Published on February 25th, 2019 | by William Charles30
IHG To Introduce Variable Point Pricing In 2019 (Confirmed But No Additional Details)
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