Marriott May Undergo Devaluation: How The Dynamic Pricing Will Affect Visitors?
The Marriott Bonvoy programme is undergoing significant adjustments, and individuals with large point balances or a special vacation planned should be prepared.
Marriott said last year that it will no longer use its long-standing reward charts in favour of dynamic pricing. The modification is expected to go live in March. While Marriott has not provided a precise date, TPG has verified that members will be contacted before to the move.
This follows similar moves by Hilton – and, more recently, IHG – to better align award prices with current cash rates for rooms. And, as we’ve seen from others, this might raise the cost of award evenings during busy times and make aspirational prizes more difficult to get.
Marriott’s major move is less than a month away. While we hope for the best, Marriott Bonvoy members should book their accommodations as soon as possible.
Most hotels will continue to price in their present bands — that is, between off-peak and on-peak tariffs — until the end of 2022, according to the hospitality giant. However, after the shift takes effect next month, a few hotels will price outside of these bands.
To put it another way, they could charge any number of points for a night with no restrictions. Before the changeover to dynamic pricing next month, here are a few things to keep in mind.
Interest rate hikes aren’t expected to speed up deals, according to Reay. The raises aren’t like deadlines for 1031 exchanges or tax law changes that take effect the next year.
Buyers have benefited from historically low interest rates on hotel loans, and a quarter- to half-point hike from the Fed translates to higher loan interest rates, he added. A half-to-one-point increase in debt service equals a 25% increase.
Here are few things to note before JW Marriott implements Dynamic Pricing model.
Majority of Marriott Hotels to Remain in Their Current pricing structure
According to Marriott, the majority of hotels will maintain their present pricing ranges in 2022, as stated in the introduction. This means that most Category 3 hotels will have a pricing range of 15,000 points per night off-peak to 20,000 points per night during peak season.
This year, additional diversity in the bands will be introduced for the 97 percent of homes. Instead of the present predetermined levels, you may, for example, spend 16,000 points one night and 18,000 points the next.
However, there is one little condition that might make the most difference in the short term: after the reform takes effect next month, the remaining 3% of hotels will price outside of these categories.
This translates to more than 200 hotels for which Marriott may charge whatever it wants. At the moment, the highest prize price is 100,000 points.
Marriott hasn’t said which properties would be outside of these bands, but we’re guessing it’ll be higher-end places that were previously a good value on points. Consider luxury resorts such as the St. Regis Maldives, where accommodation costs may often exceed $1,000 per night.
When Marriott announced the switch to dynamic pricing, David Flueck, Marriott’s senior vice president of global loyalty, told TPG that the advantage of moving away from an award chart is that hotels will be more motivated to offer award space. However, desirable homes may become substantially more costly than they are now under the existing system.
In order to sell more rooms, hotels now limit the quantity of rooms offered on points. This can occur during busy travel periods such as school breaks, huge events, and significant holidays. As a result of the new scheme, we may see more rooms available for booking using points during certain hours, but at a premium.
This may concern Marriott Titanium members.
I pay cash for the majority of my regular hotel stays and use points for more luxurious ones. For example, during the sluggish month of January, I stayed five nights at the London Edition for 220,000 points with the fifth-night free bonus. The cash prices were considerably over $500 per night, which was way above my budget.
My fear is that, starting next month, the 3% of hotels that fall outside the current bands will be the top, aspirational hotels for which we all store our points. I hope I’m incorrect, but this adjustment to dynamic pricing might imply that high-end locations would cost excessive amounts of points on various days, akin to Hilton Honors’ premium award rooms.
Other Marriott properties’ award price might become even more unpredictable starting in 2023.
Only time will tell what really occurs, but if you’re planning a future high-end Marriott stay, this is something to think about. Make your bookings soon because Marriott allows you to book up to 11 months in advance.
Adding Points to Marriott Free Night Rewards
Marriott’s statement included the apparently excellent news that you may now add up to 15,000 points to your Marriott free night rewards.
When you qualify for Marriott Titanium Elite level, you may earn these prizes with Marriott cobranded credit cards and as an annual Choice Benefit. These certificates are often worth 35,000, 40,000, or 50,000 points each.
When booking a stay, you search for an award night as normal, and if the night costs that many points or less, you use the free night award instead of using your points.
However, the good news may not be as fantastic as it appears on the surface.
While the opportunity to top up your Marriott certificates has yet to be introduced, it may correlate with the introduction of dynamic pricing. This might indicate that Marriott believes dynamic pricing would boost the price of enough hotels to make using free night certificates more difficult, which is a concern for anyone with a certificate.
If you’re using a 50,000-point certificate + 15,000-point certificate to book anything that previously cost only the 50,000-point certificate, the addition is actually a reduction. Again, until we see what happens with award pricing next month, there’s no way to know for sure.
Redeem Your Points Before The Change in Policy Comes into Effect
So, with all of these unknowns, what is my counsel to you? Even if you don’t have a firm strategy in place, redeem your points immediately.
You’ll be able to lock in award chart rates before the imminent changeover to dynamic pricing if you do it this way. If your plans change, you may easily cancel your reservation and get your points back up to the reservation’s cancellation date.
You may also cancel your stay, rebook at the reduced prices, and pocket the difference if award rates for your stay decline. You’re hedging your bets for the short term while avoiding any risk.
If you have any lofty awards in mind, this tip is very vital.
Conclusion
All we know for sure right now is that the move will occur in March, and that the bulk of awards will remain within current pricing bands. The 3% of hotels that will price outside of these ranges are the most worrying, and they should provide us a hint as to what to anticipate after the 97 percent guarantee expires in 2023.
At this time, we’d want to see Marriott be as open as possible about these changes and provide consumers with as much information as feasible. Dynamic pricing, in principle, might be beneficial if award rates were steady for the most of the time and more award rooms were accessible to members.
Marriott, on the other hand, hasn’t provided us with enough information to see these future changes in a good perspective, which isn’t the ideal approach to start such a major programme shift.
I’d highly recommend redeeming some of your Marriott points now, before the switchover next month, until we learn more.
Stay back to TPG for more information when we hear more about Marriott’s new dynamic pricing, which is set to begin next month.