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Over the past few years, many hotel loyalty programs have adopted some sort of variable award pricing. Hilton's award nights are fully dynamic priced, while Marriott adopted peak pricing in September 2019. Hyatt planned to launch peak pricing on March 22, 2020, but delayed the introduction to 2021 due to COVID-19. Even Wyndham moved to a three-tier award structure in April 2019.
The last major holdout was IHG Rewards. With only a couple of exceptions, reward nights at all 5,900 IHG properties cost the same no matter the day of the year. However, that's no longer the case. An IHG Rewards spokesperson confirmed to AwardWallet Friday morning that IHG “began extending dynamically priced Reward Nights to more hotels around the world this week.”
IHG Rewards says that “with this program update, the number of points required for members to redeem a Reward Night will now flex up and down, just like cash rates for room bookings.” However, it doesn't explicitly say that award rates are tied to cash prices.
Is This Bad News?
Not necessarily. A lot of hotels that I'm finding are pricing at cheaper rates than under the dynamic award pricing than at their prior set rates. For example, let's take a Saturday night in Atlanta during the upcoming Fourth of July weekend:
That's a solid slate of excellent hotel brands all costing 25,000 points or less. Under the prior static award pricing, these hotels cost:
- Hotel Indigo Atlanta Downtown: 35,000 points
- Crowne Plaza Atlanta Midtown: 30,000 points
- Hotel Indigo Atlanta Midtown: 30,000 points
- InterContinental Hotels Buckhead Atlanta: 45,000 points
That means under dynamic award pricing some nights at these hotels are pricing half of their previous rates.
But what about Times Square for New Year's Eve? Surely that's going to be where award prices are higher than before, right? Not currently. Here are the search results for a two-night stay in Times Square for New Year's Eve:
The Crowne Plaza Times Square doesn't seem to be included in dynamic award pricing yet, as it's priced at the same 60,000 points per night as before. However, the InterContinental Hotels New York Times Square previously cost 70,000 points every night of the year. Now, for some of the most peak nights of the year, it's averaging 58,750 points per night.
IHG's Dynamic Award Pricing Timeline
IHG's dynamic award pricing has been a long time coming. In its 2018 investor report, IHG told investors that it was “testing new features for 2019 roll-out, designed to increase member engagement with variable point pricing.” In a statement to TPG in February 2019, an IHG spokesperson confirmed that it expected “a roll-out later this year and will share additional details as they become available.”
In mid-2019, IHG added properties in Macau with reward rates higher than its previous 70,000-point maximum. Some nights at the new InterContinental hotels cost 75,000 points while some peak nights were priced at 100,000 points per night. However, IHG didn't rollout any other dynamic award pricing in 2019.
On April 23, 2020, IHG launched dynamic award pricing in the China region. Around the same time, I noticed that the Staybridge Suites Atlanta Perimeter Center in Atlanta was being dynamically priced. IHG confirmed that this hotel was “part of the test group for dynamic pricing.” That hotel—and seemingly the rest of the test group—were returned to static award pricing that same day.
Now, in late May 2020, IHG is starting to roll out dynamic award pricing to an unspecified number of hotels throughout the U.S. and around the world.
What Dynamic Award Pricing Means for the Fourth Night Free Perk
One of the marquis benefits of the IHG® Rewards Club Premier Credit Card and IHG® Rewards Club Traveler Credit Card cards is a fourth reward night free when redeeming points for four or more nights.
Before the rollout of dynamic pricing, it didn't matter which of the four nights was discounted to zero points, as all nights cost the same amount. With the rollout of dynamic award pricing, we were curious if IHG would continue to make the fourth night free. Or, would IHG's free night policy mirror Marriott's fifth-night award free perk where the cheapest night is discounted?
Before logging into my account, I checked a four-night stay in Atlanta over the Fourth of July weekend. The average award nightly rate at the Hotel Indigo Atlanta Downtown is 24,375 points. That's a total of 97,500 points before the fourth-night award free:
After logging into my account, I clicked through to the confirmation page. There you can see clearly that the fourth night has been marked down to zero.
