IHG Rewards devalued their points without notice and in the middle of the pandemic, when hotel properties have been suffering. Those hotels, for the most part, should want award guests filling rooms more than ever before. And with room rates in most places down, points should go farther than before not be worth far less.
So why would IHG do this? I try to avoid starting with explanations like
- Evil. They can stick it to their members, so why not?
- Stupid. They are sacrificing the long-term loyalty the program has built over decades
IHG says they went to dynamic pricing of awards last year, so the gutting of point values now isn’t really new. This is disingenuous.
I assume that smart people are running the program, and one story I’ve heard – second hand, so I’m not vouching for this – is that IHG is trying to manage cash flow challenges. By increasing the points price of redemptions that means fewer redemptions:
- When members see so many points for an award, they may just pay cash (even if it means paying cash somewhere else)
- Member points don’t cover as many room nights, so IHG doesn’t have to pay its owners for as many awards.
I’m not saying cash flow is the reason, but it seems more plausible than ‘evil or stupid’ and any of the reasons I’ve been able to come up with for devaluation without notice during a pandemic point away from consumers investing long-term in the program. IHG executives have to know this, so I assume they were willing to trade long-term customer value for short-term benefit.
To be sure they are not alone,
- United devalued partner awards during the pandemic in fact did it more than once. The reasoning there seemed clear, and for the same reason they refused to refund customers whose flights were cancelled: preservation of cash at all costs (they have to pay money to partners for those awards)
- Delta devalued partner awards during the pandemic and then went back and did it a second time. But that is simply par for Delta, so not unexpected. It’s the consistent direction they’ve been headed for at least 7 years.
Always and everywhere the elimination of award charts has presaged devaluation. The new President of American AAdvantage says he doesn’t understand why people care about award charts but will leave them in place.