IHG Confirms It's Planning Variable Pricing for Reward Night Redemptions
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While the major airline mileage programs are fairly similar in both earning and redeeming, hotel loyalty program redemption strategies vary from one program to another. At one extreme, you have Wyndham's current 15,000 points per night flat redemption rate at all properties, which is going away as of April 3.
Meanwhile, other hotel programs use flexible pricing. Redemption rates at Choice properties, for example, change every few months, leading to widely-varying award prices at the same property. Hilton award night rates vary from night to night. And Marriott plans to roll out peak and off-peak pricing sometime in 2019.
IHG Rewards, however, is one of the few hotel loyalty programs left where you can be sure what an award night would cost. After the annual award devaluation each January, you know how many IHG points you'll need to redeem for an award for the remainder of the year. The only difference is if the property goes on PointBreaks discounts.
Now, that policy is coming to an end. In IHG's 2018 year-end report, it included this blurb about its plans for the IHG Rewards loyalty program:
Testing new features for 2019 roll-out, designed to increase member engagement with variable point pricing.
Between my wife Katie and I, we have more than 530k IHG Rewards points to burn. We also spent a combined 140 nights in IHG properties in 2018 -- with quite a few of those as free nights thanks to the IHG Rewards Premier Credit Card's fourth award night free benefit. So, the idea of a variable point pricing certainly concerns us.
I reached out to IHG Rewards to see if there were any more details available at this time. An IHG spokesperson confirmed that IHG is "testing new features on variable pricing" but couldn't provide any more details at this point:
We are in the early stages of testing new features on variable pricing for reward night redemptions as part of a continued effort to enrich the value proposition for our IHG Rewards Club members. We expect a roll-out later this year and will share additional details as they become available.
What Could These Changes Be?
I'd like to be optimistic about these changes. It's possible that this could simply mean discounted award nights during off-peak periods at hotels. However, IHG Rewards already has a discount program through which it can accomplish this called PointBreaks.
Perhaps the variable pricing will mean the introduction of peak and off-peak pricing, similar to what Marriott is implementing soon. This would be a fairly reasonable move for the program, as it doesn't make sense that a Times Square property would charge the same number of points for New Year's Eve as it does in the off season.
Having to pay a higher peak price would be a bummer for those who are looking to maximize their IHG Rewards points during limited vacation times. However, it'd hopefully also open up some more reasonable redemptions during the rest of the year.
At the extreme, IHG Rewards could pull a Delta and make award night redemption rates closely tied to the room rate: If a room cost $250 per night, it'd require 50,000 points. A week later, the same room might cost $150, or 30,000 points.
Because the economics behind hotel loyalty programs differ substantially from airline loyalty programs, I don't see a revenue-based model being adopted. No matter what the changes are, though, this is another reminder to use your points as soon as you have enough for the redemption you want -- especially as cancellation policies typically mean that you have until the week of check-in to cancel. If the changes end up working in your favor, you can always cancel and re-book.
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