IHG's dynamic pricing goes wild, spiking award rates for some hotels

Just over a month ago, I wrote about why I depleted my IHG account to make eight redemptions. After all, I was able to get an excellent redemption value of 1.32 cents per point across eight redemptions. I knew this type of redemption value -- 2.48 times TPG’s valuation of IHG Rewards points (0.5 cents per point) -- wouldn't last forever. But, I hoped I'd find great value redemptions for months to come.

Well, now we're starting to see the negative side of IHG's dynamic pricing. When I first saw a Loyalty Lobby post earlier today about IHG devaluing its rewards to 0.35 cents per point, I panicked. After all, my husband JT recently bought a significant amount of IHG Rewards points at 0.5 cents per point and we have yet to redeem them all. Luckily, although IHG made some changes to its award pricing algorithm on April 1, 2021, the devaluation isn't as bad as I'd initially assumed. Here's what you need to know.

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Higher award night costs

One oft-forgotten negative of dynamic award pricing is that you can't easily compare new pricing to old pricing. There is no old award chart to use for comparison and most of us don't keep records of what specific properties cost in the past. However, I know from experience that specific aspirational IHG Rewards properties have consistently priced at 70,000 or 100,000 points per night. Now these properties are consistently pricing at 100,000 points and 120,000 points per night. A few examples:

• InterContinental Hotels Maldives Maamunagau Resort: Previously 100,000 points per night, now 120,000 points per night
• InterContinental Hotels Le Moana Bora Bora: Previously 70,000 points per night, now 100,000 points per night

I didn't find any currently bookable award nights at the InterContinental Hotels Bora Bora Resort Thalasso Spa, which previously cost 70,000 points per night when you could find availability. So, unfortunately, I can't say how this resort will price when award availability appears.

I'm also seeing other properties, such as the Kimpton St Honoré Paris and InterContinental Paris Le Grand, cost more than 70,000 points on some nights. I feel less confident that these properties never cost more than 70,000 points per night in the past, since I haven't closely tracked them. But they're pricing higher than 70,000 points on multiple dates now.

When introducing dynamic pricing last year, IHG didn't announce a price cap for its awards. But I've noticed since IHG introduced dynamic pricing that no property offered award prices higher than I remembered that property charging before dynamic pricing. So my hunch is that yesterday IHG removed the limit that capped awards to the price charged before dynamic pricing.

An IHG Hotels and Resorts spokesperson confirmed to TPG that reward nights aren't defined by minimum or maximum point amounts. Additionally, this spokesperson noted that redemption rates update as often as daily based on demand, seasonality and other factors.

Related: 6 ways IHG Rewards Club should improve its loyalty program

Some redemption rates are low

The Loyalty Lobby article published earlier today noted that "several readers have contacted us over the past 24 hours regarding obscenely high point prices for stays at IHG affiliated hotels". And indeed, it's easy to find examples of high IHG point prices that result in low redemption rates.

For example, consider the InterContinental Grand Stanford Hong Kong. You could pay $195 or 44,000 points for a one-night stay in November, which gives a redemption rate of just 0.44 cents per point.

Or consider the InterContinental Singapore. This one-night stay in September would cost $212 or 58,000 points, which offers a redemption rate of 0.37 cents per point.

One of the worst redemptions rates I saw was at the InterContinental Tokyo Bay. For a one-night stay in August, you could pay $276 or use 80,000 points, for a redemption rate of 0.35 cents per point.

Unfortunately, these are far from the only examples of high points costs and poor redemption rates. So, it's essential to calculate the redemption value you'll get before redeeming IHG Rewards points now.

Since I don't have data for how these properties were priced a few days ago, I can't conclusively say whether these poor redemption rates are new. But, as I'll discuss in the next section, you can certainly do a lot better when redeeming IHG points.

Related: Why I often choose IHG and Choice hotels, despite limited elite perks

There are still excellent redemptions to be found

Not all hope is lost for IHG loyalists. After all, for most of the destinations listed above, I found a different IHG hotel on the same date that could provide a good redemption value. For example, you can redeem 18,000 points or pay $195 for a one-night stay this November at the Holiday Inn Express Causeway Bay Hong Kong. At this rate, you'd get a redemption rate of 1.08 cents per point.

And you pay $190 or 21,000 points for a one-night stay at the Holiday Inn Express Singapore Orchard Road this September, for a redemption rate of 0.90 cents per point.

And you can stay in the middle of New York City this June at the Holiday Inn Express New York City Chelsea for 21,000 points or $293. This redemption would give you a massive 1.40 cents per point.

Especially if you have the IHG Rewards Premier Credit Card and use its fourth night reward benefit by redeeming your points on stays of three nights or longer, you can still get a lot of value from your IHG Rewards points.

Related: Why I’m happy to pay the annual fee on the IHG Premier Card

Bottom line

The IHG Rewards program seemingly made negative changes to its award pricing yesterday while making several Six Senses properties bookable with IHG points. Luckily, it's still possible to get excellent redemption rates that are well over TPG's valuations and even above the rate at which you can buy IHG Rewards points.

I recommend using today's news as a catalyst to redeem IHG Rewards points for upcoming stays when you can do so at a reasonable rate. It's also worth calculating your redemption rate each time before you redeem IHG points, as redemption rates vary greatly right now. The rate at which you should use cash instead of points will vary depending on many factors. But, based on TPG's valuations, it's typically not a good idea to redeem IHG points for less than 0.5 cents per point.