As many airlines and hotel programs have moved, at least partially to dynamically priced awards, or you can offset part of the fare using miles, we can have a look at the pros and cons of dynamic awards.
Whether you win or lose with dynamically priced awards mainly depends on how, when, and what you book. You can mostly forget those vacations in the Maldives that will cost millions of points and use your points at a Fairfield Inn instead.
Pros
- The price of the award fluctuates with the paid rates
- Usually, all the taxes and fees, including resort ones, are included
- You can use your points towards multiple rate types (Accor)
- Simplifies the program – makes it easier to understand for a casual member
- You can mix and match points and cash
- No need for the program to adjust hotel categories annually
Cons
- It sucks all the fun of the program, making it essentially a cashback one
- Stays at aspirational properties become extremely expensive in terms of points required
- No points of swiping affiliated credit cards – cashback better
- You end up paying all the taxes, service, and resort fees that the hotel usually collect on paid rates that are generally excluded from awards
- Cancellation rates in hand with the paid rates, while now awards are USUALLY flexible
- Free night certificates issued by co-branded credit cards must have a cash maximum
- The number of points for award wildly fluctuates with the paid rates
- You can only use points towards most publicly available rates (some deeply discounted may be excluded like Accor).
- You likely earn free nights faster by using OTA programs or merely booking the cheapest rate available that hotel programs rarely match (10% to 30% off).
Conclusion
You also have to remember that you don’t earn points for all kinds of crap fees that hotels collect; service charges, destination, and resort fees plus actual taxes, while you end up paying them when redeeming dynamically.
The hotels receive, at least in the case of Accor, roughly 15% of the booked paid rates as a reimbursement for the stay (one manager disclosed this to me once when they were attempting to use a fake currency conversion rate back when Accor vouchers were used only on few currencies).
Any other pros and cons that you would add to the list?
Dynamic pricing is done to eliminate customers getting good value. Sure, you can sometimes find a beach resort offering low prices in the middle of monsoon season or some similarly highly undesirable time when cash rates would be extremely low anyway but they soak you majorly for wanting to use your points when you would actually want to like Hawaii in Winter.
Dynamic pricing erodes the value of rewards programs
I have been planning a trip to Hawaii for my birthday and had the perfect dates picked out. The Hilton Hawaiian Village was charging the Standard Room Rate of 60k and at 5 nights for 4 it would cost me 240k or 48k/night, which purchased would be $480/night but is effectively $240/night based on buying during the 100% bonus sale. The cheapest rate for that same room WITH HH discount comes to $522 with resort fee. That’s an effective savings of $282/night. In total, it effectively costs me $1200 at the 100% bonus rate vs. $2570 for those same 5 nights at the HH discount rate. That’s a savings of $1370.
THEN I went to book it and the rate had changed from the Standard at 60k to Premium at 133k/night. Just like that. Fortunately, I was able to move the dates and found 60k available later but, wow, did that make my heart skip a few beats.
The price went up because cookies showed you wanted it. With air and hotels and cars, delete cookies before revisiting sites.
Oh, there was no way for it to know. I started looking last year, actually. Maybe once a month or so. It was only when I went to finally book it that it had gone up for just one week in July. I never actually had clicked on any dates – just month by month through the year. So it never knew what dates I wanted to go – not even the month. It just happened to go up the week that ended on the date I planned to go.
I’m not so sure that your comment that it simplifies the program is a pro. Even a casual member would who has some points would simply try to make a reservation on the hotel website using points. It would not make much difference to them the number of points required except they might notice that the number of points seems high and they do not have nearly enough points. Personally I would not consider this a pro or a con.
I really dislike the dynamic pricing model! It really spoils the program on many levels. IHG really have destroyed the value that was there program. Why would anyone buy points now? Even with 200% bonus its really stupid to buy the points.