The travel industry in an ever-evolving beast. Just when you think you’ve figured it out, things change.
For the longest time award charts have been a staple. Hotels award charts simply said “If your hotel is a ‘Category 1’ property, it cost [X] amount of points. If your hotel is a ‘Category 2 property, it cost slightly more with [X] amount of points.” The higher the category of the hotel, the higher the award redemption rate.
Airlines incorporated the same methodology with award charts that said “If you want to fly from [Region A] to [Region B], it cost [X] amount of miles. If you want to fly from [Region A] to [Region C], it cost [X] amount of miles.” Generally, the further the distance, the more miles were required. However, the rates for both hotel and airlines were stagnant.
BUYING YOUR “LOYALTY”
Well over the last few years, the rules have changed and we’ve seen airlines move to revenue-based earning. In other words, the amount of miles that airlines “award” you is simply based on how much money you spend with them. For example, if you purchase the cheapest revenue economy ticket, they’ll “award” you with 25% of the miles flown. If you purchase an obviously more expensive business class ticket, the airline will “award” you with 200% of the miles flown.
Well now, it seems the introduction of “peak” and “off-peak” award charts are en vogue in the hotel industry.
Recently, Marriott (the largest hotel chain in the world) made this plunge and it was not met with open arms. Unfortunately, the “peak” and “off-peak” pricing was not determined by time of the year but instead by the day. For example, a specific hotel could cost 5,000 points on Monday and 10,000 points on Tuesday making the redemptions unpredictable.
It’s worth noting that Marriott “rebalances” hotels on a monthly basis, so you may have to check at the beginning of the month to see if the price of a reservation has gone up or down.
HYATT ANNOUNCES “PEAK” AND “OFF-PEAK”
Hyatt (perhaps, my favorite hotel chain) made an announcement that it’s making substantial changes to its award chart too and unfortunately it’s along the same line as Marriotts move to peak and off-peak pricing in March 2020. This is not a full move to dynamic pricing but it does add some complexity. Here’s the announcement from Hyatt:
Starting in March 2020, World of Hyatt will introduce Off-peak and Peak point redemption for free night awards. Under this new structure there will be three point redemption values, which will allow members more flexibility when it comes to getting the most out of their points for free nights at more than 1,000 hotels worldwide.
- Off-peak: Fewer points will be required during Off-peak times – starting at 3,500 points per night (the best value when hotels are less busy)
- Standard: Points required during standard redemption periods will follow today’s point requirements – starting at 5,000 points per night
- Peak – When hotels are the busiest, more points will be required for a free night – starting at 6,500 points per night and will be no more than 5,000 points above the Standard point requirement
- This new structure will be true for all types of award nights, including free nights in a standard room, club-access room, standard and premium suites.
- Points + Cash awards will also offer Off-peak and Peak rates and will still require 50% of the standard cash rate and 50% of the points required for a free night.
- If a member has an existing award booking for a night that changes to Off-peak in March 2020, they will receive an automatic one-time refund on the point difference. Members will not be charged more if their existing award booking changes to Peak.
- Free night point redemptions will be identified as Peak, Standard or Off-peak as soon as nights are available for reservations (usually 13 months in advance) and will not change once posted.
- Our hotel award categories are not changing and will remain 1-8.
MY INITIAL THOUGHTS
Anytime an airline or hotel says they are making “enhancements” to a program, generally, it’s not a good sign for customers. However, we won’t really know what to think of this change until March when Hyatt implements the changes.
I suspect the more desirable locations will require more points during popular school breaks, like summer, winter holidays and spring break.
Hyatt points already stretch further than Marriott Bonvoy points so “off-peak” pricing could make some popular spots more accessible for those of us with tighter points budgets.
One aspect that really excites me is the fact that Hyatt will set these prices once (when the dates are open for booking). I enjoy efficiency so checking award pricing every….single…month is not cool. (Yes, I’m looking at you Marriott).
Additionally, Hyatt is automatically refunding points for reservations that get cheaper in March. Tell me that’s not phenomenal!
I’m a big fan of Hyatt. Although, they don’t have a sizable international footprint like their competitors, they have been acquiring and partnering with various boutique hotel chains around the world making it even more appealing for me.
However, are we likely to see higher prices for awards at hotels we want to stay at? Most likely. But at this point, we have no idea how many properties will be in peak or off-peak pricing, and how often we’ll see them implement higher pricing overall. Marriott made the claim that the number of properties moving into peak pricing would be balanced by the hotels falling into off-peak pricing. That claim fell largely on deaf ears based on Marriott’s history of corporate speak and backtracking on promises.
Hyatt has a much better track record than that. I’m not suggesting that these are all going to be positive changes but I’m much more optimistic.
What do you make of this announcement? Do you have a favorite hotel chain?