This is a big day for Marriott Bonvoy. It was announced that the program will extend elite status. However, major changes will also be made to Bonvoy award prices. OMAAT readers won't be pleased.
Marriott Bonvoy has removed award charts
Marriott Bonvoy will discontinue its award charts and instead move towards flexible points redemption rates. The timeline is:
Marriott Bonvoy will move to dynamic pricing starting March 2022. Prior to that, the existing award chart will remain in full.
Between March 2022 to the end of 2022 award pricing for more than 97% properties will remain between off-peak or peak redemption rates. That means that just under 3% hotels will have redemption rate ranges higher than they are now in 2022
There will be no further restrictions on the award pricing starting in 2023
Marriott Bonvoy will continue to offer the fifth night free, which means that you get your fifth night for free if you redeem points for 4 nights.
Flexible points redemption rates will allow for more redemption rooms, as hotels will be better able to manage their inventory. It is unclear what this means in practice. Marriott Bonvoys existing limit on award rooms will not be lifted, so standard rooms may not always be bookable using points. There are currently no plans to offer redemptions for additional room types.
To give you an idea of the situation, Marriott Bonvoy used to have an award chart. All hotels are classified into Category 1-8 and each property has off, standard, or peak pricing. An award night costs anywhere from 5,000 to 100,000 Bonvoy Points per night.
The future will be endless in terms of how expensive a Bonvoy award evening could go. The future will show how expensive a standard room can be.
Redeems at the most prestigious hotels will be more expensive
Is there a reason why the Marriott Bonvoy award pricing has changed?
It is worth learning the economics behind hotel loyalty programs.
Marriott does not own the majority of properties but has a franchise or management agreement.
The loyalty program pays the hotel a portion of the stay when a member redeems Marriott Bonvoy Points
The amount that is reimbursed depends on how full the hotel is and what the average daily rates are. If a hotel is not full, the reimbursement rate will be low to cover incremental costs. However, if the hotel is full (think 95%+ occupancy), then the hotel will get reimbursed at the average daily price.
The Marriott Bonvoy members who redeem at full-priced hotels are the most expensive. This is because the program is paying almost the entire price of that stay for the member. These changes to the award program are meant to fix that and eliminate all overly expensive redemptions for Marriott Bonvoy.
These changes will have the greatest impact on hotels that are always full and have high average daily rates.
The more busy the hotel, the higher the award costs.
How dynamic will Marriott Bonvoy award pricing look?
In fact, Marriott Bonvoy is following in the footsteps of many other travel loyalty programs. Hilton Honors discontinued award charts many years ago, and IHG Rewards recently changed to dynamic award pricing.
What can we expect from Marriott Bonvoy My understanding is that Bonvoy points will not be able to be used for a specific dollar amount toward a hotel stay.
Instead, there will be a more general correlation between the cost of a stay and the award price, similar to Hilton Honors. Hilton Honors has an unofficial maximum award stay cost (150,000 Honors Points for a standard hotel room), so we will have to wait and see when Marriott Bonvoy charges.
I wonder how much higher award pricing is possible for the most expensive hotels. Peak season stays at the top properties cost 100,000 Bonvoy Points per night. That's $700 worth of points at a value of 0.7c per point. Although some Marriott properties are more expensive than this, they are few and far between and likely not always full.
You will be amazed at how costly some properties can get
This is a bad change for anyone who wants to maximize value
We are all passionate about maximizing our miles and points hobby. This means redeeming points at properties that give us the highest value per point. This is a terrible change for people like us. Staying at Marriott's top properties for five nights with the fifth night free will cost you no more than 400,000 Bonvoy Points.
Is there a silver lining? I believe that Marriott executives would argue the new award pricing model is rationaler.
Sometimes hotels are priced at a high point, especially during the off-season. In these cases, the category might not make sense. Pricing may be more reasonable in those instances.
Realistically, most people don't redeem for Al Maha or St. Regis Maldives. I also think that these changes won't be too bad for people with better redemption habits.
Even with dynamic award pricing being used in other programs, there are limits to how many points top hotels can earn. Most loyalty programs realize that it is important to keep some aspirational redemptions reasonable priced to give people something to look forward to, even if it never comes to pass.
For more average hotels, this might not be a problem.
Bottom line
As of March 2022, Marriott Bonvoy will introduce dynamic award pricing. This will mean that the program will no longer use award charts and instead use flexible redemption rate with no minimum or maximum points for redemptions.
It is impossible to hide the fact that for those who love redeeming for Category 8 properties and maximising our points, this will almost certainly be bad news. It is not clear how high Marriotts award pricing might go.
What do you think of Marriott Bonvoy's switch to dynamic award pricing
