Update 2/25/19: A spokesperson for IHG has now confirmed variable point pricing is coming, but provided no additional details. They had this official comment:
As part of a continued effort to enrich the value proposition for our IHG Rewards Club members, we’ll be introducing variable pricing on reward night redemptions. We’re testing new features for a planned roll-out this year, and will be sharing additional details as they are available.
Original post: IHG shared preliminary results for the year to 31 December 2018 and in there it contained the following:
Strengthen loyalty programme – Continuing to innovate IHG Rewards Club to build stronger and deeper relationships with our guests to drive high value revenue across our hotel estate
- Loyalty room revenue contribution up 4%pts in 4 years to 43%, including ~50% in the Americas.
- Loyalty members 7x more likely to book direct, and deliver a 25% stay premium.
- Testing new features for 2019 roll-out, designed to increase member engagement with variable point pricing.
As you can see, the last dot point says they tested variable pricing features for a 2019. For now, we don’t have any details on how that variable pricing will actually work. There are a few options they could use:
- Award prices are directly linked to the cash price of the room. This is the method Southwest uses.
- Off peak/peak pricing. The Marriott program will soon introduce peak and off peak pricing.
- No transparency, make it up as you go. This is the method that Delta currently uses to determine award flights, they have completely removed the award chart and just make changes on the fly with no notice.
Personally I don’t take issue with loyalty programs that use either of the first two pricing systems, I actually prefer award prices being directly linked to the cash rate but that’s because I tend to stay at lower tier properties and suspect I’d get better value from points if that was the case. Obviously that’s not the case for everybody. The third option just makes me lose all faith in a loyalty program, if you can change pricing at a whim with no notice or oversight then my points are dramatically devalued and I’m less likely to be loyal as a result. It’ll be interesting to see what direction IHG decides to go.
Hat tip to Head For Points
View Comments (28)
IHG change things without disclosure anyway. Multiple Amsterdam HI/E were costing 20k last summer. But they all increased and some have changed from 20k to 35k.
The worst part, none of those were on the massive price hike list IHG published for this year.
I only noticed because I booked some last summer, and were checking this year. IHG is not be trusted.
Holiday inns costing 40k, 50k And they’re going to be variable point pricing?! If I can get a decent room for 50-60k Hilton points, 35 or 50k Marriott points or 12k-15k Hyatt points why would I pay 50k or more for a holiday inn? Hilton is the easiest points to acquire for me. I can earn half a million easy in a year and even more with P2. I can easily have Hyatt points by transferring to UR. Marriott is kinda hard to acquire for me but they have plenty of credit cards to get sign up bonus. IHG points is already very hard for me to acquire. I’ve probably had only 160k total IHG points the last five years and probably 250k with P2.
And the value of IHG redemption falls like every other hotel chain did, whatever still scrounging for breadcrumbs
I think at this point we will see if da nang jump from 40 to 50 to 70 then new pricing prolly 80+ within a year span lol
Their properties in Hawaii have redemption value of ~.33 cents per point already unless they hack up the price in dollars. But if they hack up the price you’re better off booking with other properties. With this change I can easily see these hotels charging 50k and way more during high season so at that point I’m better off redeeming my points for gift cards. At least that way there’s .25 cents per point redemption value
You wrote: "Personally I don’t take issue with loyalty programs that use either of the first two pricing systems, I actually prefer award prices being directly linked to the cash rate but that’s because I tend to stay at lower tier properties and suspect I’d get better value from points if that was the case. "
Unfortunately, in a program where award prices are directly linked to the cash rate, even if you like low-tier properties, if their prices shoot up because of, say, a special event that you want to attend, if you completely can't afford the skyrocketing cash prices, you probably can't afford the skyrocketing award prices either. At Southwest, the award price for the last seats on the plane are ridiculous, while at American the AAnytime awards that can get you the last seat for sale on the plane are typically just 2 to 3 x the SAAver award.
And it's not only events. There are certain locations, like Manhattan NYC, where all properties tend to be expensive, and it's only in programs where the award prices have nothing to do with cash rates that you can typically get good award rates in those locations. I got an HIX in Manhattan a few years ago for 35k per night while the cash cost was about $350. In many other places, HIX that cost only $200 are 35k, so that implies that if IHG went like Southwest, that an HIX near Times Square would require closer to 100k points. You really want that???
Yes, I prefer have a strong every day value than occasional great value.
That took awhile. (To understand the second to the last sentence, i.e. until I found the mistake.)
IHG has one of the worst redemption rates, but their Intercontinental brand is one of the best I've ever stayed at. As much as I'd love to leave IHG it's difficult given their ubiquitous international presence and quality.
Wonder how the chase free night, those that still have the no cap for the year will work
I was recently looking to redeem that no cap free night and had a hard time finding availability. I was specifically looking at New Orleans and every IHG in the whole town had no availability on some nights. Not sure how that is possible. Some IHG hotels never appear to be available for awards, like in Monterey, CA.
Some hotels would cost less points with variable pricing a la Hilton's or Southwest model.
However the other side of the coin would be those Road Trip proerties such as HIX and such, en route to some National Parks etc, would become a lot more expensive.
We have redeemed 25K properties when doing a road trip to visit Glacier NP and the Canadian Rockies. Cash rates were all over $250 so it made the pt worth 1c that is almost unheard of with IHG pts. lol.
So once this variable pricing is in place, those properties would cost a lot more.