Doing some reverse math on the award pricing for this four-night stay, we can see:
- 22,500 points for July 2
- 25,000 points for July 3
- 25,000 points for July 4
- 25,000 points for July 5 => 0 points for IHG Rewards Premier Card and IHG Rewards Traveler Card cardholders
This means cardholders will still get the fourth night free, even if there's another night that's cheaper. However, this isn't always going to work out in your favor.
For example, the Staybridge option in the example above averages 23,750 points per night for a total of 95,000 points before a fourth-night free discount. In this case, the fourth night you're getting for free is at the cheaper rate of 22,500 points:
What Dynamic Award Pricing Means for Free Night Certificates
IHG Rewards Premier Card cardholders get an annual free night certificate after renewing their card for another year. This certificate is limited to reward nights costing 40,000 points or less. Under static award pricing, that meant you were limited to a set number of hotels. However, some hotels that were unachievable under static award pricing are now available with dynamic award pricing.
For example, the spectacular InterContinental Danang was priced at 70,000 points per night under static award pricing. Now, there are reward nights available for as little as 40,000 points per night:
When I search for this same night using one of my IHG Rewards Premier Card free night certificates, it's showing as free:
Well, almost free. The confirmation shows a strange charge of just 5¢ after taxes and fees:
As part of IHG's COVID-19 response, any free night certificates set to expire between March 1 and December 30, 2020, have had their validity extended to December 31, 2020. Also, all new certificates issued in 2020 have an 18-month validity.
If you don't have the IHG Rewards Premier Card yet, you can still get a whopping 125,000 bonus points after spending $3,000 on purchases within the first three months of account opening. And as you can see above, those points stretch further than before.
- Earn 125,000 bonus points after spending $3,000 on purchases within the first three months of account opening
- Enjoy a Reward Night after each account anniversary year at eligible IHG hotels worldwide. Plus, enjoy a reward night when you redeem points for any stay of 4 or more nights
- Earn 25 points total per $1 spent when you stay at an IHG hotel
- Earn 2 points per $1 spent on purchases at gas stations, grocery stores, and restaurants. Earn 1 point per $1 spent on all other purchases
- Platinum Elite status as long as you remain a Premier card member
- Global Entry or TSA Pre✔® Fee Credit of up to $100 every 4 years as reimbursement for the application fee charged to your card
- IHG Rewards Club Bonus points are redeemable at hotels such as InterContinental®, Crowne Plaza®, Kimpton®, EVEN® Hotels, Indigo® Hotels & Holiday Inn®
- Earn 25 points total per $1 spent when you stay at an IHG hotel
- 2X points per $1 spent on purchases at gas stations, grocery stores, and restaurants
- 1X point per $1 spent on all other purchases
The earning for spending at IHG hotels breaks down as follows:
- Earn 10X points for being a IHG® Rewards Club Premier Credit Cardmember
- Earn 5X points from IHG® with Platinum Elite Status, a benefit of having this card
- Earn 10X points from IHG® for being an IHG® Rewards Club Member (Being a cardholder is not required to earn this bonus for participating in the IHG® loyalty program)
Final Thoughts
For now, IHG Rewards' dynamic award pricing seems like nothing but a positive. All hotels that we have checked so far are pricing at or lower than the static award pricing those hotels previously had. That means that your IHG Rewards points just got a bit more valuable. If you have upcoming award reservations, you should check current pricing and rebook if the price has dropped.
However, that doesn't mean that this will remain good news. Right now, many hotels are in bad shape due to COVID-19. Lower award prices is one way that IHG can help fill hotel rooms. Once travel returns to normal, we are sure to see the dark side of dynamic award pricing.
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The dynamic pricing should reflect the low demands during the pandemic.
Many blog have commented in a positive way on that change, but I would expect that both, the prices in money and the prices in points will dramatically increase when the pandemic is over. It is just a great opportunity for IHG to make the switch when the prices are low!
Pleasantly surprised that the new dynamic pricing is favorable to us consumers. This isn’t the norm across the board. One interesting thing IHG is doing for their loyalty membership is extending the current membership period (ostensibly due to COVID related travel decline) for free so your next dues date is pushed back (6 months in my case). This also means that the free night certificate that comes with the membership is delayed until you need to renew your membership.
