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

April 02, 2021
7 min read
InterContinental Maldives Maamunagau Resort lagoon villa
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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

Intercontinental Bora Bora Le Moana (Photo by Zach Honig/The Points Guy)

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:

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

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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.

(Screenshot courtesy of IHG Rewards)

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.

(Screenshot courtesy of IHG Rewards)

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.

(Screenshot courtesy of IHG Rewards)

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.

(Screenshot courtesy of IHG Rewards)

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.

(Screenshot courtesy of IHG Rewards)

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.

(Screenshot courtesy of IHG Rewards)

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.

Featured image by InterContinental Maldives Maamunagau Resort (Photo by Jean Arnas/The Points Guy)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023