The Points Guy looked at about 50 hotels out of more than 7000 in Marriott’s portfolio, including the ones Marriott says are their most popular redemptions, to see how the value of points are holding up after the chain dropped award charts and went to dynamic pricing.
My own experience hasn’t been good, for instance over the weekend I wanted to redeem a 50,000 point free night certificate for a hotel that wound up costing 52,000 points. And since Marriott hasn’t launched the option to top off certificates with more points yet, to meet their price increases, I was stuck unable to use the expiring certificate.
Nonetheless I was interested to see what they found in their experiment. Going in my hunch was that any devaluation would be small. After all, Marriott said the impact would be small until next year. There are about 200 hotels where the impact isn’t small and prices may have risen more than 30,000 points above the old peak price.
- Take a category 7 hotel where off-peak was 50,000 points.
- Peak was 70,000 for that hotel, and now it can cost 100,000.
- There are properties that have literally doubled from a low of 50,000 points to now cost 100,000. I’ve had readers complain about this exact example for bookings they’ve tried to change.
The biggest hit comes at places like the Ritz-Carlton Koh Samui; Westin Grand Cayman and St. John; Paris Marriott Champs Elysees; Renaissance Paris Arc de Triomphe and Paris Vendome; Bodrum and West Hollywood EDITION; Grand Bohemian Asheville and Charleston; JW Marriott Essex House and Marco Island Resort; Ritz-Carlton Santa Barbara, Georgetown, Fort Lauderdale, Half Moon Bay, Laguna Niguel and Sarasota; Westin Maui, Westin Princeville Ocean Resort; Wailea Beach Resort.
But those are just a handful of Marriott’s behemoth. If you want to spend the night at a SpringHill Suites where there are few other options you might come out ahead!
Here was The Points Guy‘s conclusion:
When we average all properties together, we’re left with an average value of 0.84 cents per point.
This is actually higher than our previous valuation of 0.8 cents per point. And it shows that, based on these 50-plus properties, there’s still value to be had.
Now, in some sense this piece is comparing apples to oranges, and also asking the wrong question.
- The methodology doesn’t show what they say it says. The Points Guy isn’t comparing what rooms used to cost in points with what they cost today. They are comparing what hotels cost today in cash versus what they cost today in points, coming up with an average value in points against a room rate, and comparing that against what they used to think the average value of a Marriott point was – which isn’t based on the same sort of methodology to begin with (it’s something that they’ve only done for their valuations of United, Delta, and American miles).
- And their points values answer the wrong question. There’s a difference between ‘the room rate value your points can redeem for’ (what TPG measures) and ‘the value of a point’ (what TPG says they’re measuring).
You can buy whatever you like with cash, not so Marriott points. As much inflation are we’re seeing in the U.S., Marriott has been inflating more. So Marriott points are a worse store of value. And you can earn a rate of return on your money, while Marriott points will only continue to get less valuable (they’ve told us to expect this next year).
And their comparison only accounts for dates when standard rooms are available at hotels, which biases in favor of when you’ll get better value from points.
However I think this is a nice effort that suggests Marriott did what they said they would do – limit the carnage in the first year, in much the same way they over-indexed Bonvoy value when the program first launched (they waited to add a higher tier category and launch peak and off peak pricing, even though they announced it as their plan).
The playbook is ‘announce a negative change but wait to fully implement it’ so everyone looks at the new program and says “great!” or “not so bad!” before it gets worse. We should believe Marriott when they say next year will be worse!
And within the average there are some lessons.
- There’s huge variance Just because the program is revenue-based without award charts doesn’t mean they’ve (yet) converged to average value pricing. They found a $0.0041 per point value at the Moxy Paris Bastille and a $0.0121 per point value at the St. Regis Rome. You still need to look for value.
- Some of the best value remains at the highest-end resorts perhaps a result of the 2022 caps they’ve put in place. The prices at places so expensive they’re off the charts aren’t as good a deal as they once were, perhaps, but still represent strong value against the retail price of a room (if you would have paid that much for the room in the first place), e.g. 1.8 cents per point at the St. Regis Maldives and 1.2 cents per point at Al Maha in Dubai.
- Value isn’t where we’ve come to expect it in recent years the points cost of the best hotels have generally gone up, while the cheapest hotels have remained a strong value in points. Don’t assume that ‘low category’ hotels are good value anymore, they note the Moxy Paris Bastille delivered only $0.0041 per point and the AC in Karow just $0.0045.
How anyone can look at the changes and not see less value is beyond me, yet they believe “that fear has not been realized at this time, as on average, we saw a value of 0.84 cents per point across the 15,000-plus data points we analyzed. This is similar to our previous valuation of 0.8 cents apiece.”
That misses that their original valuation was too high, that their new approach uses a different methodology entirely so shouldn’t be compared, and overvalues points because it treats them as though they were cash when they’re less flexible than cash – and more prone to devalue. Marriott has told us to expect to be kicked harder next year. And that expectation has to factor into the current value of the currency.