Marriott is eliminating award charts, but they won’t tell us exactly when. So it’s a secret devaluation. In commenting on the timing on this devaluation the offer,
With the introduction of flexible point redemption rates sometime in March and the elimination of hotel categories, we can no longer offer Travel Packages.
They say it’s coming sometime in March. That’s consistent with the original announcement that award charts would cease in March 2022. Some people have assumed this would mean March 1, 2022. And that’s possible, however a Marriott spokesperson tells me “we haven’t announced the date yet.”
Marriott knows that they are doing this in March. It’s possible they’re not certain when they’ll be ready with the tech in place, but even if that’s the case they could wait until the new anti-customer system is ready and tested and then announce a date, with advance notice, for this to go into effect. There’s no rush, other than reducing program expenses more quickly versus less quickly.
When I spoke to Marriott Senior Vice President David Flueck about the elimination of award charts back in October, he told me we’d see points prices more closely align with room rates.
- More price points than before. It will no longer be just 8 hotel categories with off-peak, standard, and peak rates.
- Most hotels won’t fundamentally change price in 2022. What this looks like is that while the category chart goes away “97% of hotels will still range between off-peak and peak through 2022” in other words most hotels aren’t going to change price by orders of magnitude. That’s a promise for only one year, and only about the points range and not about average redemption prices.
For stays starting in 2023 Marriott will “adjust rates based more closely on hotel rates.” I expect this won’t mean things are… better.
- More rooms will be available for redemption. Flueck confirmed that the minimum number of rooms a hotel has to provide to the program isn’t changing, so this must be accomplished by raising the price Marriott will pay properties for rooms in some fashion. I’ll have to wait until a hotel shares an updated program guide to see the updated economics here.
There should also be “more premium rooms available for redemption,” and the Bonvoy program is “working hard with owners to ensure” this. The pricing structure for premium rooms (as an add-on to the base redemption price) won’t change.
- More rapid price adjustments. No more categories means no more annual category adjustments. Currently dates at hotels move between off-peak, standard, and peak on average monthly. Moving forward we’ll see pricing changes happen more regularly than just once a month, though we’ll see changes in smaller increments than a category adjustment would have meant.
- 3% of hotels will see big changes right away. Flueck described hotels that have seen significant recovery, higher average daily rates, will be the ones going up – where there’s outsized value in redemption prices relative to room rates. This is “not necessarily the most expensive” hotels, which I take to mean it’s hotels that are operating at close to capacity and where Marriott finds itself paying out override rates for rooms (actual average daily rates instead of discounted redemption rates) often along with pulling in higher than expected room rates.
Making more rooms available for redemption at average value isn’t something that’s going to be good for members. Eliminating the transparency of an award chart, and changing redemption prices more frequently, isn’t something that’s going to be good for members.
The fundamental proposition of points is the possibility of getting outsized value for redemptions.
- Hotel chains can buy inventory cheaper than guests. That’s doubly true for excess inventory.
- But guests value the stay at what they’d have paid for it. So the chain can deliver rooms at a discount to members redeeming their points.
- With fixed or award chart pricing, it makes sense to spend cash when a room is cheap and redeem points when the room is expensive – in other words, getting more value for points.
- But tying redemption prices to cash means always getting average value, and taking the possibility of outsized value off the table. There’s no more leverage in collecting points, and they’re no longer about making dream stays possible.
Revenue-based redemptions make collecting points more like a punch card, with guests earning a straight rebate on their hotel spend or card spend. And who would accept earning 2 points per dollar on a Marriott co-brand if each point is just going to get you $0.006 apiece? That’s a 1.2% rebate card, which is hardly competitive in today’s marketplace.