It shouldn’t come as a surprise to many that Marriott Bonvoy has thought of moving to dynamically priced rewards considering what Accor, Hilton, to an extent, and IHG have all done (read more here).
We got a hold of an internal document that clearly states that Marriott’s goal, at least in 2020, was to move to dynamic awards at a later date, which their spokesperson claims that they have no intention of.
You can access Marriott Bonvoy here.
There is a chapter on Inventory Control Dates where Marriott discloses their long term intention:
Inventory Control Dates (ICDs) Inventory Control Dates (ICDs) give participating properties the option to cap award redemptions nights to a reduced percentage of total capacity on a limited number of nights. Each property is allotted a minimum of 10 and a maximum of 40 ICDs per calendar year based on the property’s ratio of redeemed nights to total hotel capacity. A property is allowed up to four changes per calendar year to the dates it implements ICDs.
Properties are encouraged to evaluate the need to use Inventory Control Dates to assist in driving revenue on high demand nights (i.e., for a special event). Limiting award redemption stays at the property could otherwise negatively impact the hotel’s redemption penetration and therefore the hotel’s redemption schedule for the following year.
In the long-term, ICDs will phase out in anticipation of dynamic pricing upon notification from Loyalty. In addition, to meet legal obligations, a wider scope of ICD functionality will remain in place past the aforementioned for a list of properties outlined in Marriott Bonvoy Terms and Conditions.
Marriott properties are allowed 10 to 40 days per year when they can restrict the number of award rooms, and the exact minimum number is unclear (could it be just one?).
This document spells out that these Inventory Control Dates, when the hotel rates are through the roof, are no longer needed when dynamic award pricing would be in place, and the number of points required for awards would be equally expensive.
Marriott Bonvoy awards are rather dynamic already, considering that a hotel in each category has SIX different point requirements depending on OFF-PEAK, STANDARD, and PEAK combined with Saver and Standard.
What are the pros and cons of dynamically prices hotel awards?
Marriott claims that they have no intention of moving to dynamically priced hotel awards. Still, it has been their goal, at least in the past, based on the internal loyalty program guide from February 2020 (before the pandemic).
The number of points required for hotels already varies a lot. Both hotels and Marriott can limit the number of awards allotted to each hotel, capping the potential money going out.
Before the pandemic, Marriott leadership indicated on the earnings call that the loyalty program was cash-flow negative, meaning more money going out of the door than coming in. Obviously, their goal was to fix the issue.
Whether the pandemic corrected the issue for Marriott remains to be seen. The hotel rates crashed, and category changes didn’t reflect this. There was no wholesale category shift down that should have been the case. Marriott Bonvoy can keep rising the number of points required for awards fixing the cash coming in/going out issue when the sector recovers.
If Marriott decides to move dynamic hotel awards, it essentially will end its credit card business with Chase and American Express. Why would you swipe Marriott Bonvoy co-branded cards when they are essentially cashback ones, but you can only cash out at Marriott-affiliated hotels?