What “Dynamic Pricing” of Hotel Awards Means for Your Travel Planning

Once upon a time, it was relatively simple to spend your hotel points. An award chart would be published, with “award categories” determining how many points were required per night. Since every hotel in the chain was allocated to an award category, you knew exactly how many points you needed for one or more award nights at your chosen hotel(s).

You might have a large enough points balance to book that vacation stay immediately. But, if not, you knew exactly how many points you needed to earn (or buy during a promotion).

Hilton and IHG are already pricing awards using “dynamic pricing”, with Marriott to follow in 2022. So how does this impact your travel planning?

Much More Effort

Under a fixed points system, you booked your award stay and that was it! Nothing more to be done except look forward to your vacation…

With dynamic pricing, you need to be far more attentive. Any time you have an idea for a vacation, you need to make a reservation using your points straight away (double and triple checking the cancellation policies on award nights…).  That is the only way to lock in your “points price”. Delaying too long means that you run the risk of your hotel stay costing you even MORE points.

Unless you are happy paying any price, you also must be flexible with your dates. Some nights might cost fewer points than others. Frustratingly, this might not match up with whatever dates you’ve found airline award space for…

The job isn’t done once your reservation is confirmed… assuming that you like to save money / points. With dynamic pricing, the points price can move around, sometimes quite substantially. This is especially relevant in larger cities such as London or New York, with dozens of potentially equivalent hotel options to choose from. You might be booked at a Hilton for 40,000 points per night, only to find a few days later that the Doubletree is now costing 35,000 points per night (for the dates of your trip), and a few days after that your original Hilton might be down to 32,000 points…

Whether it’s part of your daily routine, or slightly less frequent, you need to regularly re-visit the dates of your stay to see whether prices have gone down. Luckily, the price of your confirmed reservation can NEVER go up (which is why the crucial starting point is formally booking something to lock it in). But you might be able to save some points by cancelling and rebooking, which can make the frequent checks worthwhile.

Earn and Burn?

One of the reasons that hotel chains like dynamic pricing is that they can quietly devalue their points without anybody really noticing. This should lead you towards spending your points whenever you can make good use of them.

But this generally wise piece of advice has a downside, which is most obvious with Hilton Honors. When trying to book a multiple-night award stay with a low points balance, Hilton won’t even tell you how many points you would need. It simply defaults to its Points & Money option, which allows you to use your points to discount the paid rate.

It doesn’t matter if you might be willing to buy more Hilton points during their frequent bonus promotions, or if you are waiting for a bunch of credit card points to post, or if you might be inclined to cancel a different award booking to free up enough points… If you are logged into your account/app, Hilton will NOT show you how many points you need, until you have them…

Should You Even Bother?

This is the most dangerous part (for the hotel chains). One major hotel chain runs a ‘perfect’ dynamic pricing award scheme… Accor Live Limitless. Accor points convert into € vouchers that can be used to pay for all, or part, of a hotel stay (at regular paid rates).

If you spend €800 (roughly $920) at a full-service Accor hotel, you will earn 2,000 points (25 points per €10).  Those 2,000 points can be converted into a voucher worth €40 (roughly $46). This is a very simple rebate of 5%. You can earn more points by earning elite status with Accor, but with chain-wide promos relatively rare, you are generally capped at a rebate of 9%.

THIS… IS… BORING!!!  There’s no point dreaming of saving up your points for a trip to the Maldives or Bora Bora, because you would just be paying the cash rate using vouchers.

Moreover, you could easily do better than that 5% rebate by signing up for Hotels.com Rewards, where you get 1 free night for every 10 paid nights (roughly a 10% rebate).

As a result, as award pricing more closely tracks paid rates, the more likely that some customers realize that the hotel chain’s loyalty program doesn’t work for them. This is especially relevant for those guests without elite status (or any interest in those elite benefits that have yet to be “enhanced” away…).

The Bottom Line

Dynamic pricing has been introduced as a way for hotel chains to manage their own internal issues (and with their franchises). But it also makes life much more difficult for loyalty program members. Even the most engaged members might start to wonder whether dealing with the dynamic pricing of awards is worth the hassle…

What do you think? Let us know in the comments section…

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