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Big news out of Marriott this morning! Over the next few months, Marriott is introducing dynamic award pricing. This change will mark the end of award charts and standardized pricing. Instead, award prices will mirror demand and cash prices at hotels. Here is what we know about this massive change.
What is Dynamic Award Pricing?
Before we get into the news, it helps to understand what dynamic award pricing is. This is the model that airlines like Delta and United use. Rather than a standard “flying from A to B costs X miles”, you pay based on the demand and cash price of the ticket.
Hilton was the first hotel chain to move to this model of pricing. You can read more about how Hilton Honors works here. The gist is that the same room can cost a different amount of points depending on the day of the week, whether the hotel is full or empty, the popularity of the hotel at that time of the year, and other factors.
Marriott's Move to Dynamic Award Pricing
Until now, Marriott has used a standardized award chart. Depending on the peak, standard, and off-peak times of year for that hotel, you knew in advance how many points you would need to stay at that hotel each night.
When will this happen?
- The current award chart will remain in place until March 2022.
- From March 2022 until the end of 2022, 97% of Marriott properties will price between the current peak and off-peak prices.
- In that time, 3% of hotels may vary outside of these pricing bands.
- From 2023 onward, dynamic pricing will go into full effect.
There are some important points to note. Some of these are good, while others look bad.
- Fifth night free remains in place for award bookings.
- There is no cap on how many points you could need to book an award stay in the new dynamic pricing model.
- Not all standard rooms will be bookable on points, as caps will remain in place. There is no announcement yet that more rooms (or even all rooms) will become eligible for award redemptions. Hotels can still set limits.
No Standardized Redemption Rate
As mentioned in point 2 in the last section, there's no cap on what rooms can cost in number of points. Additionally, this will not be a “1 point = x value” model, either. That would help us understand how many points we could expect to pay.
Instead, this new dynamic pricing model means award redemptions at Marriott properties will somewhat emulate cash prices. But not exactly. This may mirror what Hilton does, but only time will tell. In recent AwardWallet user redemptions, Marriott Bonvoy's points are worth 1 cent. We'll have to keep an eye on this to see what average values are in the future.
Why is Marriott Doing This?
Most Marriott hotels (across its many brands) are not owned by the company but are franchises. When you redeem points, Marriott pays the hotel for your stay. How much the hotel gets depends on how full it is and the average cash price during your stay. The more full the hotel, the more money Marriott forks over for your award stay.
Thus, Marriott can move to a model where you either fork over more points to help offset your expensive stay (expensive from their accounting) or get discouraged from making these costly redemptions. Either view helps Marriott save money.
Who Does This Affect?
For those of us who love to find maximum value in our redemptions, this hurts. Finding a crazy deal for outsized value is likely going away. For the average traveler redeeming at less-“aspirational” properties, this change might be negligible. If points requirements go down at a SpringHill Suites property during a road trip, many of these types of travelers might enjoy the change. Only time will show us the specifics and help us understand what to expect in our award redemptions.
The bottom line is that Marriott will introduce dynamic award pricing. 3% of hotels may price higher than current peak rates in 2022. From 2023, Marriott Bonvoy will move to full dynamic pricing. Perks like “fifth night free” will remain, but points requirements will more closely match cash prices. We haven't seen any announcement about the minimum or the maximum number of points you may need for a stay in this new model.
What do you think? Good, bad, or a combination?
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