4 new things to know about the big changes to World of Hyatt
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Hyatt surprised the loyalty world when it announced yesterday it would be introducing peak and off-peak pricing beginning in March 2020. While this new pricing scheme is much more predictable than the dynamic award pricing we see from hotels like Hilton and from airlines like Delta and United, it still represents a devaluation for some customers, especially those who primarily travel during peak times like Christmas and school vacations.
If you're still getting up to speed on these changes, which will affect all of Hyatt's various award charts (including standard rooms, club rooms, suites and all inclusive properties), you can check out our first reaction to the news at the link below. In that post I noted it's still too early to gauge exactly how bad these changes are going to be, as there are still a number of unanswered questions about how Hyatt plans to implement peak and off-peak pricing. And those who are traveling during the slow season, might actually benefit.
Hyatt reached out to us to clarify a number of these questions, so let's take a look at what they had to say.
Further Reading: Big changes coming to World of Hyatt: Peak and off-peak pricing added in March 2020
Free night certificates
Let's start by looking at how Marriott handled its certificates after the introduction of its peak and off-peak pricing.
Since Marriott ties its free night certificates to a specific point value instead of a hotel category, the introduction of the new pricing for Marriott Bonvoy created some problems. For example, the most common type of Marriott free night certificate is worth up to 35,000 points, which used to mean it was valid on any category 1-5 hotel. Now, category 5 hotels under peak pricing cost 40,000 points per night, so these free nights can't be used there.
Hyatt has always indexed its free night certificate to hotel categories instead of point values. For example, the World of Hyatt Credit Card offers a free night valid at any category 1-4 hotel each year on your account anniversary, and a second one if you spend $15,000 on the card in a calendar year. This is one of the fastest ways to recoup the card's annual fee, as these free night certificates can easily be worth several hundred dollars.
It was initially unclear whether these certificates would apply to category 4 hotels under peak pricing, but Hyatt has confirmed that they will "remain applicable during all point requirement periods," meaning you can use them for hotels under peak pricing.
Hyatt will set peak/off-peak dates, not individual hotels
Individual hotels have much less incentive to be generous with off-peak award availability than Hyatt as a corporation does. The good news is that peak and off-peak dates will be set centrally by Hyatt, and not up to each individual hotel. Peak and off-peak dates will be determined for an entire geographic market, not on a property by property basis. Here's what a Hyatt spokeswoman told us:
"Hotels are grouped by geographic market (called market tracts) and properties in the same market will adhere to the same calendar of Peak, Standard and Off-peak periods. Peak, Standard and Off-peak designated days are set centrally – they are not set by the individual hotels."
Most days will still use standard pricing
Obviously the big elephant in the room when discussing peak and off-peak pricing is how many days will feature higher prices and how many might be discounted below their normal rates. When Marriott launched peak and off-peak pricing they promised that across the global portfolio, the same number of properties would be peak and off peak. Hyatt didn't mention any similar balancing or control mechanisms in its original announcement, and the clarification they offered doesn't do much to reassure me that these changes will be minor:
"There are no minimum or maximum number of nights that a property can designate as Peak or Off-Peak point redemption periods. However, the majority of days will be set to Standard each year."
My takeaway from this is that in a popular market like Sydney, where Hyatt only has two properties (the Hyatt Regency Sydney and the aspirational Park Hyatt), we could see a majority of the year set to standard pricing, a bunch of dates set to peak pricing, and little if any off-peak discount pricing to make up for it. That's the biggest fear among most Hyatt loyalists here, that what we just heard was a devaluation to an attractively priced award chart without anything being given in return. The good news is that in larger markets like New York, the Park Hyatt can't selectively set itself to peak pricing year round, as Hyatt corporate will be making that decision for the entire geographic market.
This might lead to more award space opening up
Dynamic pricing is often sold to customers as a better way to match supply and demand, and make more awards available (at a higher price) to those wiling to pay for them. Whether it plays out that way in practice is another question, but Hyatt seems committed to using peak and off-peak pricing to open up more award space to members:
"These changes are structured to better align with hotel demand. Therefore, we anticipate this to create more flexibility for members to use their points for award nights during preferred Off-peak periods, which would create more availability during Peak or Standard periods."
At the end of the day, variable pricing like this represents a devaluation for many travelers. While Hyatt has answered most of our burning questions and assuaged some of our fears about this new change to the World of Hyatt program, there's still a lot we don't know. Make sure to stay tuned when these changes go live in March, as the TPG team will be taking a deep dive through the new peak and off-peak rates to figure out exactly how dramatic a change this is for the program, and how you might be able to actually benefit.