Most major hotel chains make award category adjustments each year. Typically when these changes are made, they’re not changing the number of points required for a stay in a particular category of hotel (for example, a Category 6 hotel will still cost 25,000 points per night), but rather are changing which hotels are in which categories (a Category 6 hotel may transition to Category 7, which requires 30,000 points per night).
The past few years the hotel industry has been doing extremely well, with room rates and occupancy up. The award category in which a hotel belongs typically reflects the average daily rate and occupancy of the hotel. As a result, we’ve seen more hotels go up in category than down in category the past few years.
To give an example of the changes we saw in 2015 across different loyalty programs:
- Hyatt changed the categories for just 70 hotels, with 22 moving up in category and 48 moving down in category
- IHG changed the cost for ~10% of their hotels, with ~67% moving up in price and ~33% moving down in price
- Marriott changed the categories for ~36% of their hotels, with ~75% moving up in category and ~25% moving down in category
- Starwood changed the categories for ~22% of their hotels, with ~11% moving up in category and ~11% moving down in category
The hotel industry isn’t doing quite as well this year, and we’ll actually see paid rates decrease, on average. So in theory you’d think hotel categories would decrease accordingly, especially in regions which are struggling (Brazil, China, etc.).
IHG Rewards Club has just announced 2016 award night cost changes, making them the first program of the year to do so. These changes kick in for bookings made as of February 17, 2016 (it’s fine if the stay is on a subsequent date).
Here’s the full list of hotels changing categories.
With these changes, the cost of free night redemptions at ~400 of IHG’s 5,000+ properties will be changing by 5,000-10,000 points. Some properties are going down in price, though most are going up.
While IHG doesn’t have a “traditional” free night chart with categories, currently the most expensive free night redemption is 50,000 points per night. Under the new system, select hotels will cost 55,000-60,000 points per night, which means IHG is raising the cost of stays at top properties by up to 20%.
For example, the following five hotels will cost 55,000 points per night:
- InterContinental Boston
- InterContinental Melbourne
- InterContinental Rome
- InterContinental Sydney
- InterContinental Washington DC
Meanwhile the following 13 hotels will cost 60,000 points per night:
- InterContinental Bora Bora (both properties)
- InterContinental Cannes
- InterContinental Hong Kong
- InterContinental London Park Lane
- InterContinental Monterey
- InterContinental New York Times Square
- InterContinental Paris (both properties)
- InterContinental San Francisco (both properties)
- The Venetian & The Palazzo Las Vegas
This certainly does impact my valuation of IHG Rewards Club points. At the moment IHG points can be indirectly purchased for 0.6 cents each, which is roughly what I value them at. That valuation is partly based on being able to redeem for stays at their top properties for 50,000 points per night. It’s the equivalent of paying $300 per night for a stay there.
With these changes, many of these properties cost 60,000 points per night. On top of that, keep in mind that IHG Rewards Club has capacity controls on free night redemptions, unlike several of the other major hotel chains.
With these changes, I’d say I value IHG Rewards Club points closer to ~0.5 cents each.
We’re seeing the cost of many of IHG’s best properties go up in price by 20%, which is very bad news. While IHG doesn’t have “traditional” rewards categories, we’re seeing them add new redemption costs here, and not just adjust how many points are required within the existing structure.
PointBreaks continues to be a great use of IHG Rewards Club points, where select hotels are just 5,000 points per night. Unfortunately the list of qualifying hotels seems to get worse with every promotion, so that’s not quite as valuable as it once was either.
The full impact of these changes will depend on your redemption patterns, so be sure to check the changes by hotel to see how you’ll be impacted.
How do these IHG Rewards Club redemption rate changes impact your valuation of their points?