Are dynamic Marriott points more valuable now? Yes, but with a big caveat …

DEVGRU      2022-04-18     2022-04-18 4 Comments

The Points Guy recently published a quantitative analysis arguing that the Marriott points, even after the implementation of dynamic awards, retain its purported value of ~0.8 cent/pt. To get that conclusion, they pulled data from 50+ hotels over ~150 days. In fact, the average redemption value after the dynamic award is in place is 0.84 c/pt. They thus concluded that Marriott’s dynamic award scheme isn’t bad after all. At least it’s not a huge devaluation as previously dreaded.

Gary from View From The Wing disagreed with TPG‘s methodology and challenged their conclusion, calling it not an apple-to-apple comparison. Gary’s argument is that TPG didn’t factor in how many points a hotel would have cost in the old system, so the benchmark simply isn’t right. On top of some personal experience of being “Bonvoyed”, Gary concluded that “How anyone can look at the changes and not see less value is beyond me”.

Who is right here? Is Marriott so irredeemably bad, or has giving Marriott flack become the politically correct thing to do in the travel blogosphere? In this post, we try to resolve this dispute by letting the data speak for itself.

Methods

Building upon TPG‘s (incomplete) methodology, we searched and compiled cash and point cost of 7800+ Marriott properties over the course of a full calendar year. This prevents biases in properties (e.g. luxurious resorts vs conference hotels) as well as in seasons. Considering Gary’s valid criticism of what benchmarks should the new dynamic value be contrasted with, we pulled the old point redemption values before the awards becoming dynamic. This permits a truly apple-to-apple comparison.

One valid criticism of this approach, of course, is that the scope is so large that it basically ignores what’s going on in individual hotels. Suppose there is a Courtyard property going up in values and a St Regis going down. The perception could be very much different, while the math suggests everything is fine. To address this potential issue, we looked at individual hotels and asked: which hotels were impacted most by this change (both negatively and positively from a customer point of view).

Results

Average redemption values

Having surveyed nearly 98% hotels in Marriott’s entire portfolio over a full calendar year, we found the value of the dynamic points indeed centers around 0.8 c/pt.

The mean value is 0.82 c/pt and the median is 0.79 c/pt. There are 24 properties that give a redemption value greater than 2.0 c/pt, which we consider “out-sized” values.

Now back to Gary’s question: how about before? Is the 0.82 c/pt value, on average, better or worse? Let’s check out the plot below.

To our surprise, the distribution of the old redemption system slightly sits to the left, centering around 0.7 c/pt. The old average was 0.79 c/pt with a median of 0.76 c/pt. If we look at the tail on the right side, it’s actually slightly worse than the result under the dynamic scheme.

This means that, at face value, Marriott points just become slightly more valuable after awards becoming dynamic, which is quite counter-intuitive to be honest. It is also noteworthy that TPG‘s results are quite close to our estimates despite their much smaller sample size. TPG deserves the kudos here for its quantitative approach.

What about individual hotels?

Granted, a higher redemption value does not mean your can always score a better deal, because the analysis above overlooks individual hotels. To answer this question, we compared the redemption values of the same hotel before and after March 29. Has point redemption become more or less attractive?

Turns out more than half of the hotels do not see much change at all. About a third of the hotels actually see a rise in point redemption values. This is consistent with the findings in the previous section, where dynamic awards shifts the overall distribution of redemption values to the right a little bit.

However, a big caveat got our attention: there are 85 hotels whose new dynamic redemption values are 0.4 c/pt or more lower than before. On the right side, only 42 hotels score better redemption deals. Let’s see who they are.

But hey, I just want to go to Hawaii …

Now let’s delve into the final aspect of this analysis. If a business traveler has amassed tons of Marriott points and just wants to spend them all in a luxurious beach resort in Hawaii, is the new change good or bad for him/her?

Here is the list of hotels whose redemption values varied greater than or equal to 0.4 (in both directions).

Many sought-after hotels in Hawaii, as well as other famous tourist destinations (Maldives, Half Moon Bay, just to name a few), saw a hike in point cost and a steep drop in redemption values. This means that if you have a dedicated resort property to burn all of your Marriott points, this change does not work in your favor.

Conclusion

In the grand scheme of things, Marriott’s dynamic award actually means the points are slightly more valuable, supporting what TPG claims. However, the big caveat is that it doesn’t mean the hotel you want to spend points on got more affordable. The reality is probably to the contrary, especially if you explicitly want to burn the points in high-end properties in popular tourist destinations. We think Gary’s argument would be more convincing if he pointed out the devaluation of those specific properties.

On the final note, we think Marriott deserves some credits here because it has explicitly announced that the properties in some of the most popular destinations (most notably Hawaii) was about to cost more points soon. Such announcements bought us some buffering time to strategically book those hotel for the future. If you have scored a deal, please let us know by leaving a comment below!

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