Posted by William Charles on February 25, 2019
Hotel Booking

Published on February 25th, 2019 | by William Charles

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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

 



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erica
erica

Doctor, just to understand are they ditching the chart? not necessarily will you be able to redeem 70k for ihg london park lane or , le grand, canne etc might be much more or less depending on the season and what road they picked ? adn are their really 50% of american customers using points? hard oto believe ime my grandmother uncles aunts parents most friedns and cousins all book and pay cash without a second thought to even bother crediting it to a loyalty account? how coudl this be

RC
RC

dang right as i was just starting to move from spg to ihg

Aleks
Aleks

IHG is pretty much the only hotel loyalty program that has a decent award rates, plus offer occasional savings with Point Breaks (although it has been reduced recently).
All other major programs gutted their programs to be either tied to pricing or chose exuberant rates that hard to justify. I have been personally using IHG with good success over the last 5 years, and think it’s the best program offered on the market right now: both for value and selection of the properties world-wide. It would be a shame to downgrade IHG loyalty with proposed devaluation plan. They just to expect to milk more money from the customers, but that may not work as expected – management need to learn from Marriott/SPG mistake to keep IHG program afloat.

BaconSF
BaconSF

I disagree. Hyatt points are still valuable and they have not gone through major devaluations like Marriott or Hilton

Jace
Jace

Hrm, I think IHG award rates are inflated. Unless cash rates are abnormally high, they are worth about .5 cents per point, sometimes less. It seems like they tend to limit availability more as well.

Snorlax
Snorlax

There can be some decent value in some redemptions.

escot
escot

Aleks, just wow…. at first I thought you must be a paid shill for IHG…… I too have been a long time IHG platinum whatever, but there’s been so many severe negative changes that have “gutted” (your slam for the other programs) the once storied IHG program, that your rosy comparative praise of IHG just was laughable, at least to me…. but then you slightly redeemed yourself with a note that it might be a “shame” to downgrade the program. Imagine that.

Joe
Joe

I agree, yet few people seem to agree with us. I regularly have used my points for .7 to 1 cent. Had a “peak season stay” that was nearly 2 cents. This on top of points being plentiful through accelerate, credit cards, etc. I would hate to see this program gutted.

Ryan
Ryan

I wouldn’t call the other programs’ rates “exuberant”…though the companies probably are exuberant about how much they’re giving us the shaft with such! 😉

iahphx
iahphx

The devil is in the details, of course, but in general I also prefer variable hotel award pricing. I’m not super loyal to any one chain; I accumulate points in all the major programs (largely through credit cards). So for any stay, I just need one of the hotels to have a “points deal” that I can use. IHG’s current program tends to make their hotels expensive on points often when paid rates are low. I think I’d find my IHG Points more valuable in a variable program. Unless, of course, they just use the changeover to jack up all the point redemption prices.

I am a PRIORITY and I have value
I am a PRIORITY and I have value

IHG is too expensive everywhere I go. IHG is the “HIGH COST LEADER”. I have a lot of IHG points. Due to decrease in values, I cannot use my IHG points. I always try to book another hotel chain first. IHG does not make its customers a priority, therefore I never make bookings at IHG a priority

M
M

“Strengthen Loyalty Program”, huh?
Wisely IHG did not try to “Enhance”, so a minor kudo for originality.

Money
Money

I am 100% certain whatever they have coming will work against the customers/members. Otherwise they would have announced what “exciting things are coming”.

John
John

4% Increase in the past 4 years isn’t something to brag about. That time period has been one the most lucrative in economic history. 4% would get you canned in any other industry. While increases in loyalty members booking direct is a result of banning travel agent bookings from receiving any benefits. Put someone new in charge of loyalty, most IHG hotels are not that nice and there are so many more options nowadays. Continue to devalue a program and it will eventually die out.

BaconSF
BaconSF

I agree, the only time I stay with IHG is if I have a decent accelerate promo. The spire elite benefits are a joke

miafll
miafll

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.

gary
gary

Wonder how the chase free night, those that still have the no cap for the year will work

Crazy Dog Lady
Crazy Dog Lady

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.

Darv
Darv

That’s the biggest question. The 40k properties are what will keep me renewing the cards. If they peak those above availability, that could be it for me and IHG. Hotels.com is looking more attractive every month.

scott
scott

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.

USam
USam

That took awhile. (To understand the second to the last sentence, i.e. until I found the mistake.)

sdsearch
sdsearch

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???

P
P

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

Darv
Darv

The holiday Inn Express in Kona is about 0.06 cpp peak times. I’m probably going to book it soon. That’s for one night. Better than that with fourth night free.

Kevyx72
Kevyx72

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

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