Marriott Bonvoy has finally implemented the facility to top up Free Night Awards with up to 15,000 points. This change was made necessary by Marriott’s implementation of dynamic pricing.

As a reminder, the main types of Free Night Award (FNA) you might find in your account are:

• 35,000 point FNAs from some co-branded credit cards
• 40,000 point FNAs from your 75-night Annual Choice Benefit
• 50,000 point FNAs from other co-branded credit cards

You are still required to spend your FNAs on a standard room – you cannot use them to reserve a premium room. You cannot add more than 15,000 points, nor do you receive a refund if your booked room costs fewer points (than the maximum allowed by the FNA).

And with dynamic pricing, it is worth remembering that any change to a reservation will result in its re-pricing. Sometimes this works out to your benefit, but many times it won’t…

Why Marriott Bonvoy members wanted this

It’s pretty simple…  With dynamic pricing, it has become increasingly difficult to spend your FNAs at attractive hotels.

Many credit card holders are happy to pay an annual fee because they perceive the FNA(s) received to be worth more than the annual fee. But being unable to spend those FNAs is particularly de-motivating.

Letting these cardholders top up their FNAs with points goes a long way to keeping them happy.

Why Marriott Bonvoy is HAPPY to do this

Allowing members to top up with points is one solution to a “problem” of Marriott’s own making. But what else could Marriott have done?

Give points instead of Free Night Awards

Instead of handing out 35,000-point FNAs to credit card holders, Marriott could simply give 35,000 points as an annual card renewal bonus. This would allow members to “top up” as many points as they like for whatever award they prefer. (because they’d simply have points in their account) But this doesn’t work well from Marriott / Chase / Amex perspective because…

1. The majority of cardholders don’t value “points” in the same way as they do a “free night”
2. “Points” don’t expire un-used as often (like some FNAs do). “Breakage” is great for loyalty program economics…

Increase the face value of Free Night Awards

Marriott could simply have increased the face value of 35,000-point FNAs to 40 or 50k.  LOL…

Members redeem more points

The methodology for reimbursing franchised hotels for award nights is a closely guarded secret. In general, however, franchised hotels receive:

• a small amount (to cover variable costs) when occupancy is low
• the average room rate when occupancy is 90-95%

This means that there is no linear relationship between the points cost and the actual amount Marriott must pay to the hotel. A completely full Four Points might be charging 35,000 points per night (and eligible for a 35k FNA) while a half-full JW Marriott might be charging 50,000 points per night. The former redemption would actually cost Marriott more than the latter.

Completely dynamic award pricing will solve that problem when it is fully implemented in 2023 and beyond.  (apart from when Marriott gets its forecasted occupancy wrong)  But for now, members will spend more points on average as members “top up”, instead of using FNAs at fewer and fewer possible hotels.

Bottom line

I suspect that many Marriott Bonvoy members are thrilled with the ability to top up their FNAs with up-to 15,000 points. Unfortunately, however, adding points to a FNA is just another devaluation…