not totally full, there is no reason to expect increased reward availability.

Marriott Bonvoy is introducing dynamic award pricing

What is the downside of the new Marriott Bonvoy reward pricing?

There is a danger here that Marriott moves to an Accor-style model where each Bonvoy point has a fixed, immovable value. This would be a mistake, as it removes the ‘gamification’ element of the loyalty scheme and any potential sweet spots.

A key part of all loyalty schemes is the feeling that you have ‘beaten the system’ and found a high-value redemption. Giving each point a fixed cash value (eg. 0.5p) would remove this element and make Marriott Bonvoy a bit, well, boring.

You would get the same value for your points whether you are redeeming at dull hotel in Watford or St Regis Mardavall in Mallorca (review here, picture above). More importantly, there would be no incentive to save for bigger and better redemptions so you would have less of a reason to stay loyal to Marriott.

Accor and Nectar suffer from this. If your points balance doesn’t get proportionately more valuable the bigger it gets, there is no point in keeping it high. Accor’s recent push into high value ‘experiences’ redemptions is a way of encouraging people to build up a balance rather than redeem it ASAP.

(The airlines have this model cracked. You could redeem 9,500 Avios for an off-peak return to Amsterdam in Economy, but most Avios collectors know that it makes more sense to hold on. Wait for a few years and take an 80,000 Avios off-peak flat bed business class ticket to Dubai instead.)

The changes are likely to negatively affect the top hotels, and it’s hard to see how prices won’t go up more often than not. This is particularly true during peak periods when the hotel is likely to be busier and the cash rates significantly higher.

When Hilton went down this route, it played it smart. It retained the caps on reward pricing. You know, for example, that Conrad New York Downtown will never be more than 95,000 Hilton Honors points per night even on the most expensive cash night of the year.

On quiet nights, however, redemption prices fall. This allows people who do want to ‘redeem as they go’ to always be able to cash out for a fair, if not outstanding, valuation.

Is Marriott smart enought to take this route? Let’s see. It could follow IHG Rewards, where you can now see Holiday Inn Express properties selling for over 100,000 points per night on peak nights.

Conclusion

Unfortunately, yesterday’s announcement gave no sign at all that Bonvoy understands the value of keeping a cap on the redemption cost of each hotel.

There are, however, two things which may conspire to keep it ‘honest’.

The first is OTA reward schemes. For example, Hotels.com Rewards gives you a 10% rebate on the ex-tax cost of your stay. If Bonvoy points are seen to have less value than this, a guest with no status will start to book via third party channels where hotels pay commission rates of 20%+.

The second issue is the transfer rate from Marriott Bonvoy to frequent flyer schemes. This is 3:1 or, if you convert in chunks of 60,000 Bonvoy points, 12:5. If you value an Avios at 1p, it implicitly values a Bonvoy point at 0.42p. If you can’t get this value from a room redemption, members will start clearing out their balances into airlines – and this is a real cash cost to Marriott. Of course, it could also devalue the airline conversion rate ….

We will be returning to this topic many times in the coming months I’m sure. More importantly, in the short term, is Marriott’s other news about status extensions which you can read here.


How to earn Marriott Bonvoy points and status from UK credit cards

How to earn Marriott Bonvoy points and status from UK credit cards (November 2021)

There are various ways of earning Marriott Bonvoy points from UK credit cards.  Many cards also have generous sign-up bonuses.

The official Marriott Bonvoy American Express card usually comes with 20,000 points for signing up, 2 points for every £1 you spend and 15 elite night credits per year.

You can apply here.

American Express Marriott Bonvoy credit card

Marriott Bonvoy American Express

20,000 points sign-up bonus and 15 elite night credits Read our full review

You can also earn Marriott Bonvoy points by converting American Express Membership Rewards points at the rate of 2:3.

Do you know that holders of The Platinum Card from American Express receive FREE Marriott Bonvoy Gold status for as long as they hold the card?  It also comes with Hilton Honors Gold, Radisson Rewards Gold and MeliaRewards Gold status.  We reviewed American Express Platinum in detail here and you can apply here.

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

You can also earn American Express Membership Rewards points with American Express Gold (20,000 bonus points), the American Express Rewards Credit Card (5,000 bonus points) and – for small business owners – American Express Business Gold (20,000 bonus points) and Business Platinum (40,000 bonus points).

Click here to read our detailed summary of all UK credit cards which can be used to earn Marriott Bonvoy points

(Want to earn more hotel points?  Click here to see our complete list of promotions from the major hotel chains or use the ‘Hotel Offers’ link in the menu bar at the top of the page.)