Thanks for pointing out the 4th night is the one that is discounted to zero. I’m hoping to take advantage of this feature and can already see myself trying to work it out so the most expensive night is fourth or eighth.
I have the bad feeling that the change will be neutral or even positive at the beginning and then it will become worser and worser.
I hope I am wrong!
Programs rarely make changes to benefit the consumer so I’m highly skeptical of what is to come. Time will tell.
Any word on if dynamic pricing will apply to UK based IHG properties, no sign of it so far.
At the moment there are some really good deals, however, I doubt it will last. I hope there is a points cap for each property like Hilton. If it becomes totally dynamic like Accor it will not be worth bothering with.
Another reason to not collect points. Too complicated and rules change constantly.
I’m afraid that they know that folks will always essentially view points as something for nothing. For that reason, no matter how bad it gets, it will always seem irresponsible not to collect points.
I am suspicious of this change. I agree that it looks good right now when there is very little demand, but they can change the points required for a room at any time. Loyalty program changes are never to benefit the members.
The marginal benefit I cheaper off-season rates is greatly outweighed by the loss of the aspirational awards where you maximize your redemption value. Without that, points are no different than cash back.
I believe that this will end up bad for everyone as they price everything higher and higher. Even now the points needed for a hotel stay under the static system is priced so high already. Due to COVID19 the dynamic price is lower at the moment but I expect it to be higher wants things go back to the new normal.
Why didn’t IHG delay the changes?
People will pay less with points during the off-peak periods, I suppose.
The dynamic award pricing is a positive now since there’s no demand. As surely when demand goes up, the points needed will go up accordingly. Best book things now.
Oh no…just like Marriott. Only mildly beneficial if you travel exclusively off season…mildly since prices would be already lower anyways.
Well it was bound to happen I suppose especially with Covid-19. Thanks for doing some of the legwork on figuring out redemption strategies.
The dynamic pricing could have some advantages in the off-seasons once regular travel resumes.
Thank you for the detailed write up. It’s going to be a while before I feel safe with nonessential travel again. Until then, I just hope my points and miles don’t expire and the airlines/hotels stay in business.
FYI re: typo in dates provided here — “As part of IHG’s COVID-19 response, any free night certificates set to expire between March 1 and December 31, 2020 have had their validity extended to December 31, 2020.”
Are you referring to how certificates set to expire on December 31, 2020 aren’t indeed being extended? 🙂 If so, I have tweaked the date to say December 30 now.
Wow, I figured the extension carried into 2021. I guess it’s not as generous as I thought. I have no clue when I’ll be able to use my cert this year. At least I finally got out of 5/24 jail and have a premier card (and 140K pts) on the way 🙂
In addition, the good news is that any certificates issued in 2020 will have 18 months of validity. But yeah, any certs expiring in 2020 are only pushed to 12/31/2020.
And I too am finally out of 5/24 jail! 😀 I still have the old IHG Select and new IHG Premier. Now I’m thinking about getting a Marriott or Hyatt card to diversify.
This make future devaluation easier. Just look at what Marriott done with peak pricing
Indeed it does. That’s what I meant by “the dark side of dynamic award pricing” in the conclusion. For now though, let’s enjoy the lower prices!
I can’t believe it has taken them this long to implement this into their protocol.
I’m an IHG awards member. I’m a fan of programs whose points don’t expire. All awards programs should follow suite. Like free wifi… thats become more of an industry standard. Too late for Hilton though. They lost my business forever.
Can I ask about your experience with Hilton?
No point in checking the Dynamic Award Pricing now, since there is no demand for rooms.
It seems that points and miles lose value all the time with these changes and you need to work hard to make them worthy.
The points game is not so fun anymore…
I agree, but hoping for improvements after things open up.
I am glad IHG has decided to change. More valuable which is always good. We have been deserving of this for long time
Regardless of whether this might be beneficial in the short term under covid conditions, long term this is horrible news.
I didn’t think there was anything that would encourage me to buy hotel or airline points, but this just might.
I’m wondering if rates are cheaper right now due to COVID. But as you said, another one falls to dynamic pricing. 🙁
Thanks for figuring out the 4th night free equation. It had me stumped yesterday booking when some 4-nights were more expensive than 4×1.