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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 (January 2022)

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)

  • Tariq says:

    I don’t see how availability will increase unless Marriott start to pay the hotels market rate closer to mid occupancy rather than just high occupancy – to encourage greater release of availability. The only way that Marriott can surely make that work is by adopting a Accor model?

    I would hope that given this de facto devaluation, that Marriott points become more easily available – eg similar to historic IHG levels of throwing them around like sweets. Seriously doubt it will happen though…

    • Chrisasaurus says:

      Well that is a possibility but if you view availability as being- simplistically- supply less demand, then making redemptions less attractive through higher pricing could lessen demand and hence increase availability…

      • Tariq says:

        Indeed yes that’s possible, as Rob has said that may create a problem in people looking for alternative routes out (or people amass points, which builds a future liability for Marriott).

      • Rob says:

        Yes, other blogs are giving the same theory.

  • Mark says:

    Wait till Hilton see this and remove the 95k cap.
    They already have on certain properties but this news will speed them up to roll it out fully.

    • mradey says:

      Was going to ask about Hilton as I was recently quoted 760,000 points for one night on Park Lane……

      • meta says:

        Hilton doesn’t have caps at any of their properties. You can be quoted over 95k even at the lowly Hamptons.

        • YC says:

          Hilton caps are on standard room redemptions. I think this is fair policy unless hotels begin playing room inventory games

        • Rhys says:

          Isn’t there an unofficial 150k point cap at Hilton?

        • Rob says:

          It does have caps. 95k is a premium reward which doesn’t count.

      • TGLoyalty says:

        That’s a premium room redemption. You’re basically swapping your points for £ and they are paying the flex rate for the room.

    • BJ says:

      Jolton just get round it with non standard room redemptions. There are clearly some abuses if this but for the most part Hilton and the hotels have played fair. Hopefully that will continue regardless of what Marriott does.

  • Ken says:

    Ha, ha.

    We’ll make the program so shit that people won’t use it.
    That’ll make better availability.

    I’ve never found that much problem with Marriott availability.

    There is a brilliant moments auction running at moment with 4 nights in RC Maldives.
    That’s where some of best value lies.

  • Dominic says:

    Removes aspirational redemptions, but I suspect the majority aren’t this savvy (though I may be wrong!).

    The 5 nights for 4 will provide some discount, and I’ve personally found Hilton’s pricing reasonable (albeit without great bargains). Just makes me push for 5 night redemptions.

    • BJ says:

      Provided 5 for 4 continues. Explosion of fake elites at both Hilton and Marriott must be ramping up the pressure on this benefit.

      • TGLoyalty says:

        What’s a fake elite?

        • Andrew says:

          It’s what Mother calls “new money”

        • Dominic says:

          Wondered the same. And isn’t 5 for 4 open to pretty much any member? I may be wrong, I’ve never spend long as a lowly elite

          (Please note; not being serious with last phrase)

        • BJ says:

          I’m sure you know very well 🙂

          • TGLoyalty says:

            Either you spend the nights in hotels and therefore enjoy the status benefits you earned OR you have status from a credit card and therefore you don’t spend many nights in hotels and won’t be hogging many benefits.

    • Rob says:

      80/20 rule – those which are savvy drive the most revenue.

    • TKMAXX says:

      Hilton still has some great value redemptions like Conrad Maldives etc.

      If uncapped then Bonvoy would be impossible for higher end properties due to limits on points purchases per year.

      Massive impact

  • Ian M says:

    Extremely disappointing announcement from Marriott.

    I have Ambassador status with Marriott which like a mug (considering the status extension announcement) I’ve worked hard this year to renew.

    I have a points balance of over 2.5 million. Time to burn those next year and say farewell to Marriott.

    • Mike says:

      Wow – 2.5 million by my maths that works out to be convertible to 833,333 AVIOS – that is a fair amount

      • Ian M says:

        Yeah I have enough to convert to over a million Avios, but I already have over a million Avios, so that option isn’t very appealing. I’ve been too much of an earner and not enough of a burner over the last few years. I won’t make that mistake in future.

        • Mikeact says:

          A Million is virtually nothing, you need a lot more going forward…turning left soon eats up your balance with two of you.

    • ChrisBCN says:

      ‘I’ve worked hard this year to renew’ – yes, I can see how hard it is too have to stay in so many hotels, my sympathies to you 😉

      • Dominic says:

        And presumably not to one’s own expense haha

        • Ian M says:

          100% my own expense. I would have much rather used points for a fair few of the bookings but paid cash to hit the $14k target to requalify

      • Ken says:

        What exactly is great about staying in a hotel for work ?
        Equally for most, flying is a ball ache as well, lounges and J takes the edge of it, but the novelty of business trip soon wear off.

        The loyalty schemes are a minor compensation for this, being able to treat yourself to a leisure break at a place you might not pay cash for.

        • Dominic says:

          As a young professional, I always found it very attractive. Consistently paid for my holidays and, whilst well compensated compared to the average UK resident, I am not at the stage where £200 a night on a hotel is something I can consider to be reasonable.

          • Rhys says:

            Yes, as a young professional 🙂

            I enjoy this life too but I can see why Rob doesn’t want to do the LTN-EDI-BHX-ABZ-NCL-LHR 4 day tour I am currently on!

          • Rob says:

            It was that or Sandy Lane in Barbados this week ….

          • Dominic says:

            Absolutely, Rhys! Frankly, that sounds like a wonderful 4 day tour 😉

            Always maintained my desire to travel weekly would reduce significantly once ‘settled’; COVID seems to have stripped that opportunity, anyway.

          • Oh! Matron! says:

            I’m turning 50 this year and have no problem with work jollies, especially if I can be creative with routing, maximising miles and points and nicely made cocktails (I’m looking at you, Virgin Clubhouse SFO!)

        • Rob says:

          I had an ‘all business, everywhere’ travel policy and (in 2010 money) a £300 nightly hotel budget. It wasn’t a tough life.

          If you are driving around Lancashire staying in Travelodges whilst trying to flog network solutions I can see it could be different.

          • Briand says:

            I wasn’t in the champagne world of Bankers, but I too, always travelled Business or First around the world..but then, I was bringing in million pound orders in the industry I was in at the time. As for hotels, I got sick of staying in the, so called best hotels and couldn’t wait to get home..to my own bed and home cooking .
            But the millions of various ‘Airmiles’ have been very welcome now I’m retired.

  • Andrew says:

    I was very disappointed when IHG brought in dynamic, but actually I think it’s been quite positive – I’ve ended up getting rooms for lower points than before in most cases and keeps things fun, checking to see if rates have lowered and rebooking.

    • John says:

      Yes, I have 11000 points and will close my creation card soon. I fully expect to find an ok HIX for exactly that price which will be my last ever stay with IHG except in a dire emergency

    • Paul says:

      Any tricks here? I can’t seem to work out how to gain with IHG’s dynamic pricing, whenever I look award rates for my preferred properties are generally what they were or pricier pre changes.

      • ken says:

        Any tricks here?

        Yes, go somewhere like Germany where cash rates (& hence IHG points) seem about as low as they can go.

      • Rob says:

        If you pick cheaper unpreferrred properties they will cost fewer points ….

  • BJ says:

    See @Harry T in a Travelodge near you soon 😉

  • Lev441 says:

    So I guess this is the end for the travel packages too? Got some good value out of those – have one more to burn (glad it’s been extended to next June too!)

    • Paul says:

      The end was arguably some time ago, in terms of the redemption itself! For those including myself still holding the stay element I optimistically think they’ll retain their particular category peak value, albeit it sounds like Marriott don’t even know how to handle these yet.

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