Marriott to adopt a dynamic pricing system for Bonvoy loyalty program

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Marriott [Credit: Lester Balajadia/Shutterstock.com]
With more flexibility, hotel owners may be motivated to open up more room inventory to rewards redemption if they are getting a higher rate. Photo Credit: Lester Balajadia/Shutterstock

Starting early next year, Marriott will move to dynamic pricing for its Bonvoy rewards redemption rates, the company said Tuesday. 

Dynamic pricing -- setting flexible prices for products or services based on market demands -- has been used to boost profits for a range of industries from sporting-event tickets to rideshare services. 

Now the biggest hotel brands are adopting the strategy for loyalty programs. Accor, Hilton, Hyatt, and IHG have all introduced dynamic-pricing elements to their loyalty programs. 

Currently, redemption rates for the Bonvoy program are based on a fixed chart that sets the required amount of points based on the hotel class and fixed "off-peak," "standard," and "peak" time periods. Under the existing system all hotels fall in one of eight categories with set redemption rates across the three periods. 

A room in a category 1 property during an "off-peak" time costs 5,000 points per night, while a category 8 hotel during a peak period would cost 100,000 Bonvoy points nightly. The redemption rates for hotels participating in Marriott's PointSaver program are up to 20% lower. 

Starting in March 2022, the company will transition to "Flexible Point Redemption Rates."  

"Rates will more closely resemble hotel rates and give members more flexibility and options to explore our portfolio when redeeming points for stays," Marriott said. 

"Flexible point redemption rates will mean that more rooms overall will be available for redemption stays because our hotels will be able to better manage room inventory."

According to Marriott, more than 97% of its hotels will have redemption rates ranging between the existing off-peak and peak figures in the last 10 months of 2022, while the rest of its hotels will have rates that eclipse previous maximums.

"For stays beyond 2022, we will adjust rates based more closely on hotel rates," Marriott said.

With more flexibility, hotel owners may be motivated to open up more room inventory to rewards redemption if they are getting a higher rate. But, starting in 2023, the redemption rates will be entirely untethered, and can go as high as demand dictates. 

There will also be no minimum amount for a rewards redemption, and theoretically some hotels might require even fewer points for a booking during slow periods. 

Elite status extended through 2022

Additionally, Marriott on Tuesday also announced the Bonvoy loyalty program will extend members' 2021 elite status through 2022, no matter when the status was first earned.

Points expiration will also remain paused through next year and Suite Night Awards will be extended for six months. Free Night Awards will also be extended and become more flexible. 

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