Comments (105)

  • George K says:

    I’m quite disappointed with the news, as are most, but even more so with the absence of clarity on how things will work come 2023. I also get a rash when companies say that their clearly negative changes are done purely to offer flexibility to customers and done in response to ‘our’ demands.

    Having said that, there may be still one redeeming factor. While the redemption aspect of the program may be about to suffer a setback, one of the reasons that I still prefer Marriott is because of its more-or-less consistently good treatments of its status members. This is particularly true in legacy SPG hotels, I have found, where the offer of a free breakfast and ‘guaranteed’ suite upgrades mean that I have never felt the need to pay for more than the cost of a base room in the past 7 years that I’ve been doing this. Travelling with a toddler makes this more important for us than a singleton bagging a suite for 5 days (not that this is not important!), as we always need the space…

    IHG doesn’t have anything like this. Hilton does, but is very stingy on upgrades.

    If that was ever to be eroded, I may let Marriott go…

    • ken says:

      “I still prefer Marriott is because of its more-or-less consistently good treatments of its status members.”

      Agreed. Even at bog standard Marriotts at least make an effort of recognise status & upgrade.

      • meta says:

        Nope, not in my experience. I had 100% success of upgrades at Hilton as Diamond in the last four years. I can’t say the same for Marriott.

        • George K says:

          Admittedly, my Hilton experiences over the past 5 years are minimal, so a comparison of say, my 5 Hilton stays with my 50 Marriott ones may be unfair/unscientific (circle all that applies). I’m happy to hear that Hilton does treat some well, and I am looking forward to their new automatic ‘upgrade based on status’ system.

          But I will say hand in heart that the treatment I’ve had with SPG/Bonvoy has been superlative, hence why I’m sticking with them… for now!

          My aspiration was to burn a redemption in Bora Bora before it all went pearshaped. I may settle for Gritti in the end…

    • Harry T says:

      They key point here is that the legacy SPG hotels treat elites the best.

  • RTS says:

    i wonder how they will price the packaged holiday vouchers… would probably make those more valuable again?

  • Guernsey Globetrotter says:

    I know times are hard but really – Travelodge ?!!

    • planeconcorde says:

      Agreed Travelodge is too far. May be Premier Inn depending on price difference and location. 😉

    • Track says:

      Travelodge location can be surprisingly good.

      Hyatt Place Hayes on the other end..

  • Fazzy Bear says:

    Slightly off topic – I was looking at a stay in 2022 for a Cat 8 for 385k points which I can transfer over from my Amex MR. They only give one option for Pay with Points.

    What would be the benefit of Gold status if I had a Amex Platinum card? It says 25% extra bonus points which I’m not sure would apply as Im using points to pay and enhanced room but that don’t seem to be a guarantee. If it was guaranteed then it maybe worth getting a Platinum card alongside the other features such as £200 dining credit.

    • Fazzy Bear says:

      *One Room Option for Pay with Points

    • Andy says:

      You would definitely not get the bonus points (nor base points) since it’s a points stay. Upgrades, even at Titanium level, are subject to availability, so at Gold you will be well down the pecking order depending on how busy the hotel is. The nice thing at Platinum/Titanium level is the free breakfast (see HfP article from earlier this week on how that differs at the various brands), but you wouldn’t get that from the AMEX Plat

    • Harry T says:

      You realistically mostly get bugger all as Gold.

    • YC says:

      You get the 25% extra bonus points on any incidentals that you spend while staying. Approx £15 worth of points for every $1,000….

  • Anna says:

    Grr. OH and I have about 600k Bonvoy points between us but realistically won’t be able to use them until 2023. I really only want to use them in a high end 5 for 4 scenario or I won’t feel l’ve got decent value from them!

    • YC says:

      Depending on when in 2023 you would like to stay (Q1 ’23?), you could lock in old rates before they shoot up. It also depends how quickly marriott roll out the truly dynamic pricing which would impact how far in 2023 you could lock in rates

  • Sam says:

    Why not Travelodge, especially in the UK chances are you end up having a new room at £29 at Trevelodge as opposed to an old run down room for £90/100 in the same town.

  • Sam says:

    I was so close to buy some Marriott points at one point but in hindsight, I’m glad I held my horses and took a step back. It was a good decision I made.

  • Harry says:

    Does revenue based redemption mean that we now have the additional option to redeem higher room grades? Eg Suites?

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