Yesterday we learned that Marriott is going to let former Starwood hotel brands limit award redemptions on high demand dates during the year, matching what legacy Marriott brand hotels could do.
Instead of getting rid of these redemption restrictions entirely, as we had been led to believe was the roadmap for the new program, they’re going backwards under pressure from hotel owners.
There’s been a lot of misinformation spreading since the change became public (on blogs, Marriott still hasn’t told its members) so I wanted to correct these misimpressions.
Westin Austin Downtown
How This Removes Real Value From The Program
Starwood pioneered what they called ‘true redemption’ – not just “no blackout dates” where you couldn’t use your points at all, but also “no capacity controls” so if a standard room at a hotel was being sold for cash you could also use your points.
When there’s a fixed points price for a room, that’s a great opportunity to use your points when rooms are expensive. Hotel chains have moved away from fixed prices, with IHG and Hilton hiding their award charts altogether and Marriott and soon Hyatt introducing peak and off peak prices, all geared towards forcing members to top out at average value redemptions and prevent the sort of home runs a member might get redeeming rooms during the Super Bowl or a Presidential inauguration.
Marriott is taking away the ability to get the most value out of points at former Starwood brand properties, who will be able to limit the number of redemption nights at the property during their highest demand periods. That’s the end of peak of peak period redemptions at these hotels.
Doesn’t Peak Pricing Take Care Of This Problem?
Marriott added peak and off peak pricing last year, so for instance a category 8 hotel that’s 85,000 points per night might be discounted to 70,000 points (say, Dubai in the scorching summer time) or increased to 100,000 points (when you probably want to stay there).
They’re charging more during dates they expect to sell out, and they’re revisiting every month to make sure they are raising redemption prices whenever that’s happening.
It’s natural to think this process should eliminate the need to cordon off hotels from redemption during peak periods.
- One Mile at a Time: “Isn’t the whole point of peak pricing to allow awards to be released in periods of extremely high demand?”
- Doctor of Credit: “Keep in mind Marriott already uses peak and off peak pricing that is supposed to solve these high demand periods.”
However peak pricing does nothing to benefit the hotels. Hotels receive their average daily room rate as compensation for award nights when they’re close to fully booked. That was true before and with the introduction of peak pricing.
The whole point of peak pricing is to compensate Marriott Bonvoy itself more, with more of your points, when you redeem for nights that the program expects the hotel to be full and they have to pay the hotel its override reimbursement rate.
Hotels don’t get more of a payout from peak pricing. However on peak demand dates hotels can sell rooms for higher than their average daily room rate for the year. They do not want their average rate. Instead they want to block award redemption, since ADR is the most they can get from a redemption stay, while they can increase the room rate charged to paying guests.
Owners of Starwood brands were angry that they didn’t get ‘as good a deal’ as legacy Marriott brand owners [of course sometimes the owners of the different brands are the same] even though it’s the same deal they had under Starwood (although on non-sell out nights Marriott compensates hotels less than Starwood did).
It certainly seems fair that if Marriott is going to introduce ‘peak pricing’ that it should darned well solve the problem of peak demand dates. That was never the intention of peak pricing, though.
This Change Is Definitely Not a ‘Net Gain’ For Members
Nick Ewen covers these changes at The Points Guy. He argues that letting former Starwood brands – like Westin, Sheraton, W, and St. Regis – limit award redemption on certain high demand nights of the year “is not necessarily a net loss — and could wind up being a net gain.”
Here’s his argument (repeating what Marriott told me as well): there will be fewer high demand nights in 2020 across all Marriott hotels than there were in 2019.
As part of this update, the program has reduced the number of days that legacy Marriott properties can restrict for award stays. Since these locations represent the vast majority of the combined program, “this will result in fewer days in total subject to inventory controls portfolio-wide in 2020 compared to 2019,” according to a Marriott spokesperson.
However Nick misunderstands what’s happening at Marriott. They were already limiting the number of high demand dates that Marriott brands could impose to limit award redemption. That is decidedly not “part of this update.” It’s been in the program rules for over a year, and was part of the road map when the new combined program was launched.
The only change that Marriott is now making is to increase allowable high demand dates (up from zero) at legacy Starwood brand hotels. We were already getting the full reduction in high demand dates. We’re just getting less of a reduction as a result of this change. It’s like moving from 1000 to 200 on the way to zero — and then up to 500.
This is a new decision that’s being demanded by hotels, and has nothing to do with consumer benefit. But Nick argues that’s justified as well,
[W]hy should an Autograph Collection be allowed to mark a certain number of days as “high demand” and thus off-limits to awards, while a Luxury Collection property in the same region have no ability to do so whatsoever?
Marriott was phasing out high demand award restrictions entirely.
- Legacy Marriott brands used to get up to nearly 20% of the year cordoned off if they wanted it.
- That was going down to about 3%.
- Since high demand dates were going away entirely, as promised with the launch of the new program by Marriott Senior Vice President of Global Loyalty David Flueck, there was no reason to introduce high demand dates at Starwood properties that never had them.
While Marriott says they still have a goal “to eliminate inventory controls in the future” this is a clear step backwards.