In recent days, Marriott Bonvoy seems to have implemented a relatively mild but widespread devaluation of points, whereby we’ve seen the cost of award nights at a large percentage of properties increase. The devaluation is significant enough so that it’s probably meaningful for Marriott, but minimal enough so that the company hopes that Bonvoy members won’t notice…
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Marriott Bonvoy increases points requirements for awards
For a several years now, Marriott Bonvoy hasn’t published award charts. The program has dynamic award pricing — the number of points required for a stay isn’t strictly revenue based, but rather, varies based on a variety of factors.
While there can obviously be variability at a particular hotel in terms of award pricing, it’s also easy enough to tell when there are widespread changes across properties. Essentially, we’re talking about situations where Marriott has clearly tinkered with its award pricing formula, rather than just some property specific adjustments.
As flagged by LoyaltyLobby, it looks like over the weekend, Marriott made one such change, and we’ve just seen a 5-10% increase in award costs across the board. Those are just averages, with some properties having gone up in price more, and some having gone up in price less. It’s also noted how among all Bonvoy hotels in Bangkok, the average redemption value per point is now 0.56 cents (in USD), and that’s after factoring in taxes & fees.
Run of the mill Bonvoy redemption values are getting bad
I have to say that as time has gone on, the base level redemption value for Marriott Bonvoy points has truly gotten to be pretty bad. Of course pricing is variable, so it’s not consistently the case. Historically I’ve valued Marriott Bonvoy points at 0.7 cents each, and Hilton Honors points at 0.5 cents each. However, I’m increasingly feeling that a lot of Marriott Bonvoy points redemption rates are looking similar to those you’d expect from Hilton Honors.
As a totally random example, for an upcoming overnight near Frankfurt Airport, I see Bonvoy points basically give you just under 0.5 cents of value each, which is kind of awful.
And keep in mind it’s actually worse than that. When you redeem points, you’re forgoing the points you’d otherwise earn for a cash stay — as a top tier elite member paying with a co-branded credit card, I ordinarily earn 23.5x points per dollar spent, so that’s an additional 16%+ return (assuming a valuation of 0.7 cents per point). So to get 0.7 cents of value per point, you’d need to redeem at a rate where you’re getting well over 0.8 cents of value per point.
The properties where you’re most going to get outsized value are often on the very high end. For example, looking at an upcoming night in Venice, I can redeem 158,500 points when the St. Regis Venice would cost $2,600, while I can redeem 168,0000 points when The Gritti Palace would cost $3,700.
While those are both nice hotels, the reality is that this is what I’d call “points farm” pricing. They are trying to skim the market due to the number of Bonvoy redemptions, since they only have so many rooms to fill with cash rates. If you’re going to spend that much, there are better non-points properties to stay at. If I’d never be willing to pay these amounts to stay at these properties, then I also shouldn’t value my redemptions that highly.
The loyalty program economics here sure are complicated. We know that Marriott hotel owners are really unhappy with Bonvoy redemptions, but you know Marriott is just putting these better margins in its own central pockets, rather than doing anything for owners.
Bottom line
Marriott Bonvoy has quietly devalued its points, as redemption rates seem to have gone up an average of 5-10% in recent days. Of course that’s mild in the scheme of devaluations, but when spread across the entire network, that will translate to a lot more points being needed for a lot more redemptions.
While there are still opportunities to get great value with Bonvoy points, I’m finding base level redemption values to be pretty lousy nowadays, and frequently you’ll get just 0.5 cents of value per point, give or take. That’s not very exciting, especially when you consider the limited efficient ways to earn Bonvoy points.
What do you make of this latest Marriott Bonvoy devaluation?
Your hypothesis of points-farm pricing rests on the implicit hypothesis that individual properties set their own redemption rates.
I do not know how you get that idea. From other blog entries, you clearly are aware how hotels are being compensated for honoring an award (specifically, they get close to the ADR if the property is at capacity).
Properties would absolutely kill Marriott if thet set their own redemption rates. Obviously, hotels' revenue management would simply...
Your hypothesis of points-farm pricing rests on the implicit hypothesis that individual properties set their own redemption rates.
I do not know how you get that idea. From other blog entries, you clearly are aware how hotels are being compensated for honoring an award (specifically, they get close to the ADR if the property is at capacity).
