Uh Oh: IHG Rewards Club Testing Variable Redemption Pricing

IHG reported its year-end results and noted the importance of their loyalty program to drive direct bookings (no commissions to online travel agencies) and higher revenue (“Loyalty members 7x more likely to book direct, and deliver a 25% stay premium.”).

They also noted that they’re testing variable redemption pricing.

Testing new features for 2019 roll-out, designed to increase member engagement with variable point pricing.

We do not know yet what they mean by variable pricing — whether it’s straight revenue-based redemption (points costs are directly tied to room rate) or they’re talking about more discounts during low occupancy periods or higher rates during peak periods.

However variable points pricing almost never winds up good for members. Hotel award charts are great, because you know what a hotel is going to cost to redeem. When room rates are high you use points and get a good deal. When rates are low you save your points and pay cash. The point is that you can get more than just ‘average value’ for your points.

When programs move to variable pricing your points revolve around a more or less fixed value, it’s difficult to get better than average value like $0.004 per Hilton point, $0.005 per IHG point, and $0.007 per Marriott point.

Hilton already moved to variable pricing which makes it tougher to get a good deal using your points, though at least they ‘cap’ how much a room night can charge so occasional deals are possible (although a new unpublished 120,000 points redemption level could risk that). Marriott is moving closer to variable pricing with the pending introduction of low and high season rates.

IHG has rarely been good about providing advance notice of program changes, though hopefully this is one they’ll think carefully about and give members clear guidance on and plenty of notice.

Hyatt looks better and better.

(HT: Head for Points)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Pingbacks

  1. […] New IHG PointBreaks List Comes Out on Monday: The new IHG PointBreaks list will be available online this Monday, 2-25-19. Awards will cost 5000, 10000 or 15000 points. A preview of the hotels is not available so far. The list will be posted here (note that the list currently contains PointBreaks that expire this week). H/T Doctor of Credit. Speaking of IHG, the brand is also testing variable redemption pricing. […]

Comments

  1. Not directly related, but i think IHG is making proactive attempts to retain members in “creative” ways. A few days ago I received an email from IHG telling me I had been made Gold Elite level, thanked me for my loyalty, and explained the new benefits to which i was entitled.

    I looked back over my records and calculated that my number of stays and money spent should NOT have entitled me to Gold Status.

    Just like my daughter (college student) received a packet in the mail from AA explaining she had been granted complimentary Platinum status for 6 months. I can’t recall the last time she flew AA, must have been, oh…5 year ago?

  2. With recent devaluations and fixed pricing, I have noticed a lot of cases where the IHG redemption values are a horrible deal, especially off season or in low occupancy. I’ve even seen some cases where the “cash and points” cost is higher than cash only. So, while I agree that overall this will probably represent another devaluation, I actually think it may be helpful in some cases. Their recent points sale for a few NYC hotels is a case in point. You can often find nice 3-4 star properties in NYC in winter for $100-$150 without too much effort and when IHG is offering theirs at 50-70K points for most properties, the value is not there.

  3. How on earth would this change “designed to increase member engagement”? As members, we’re used to various programs marketing “enhancements”, as they piss on our legs and tell us it’s raining. But putting that bullshit in an SEC filing or financial press release seems borderline criminal.

  4. “designed to increase member engagement…” = by getting their members to swear at them more.

    They did not say its designed to make members happier, therefore it must mean members have to put in much more effort get any value from the system, thus more swearing at IHG.
    It’s too bad that there are so many despicable people out there constantly thinking of new ways to shortchange their customers.

  5. “…designed to increase member engagement with variable point pricing.”? Uh ok. Designed to suck when you actually wanna book a desirable hotel and not suck when you want an HIE in Topeka in January.
    I now imagine the Venetian over a holiday weekend for 100,000 points.

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