Possible impending Marriott devaluation: What dynamic pricing could mean for travelers
Big changes are coming to the Marriott Bonvoy program, and those with hefty point balances or a special trip coming up should prepare themselves.
Last year, Marriott announced that it would ditch its longstanding award charts in favor of dynamic pricing. The change is set to roll out sometime in March. While Marriott has yet to give us an exact date, it confirmed to TPG that members will be notified before the switch.
The move follows similar ones by Hilton – and more recently IHG – to better match award prices with the prevailing cash rate for a room. And as we have learned from others, this could make award nights more expensive during peak dates, and make aspirational awards harder to attain.
We're now a month away from Marriott's big shift. While we are hoping for the best, Marriott Bonvoy loyalists would be wise to lock in rooms now.
The hospitality giant has said that most hotels will continue to price in their current bands — meaning between off- and on-peak prices — through the end of 2022. That said, a handful of hotels will price outside of these bands once the change goes into effect next month.
To put it another way, they could possibly charge any amount of points for a night without imposed limits.
Here are a few things to keep in mind before the switch to dynamic pricing happens next month.
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Most — but not all — hotels will remain in current bands
As discussed in the intro, Marriott told us that the majority of hotels will stay within their current pricing bands for 2022. This means that most Category 3 hotels will range between their current off-peak price of 15,000 points per night and peak price of 20,000 points per night.
What will change for this 97% of properties this year is more variation in the bands. For example, one night you might spend 16,000 points per night, and another could be 18,000 points instead of the current set tiers.
But there's a small caveat that may make the biggest difference in the near term: the remaining 3% of hotels will price outside of these bands once the change goes into effect next month.
That equates to over 200 properties — where Marriott can charge whatever it deems fit for these properties. Currently, the maximum highest award price is 100,000 points.
Marriott hasn't told us which properties will fall outside of these bands, but we expect it to be higher-end properties that were traditionally a great deal on points. Think high-end properties like the St. Regis Maldives where room rates can easily be $1,000 per night.
When Marriott announced the switch to dynamic pricing, Marriott's senior vice president of global loyalty, David Flueck, told TPG that the benefit of the move away from an award chart is that hotels will be better incentivized to open award space. However, that could come at the expense of desirable properties being significantly more expensive than under the current system.
As it stands now, hotels limit the number of rooms that are available on points in order to sell more rooms. This sometimes happens during peak travel dates like school breaks, large events and major holidays. The new program means we may see more rooms that can be booked with points during these times, but at a steep cost.
As a Marriott Titanium member, this concerns me.
I pay for the majority of my run-of-the-mill hotel stays with cash and use points for aspirational stays. For example, I spent five nights at the London Edition in the slow month of January for 220,000 points with the fifth-night free benefit. Cash rates were well over $500 per night, which is out of my price range.
My concern is that the 3% of hotels that fall outside of current bands starting next month will be the prime, aspirational hotels that we all save our points for. I hope I'm wrong, but this switch to dynamic pricing could mean that we see high-end properties cost an exorbitant amount of points on many dates, similar to what we see with Hilton Honors with its premium award rooms.
Starting in 2023, we could see other Marriott properties get much more variable with their award pricing.
Only time will tell what really happens, but this concern is worth considering if you have a future high-end Marriott stay in mind. Marriott lets you book up to 11 months in advance – so make some reservations now.
Related: 10 Marriott properties to book now before the award chart disappears
'Flexible' free night awards may be a Trojan horse
One piece of seemingly good news to come out of Marriott's announcement is that you can now add up to 15,000 points to your Marriott free night awards.
You can earn these awards with Marriott cobranded credit cards and as an annual Choice Benefit when you qualify for Marriott Titanium Elite status. Typically, these certificates are worth either 35,000, 40,000 or 50,000 points each. When booking a stay, you search for an award night as usual and apply the free night award in lieu of spending your points if the night costs that many points or fewer.
But this good news might not be as good as it seems at first glance.
While the ability to top-up your Marriott certificates has yet to launch, it might coincide with dynamic pricing. This could signal that Marriott assumes that dynamic pricing will inflate the price of enough properties to make certificates more difficult to use, which is a concern for anyone holding a free night certificate.
If you are now using a 50,000 point certificate plus 15,000 points to book what used to cost you just the 50,000 point certificate, then the addition is really a subtraction.
Again, there's no way to say for sure until we see what happens to award pricing next month.
Related: Stay here, not there: Using your Marriott free night certificate in the U.S.
Redeem your points now, even without solid plans
So, what's my advice to you with all these unknowns? Redeem your points now, even if you don't have solid plans.
Doing this will let you lock in award chart rates before the impending switch to dynamic pricing. If your plans fall through, you can always cancel your booking and get your points back up until the cancelation date for your reservation. And if award rates for your stay drop, you can always cancel your stay, rebook at the lower rates and pocket the difference. You're hedging your bets for the near term without any downside.
This advice is especially important if you have any aspirational awards in mind.
I have been actively spending down both my Marriott points balance and my stash of free night awards since the change to dynamic pricing was announced last year. There is just too much unknown for me to want to keep a large balance of points with the program, and I'd hate to not be able to book a property I've had my eye on because I waited too long the award rate dramatically increases.
Related: An important reminder: Why you should never hoard points and miles
Bottom line
Right now, all we know for sure is that the switch will happen sometime in March and that the majority of awards will stay within current pricing bands. The 3% of hotels that will price outside of these bands are most concerning and should clue us in as to what to expect when this guarantee for the other 97% is dropped in 2023.
At this point, we'd like to see Marriott be transparent about these changes and give customers more information as soon as possible. In theory, dynamic pricing could be an improvement if award prices remain stable most of the time and more award rooms are available to members.
However, Marriott hasn't given us enough information to look at these upcoming changes in a positive light, which at a minimum isn't the best way to start such a dramatic program change.
Until we know more, I'd strongly consider redeeming some of your Marriott points now before next month's switchover.
And stay tuned to TPG — we'll keep you updated when we learn more about Marriott's upcoming dynamic pricing that is scheduled to begin next month.
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