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points, though at least they ‘cap’ how much a room night can charge so occasional deals are possible (although a new unpublished 120,000 points redemption level could risk that).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)