Properties would absolutely kill Marriott if thet set their own redemption rates. Obviously, hotels' revenue management would simply sell a few rooms at a fairly high cash rate and then completely fill up the property by charging ultra-low award rates. Disastrous for Marriott it would be, hugely profitable for the individual hotel.
It is not points farming. The reason is simply these are aspirational properties seeing high demand for awards. Marriott awards at those properties tend to have a fairly high range. But Marriott has a good way here to offer above-average redemption value at times (of course, not attractive enough to induce a high probability the property will sell out).
@ John -- Sorry, I'm not following your logic as to how my hypothesis relies on hotels setting their own award pricing (which I know they don't do)?
Let's just use very simple math. Let's take an "aspirational" hotel in peak season, and assume that 50% of rooms are booked with points, and 50% with cash (the actual numbers don't matter, but I'm trying to keep the math easy). If you only end up having...
@ John -- Sorry, I'm not following your logic as to how my hypothesis relies on hotels setting their own award pricing (which I know they don't do)?
Let's just use very simple math. Let's take an "aspirational" hotel in peak season, and assume that 50% of rooms are booked with points, and 50% with cash (the actual numbers don't matter, but I'm trying to keep the math easy). If you only end up having to sell a much smaller percentage of rooms for cash, it's easier to charge higher rates and skim the market. Furthermore, loyalty programs cause people to act irrationally, and maybe book a points hotel over a better hotel without a points program.
Properties like the St. Regis Venice and Gritti Palace are great (well, I strongly prefer the former to the latter, but I digress). My point is that they're charging Aman Venice and Airelles Venice cash rates, when they definitely wouldn't be trying to do that if it weren't for the loyalty program. That's all I'm trying to say, and I don't think that's unfair?
I think it's more straightforward than that. Marriott know which destinations are popular for redemptions among their members (e.g. Venice will see a lot more of them than Fuzhou or Belo Horizonte) and will adjust redemption rates to meet that demand.
The points pricing can be done either in tandem with setting room rates or as a separate process that arrives at a similar conclusion due to being subject to similar market forces (basically...
I think it's more straightforward than that. Marriott know which destinations are popular for redemptions among their members (e.g. Venice will see a lot more of them than Fuzhou or Belo Horizonte) and will adjust redemption rates to meet that demand.
The points pricing can be done either in tandem with setting room rates or as a separate process that arrives at a similar conclusion due to being subject to similar market forces (basically a hotel can only charge more than the competition if there is a large number of hardened loyalists who need to stay in that location).
No credit card links, so everyone can easily attain the amazing benefits of Bomvoy Platinum status?
@ Gene -- I don't think I suggest that Platinum status is amazing? What I do suggest is that if you stay at Marriotts with any frequency, having status is better than not having status, and it's easy to make the math on the Brilliant Card work, in terms of recouping the fee through benefits other than the status.
Sometimes it makes sense to stay at Marriott affiliated properties not because they're Marriotts, but because...
@ Gene -- I don't think I suggest that Platinum status is amazing? What I do suggest is that if you stay at Marriotts with any frequency, having status is better than not having status, and it's easy to make the math on the Brilliant Card work, in terms of recouping the fee through benefits other than the status.
Sometimes it makes sense to stay at Marriott affiliated properties not because they're Marriotts, but because they're good hotels in spite of their affiliation with Marriott.
They know they can do this and still have the one of the largest loyalty program in the world and the largest footprint of any hotel groups in the world’s history. For now. One day when they build the first hotel on the Moon and in Mars, I can guarantee you it will be a Marriott property. And United will be flying that route on a MAX 8.
How do you define that 'largest footprint in world history'?
Marriott have fewer than 10k hotels when H World Group have more than 13k. Admittedly most of H World's hotels are located in China, but, if you exclude hotel in a group's country of origin, Marriott are still second, this time to Accor.
In fact, because H World and Accor are already working together, it's quite possible that we'll see a partnership between them,...
How do you define that 'largest footprint in world history'?
Marriott have fewer than 10k hotels when H World Group have more than 13k. Admittedly most of H World's hotels are located in China, but, if you exclude hotel in a group's country of origin, Marriott are still second, this time to Accor.
In fact, because H World and Accor are already working together, it's quite possible that we'll see a partnership between them, in which case Marriott may end up having half the hotel count of the world's biggest hotel system.
Marriott are enormous in the USA, but their footprint elsewhere, and particularly in the global South, is lousy and consistently overpriced.