Reward Nights Now Cost Far Fewer Points at IHG Hotels
Intercontinental Hotels Group (IHG) picked the perfect time to introduce dynamic pricing for reward nights. With COVID-19 having a massive impact on bookings and inventory, you can book ahead and get some incredible deals with your IHG Rewards points.
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Reward nights at IHG hotels just got a lot less expensive, and you can book a room with fewer points. Intercontinental Hotels Group, which includes Holiday Inn Express in its 15-brand portfolio, has introduced dynamic pricing for reward nights. Now, we are talking about the cost of a room in points. So, no cash out of pocket. But as I’ve explained before,” you should always treat your points like cash.
We knew dynamic pricing was coming. IHG had been experimenting with it since at least early 2019. But the roll-out took time, nearly 18 months. The IHG hotels in New Orleans were not using dynamic pricing when I booked three stays in May. But dynamic pricing has apparently gone global now, and it has significantly lowered redemption rates.
How Dynamic Pricing Works
Dynamic pricing is not at all uncommon when you’re paying a cash rate. Prices fluctuate based on demand; and that, in a nutshell, is what dynamic pricing means.
But until recently, loyalty programs offered fixed rate pricing on free night awards. The Intercontinental New Orleans was 50,000 points a night, every night. But now, thanks to dynamic pricing, I was able to book a room for just 30,000 points — a 40% reduction.
Hilton and Marriott have already adopted dynamic pricing models. Hyatt intended to introduce its own dynamic pricing this year, but decided to postpone until 2021 due to the Covid-19 pandemic.
Dynamic Pricing is Good… For Now
When Marriott introduced dynamic pricing last summer, few people were happy about it. Marriott’s plan pushed peak season redemption rates up by anywhere from 14 to 33 percent. You can expect the same thing will happen with hotels in the IHG portfolio. You will eventually pay higher redemption rates during the peak season. Just not right now.
Covid-19 has had a major impact on hotel demand, pushing both cash prices and redemption rates lower. Now is a great time to make the most of your IHG Rewards Club points, and save a bundle on future bookings.
Dynamic Pricing is Bad… Later
IHG made a good move to do this now, rather than later. Covid-19 gives them cover to introduce dynamic pricing when it will make their customers happy. Everyone loves a good deal, and they are widely available right now.
IHG no longer has an award chart, so you can expect point redemption rates to more closely mirror the cash rate for a room. That removes one of the key benefits of collecting points and miles. Before dynamic pricing, we could compare the cash price of a room (or a flight) with its cost in points. And then take the best deal!
If a room cost 50,000 points (roughly the cash equivalent of $250, per “The Points Guy” valuations), you could compare that to the cash price. If the room costs $400/night, pay with points. If it costs $100/night, you’d pay with cash. Those value calculations will still exist, but the savings for choosing one or the other will be much less compelling.
Free Night Certificates Get a Boost
This is potentially fantastic news for IHG Reward Club credit card holders. More hotels will now accept your annual free night certificate, at least during off-peak times. These certificates are good for a free night at any IHG hotel that’s priced at 40,000 points or less per night. I had planned to stay at another New Orleans hotel with my free night certificates. But when the Intercontinental’s priced dropped under 40,000 points, I changed my reservation.
I have both the IHG Rewards Club Select (discontinued) and the IHG Rewards Club Premier credit cards. Both offer this annual free night benefit.
The IHG Rewards Club Premier credit card is one of the best values in credit cards. The annual fee is just $89, so the card will usually pay for itself with just the free night certificate. Card holders will also receive an additional 10x points per $1 spent at IHG properties, mid-tier (and overrated) Platinum status in the IHG Rewards Club, and a Fourth Night Free benefit on reward night redemptions. Stay three nights on points, you won’t pay extra for the fourth.
Final Thoughts
Reward Nights now cost a lot fewer points at hotels within the IHG portfolio. This is great news, but there is a big caveat. In a healthy economy, where demand is high, dynamic pricing will push up reward redemption rates. But for now, you’re saving money on rooms. Take advantage of the savings while you can.
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