IHG negatively changed its dynamic award pricing algorithm: Here's what we know

IHG One Rewards slowly rolled out dynamic award pricing in 2020, starting with properties in Greater China and eventually reaching U.S. properties. Then, IHG's dynamic award pricing algorithms went wild as rates spiked at specific properties in 2021. Now, we're potentially seeing another less obvious devaluation.

Over the last year, I've redeemed IHG points for 30 nights. Across these nights, including six fourth-night-free reward nights, I got a redemption rate of 0.98 cents per point. My redemption rate would have been 0.78 cents per point if I didn't have the IHG One Rewards Premier Credit Card (see rates and fees) and its fourth-night-free reward benefit.

However, as Loyalty Lobby recently noted, travelers booking award stays now aren't getting redemption rates that are as good. I've noticed lower redemption rates in searches over the last month, but I figured it was simply the properties and destinations I was searching for. It seems I wasn't alone, and these lower redemption rates are evidence of negative changes to IHG's dynamic award pricing algorithm.

Related: How (and why) to calculate award redemption values

Let's examine a few stays from Nov. 4 through Nov. 8 to see what redemption rates you can expect now. For each example, I'll compare the award rate to the least expensive rate you can freely cancel until shortly before your stay.

I could book a one-king studio suite with a sofa bed at the Staybridge Suites Austin North — Parmer Lane in Texas for $650.18. If I booked the stay with IHG points, I'd redeem 75,000 points after a fourth-night-free reward as an IHG Premier cardholder. That would result in a redemption rate of 0.87 cents per point. If I didn't have access to the IHG Premier's fourth-night-free reward benefit, I'd need to redeem 100,000 points, which would only give me 0.65 cents per point in value.

If I wanted to stay at the more centrally located Holiday Inn Express & Suites Austin Downtown — University, I could book a standard district view room with one king bed for $866.91. As an IHG Premier cardholder, I'd need 107,000 points for this stay (or 150,000 points if I didn't have access to the fourth-night-free reward benefit), which would give me a redemption rate of 0.81 cents per point (or 0.58 cents per point without the fourth-night-free reward).

Let's jump over to Paris for the next example. I could stay in a standard room with one double bed at the Crowne Plaza Paris — Republique for $1,312.16. As an IHG Premier cardholder, I could redeem 164,000 points for a redemption rate of 0.80 cents per point. Without the fourth-night-free benefit, I'd need to redeem 221,000 points for a redemption rate of 0.59 cents per point.

Alternatively, I could book an essential room at the Kimpton St Honore Paris for $2,585.24. As an IHG Premier cardholder, I could book the same room type for 331,000 points after the fourth-night-free reward, netting me a 0.78 cents per point redemption rate. Without the fourth-night-free reward, I'd need to redeem 433,000 points for a 0.60 cents per point redemption rate.

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Let's head to Tokyo for two final examples. I could book a standard room with one queen bed at the Hotel Indigo Tokyo Shibuya for $1,722.81. With the fourth-night-free reward, I could redeem 242,000 points for a 0.71 cents per point redemption rate. Without the fourth-night-free reward, I'd need to redeem 324,000 points for a 0.53 cents per point redemption rate.

If I wanted to save some points or cash, I could book a one-king classic harbor view room at the InterContinental Yokohama Grand for $544.67. With the fourth-night-free reward, I could redeem 73,000 points for a 0.75 cents per point redemption rate. Without the fourth-night-free reward, I'd need to redeem 101,000 points for a 0.54 cents per point redemption rate.

I selected three popular destinations and two hotels in each destination on dates I chose randomly. Based on these six examples and my experience searching for award stays over the last month or so, it seems IHG has negatively changed its dynamic award pricing algorithm.

A spokesperson for IHG Hotels & Resorts issued the following statement to TPG:

"IHG continues to use a dynamic pricing model, which is impacted by travel demand, seasonality, and a number of factors like you mentioned. Travel demand is high, especially in popular travel destinations during a peak travel season.

"We know points are the number one reason our members join the program. We encourage them to take advantage of ways to stretch their points further and explore our Reward Nights discount landing page that features new & freshly renovated hotels. All IHG One Rewards members can regularly access 15% discounts on Reward Nights at newly opened and revamped IHG hotels globally. We also offer special Reward Night discounts for our Platinum and Diamond Elite members and cardholders throughout the year."

As these examples show, you can still get more than 0.5 cents per point — the rate at which you can occasionally purchase IHG points and TPG's July 2024 valuation of IHG points — even if you don't have access to the fourth-night-free reward benefit. And if you have the IHG One Rewards Premier Credit Card, the IHG One Rewards Traveler Credit Card (see rates and fees) or the IHG One Rewards Premier Business Credit Card (see rates and fees) and hence get a fourth-night-free reward when redeeming IHG points, you can get even higher redemption values.

That said, it still stings to be getting significantly lower redemption rates now than I have over the last year.