Is it time to ditch all of your Marriott credit cards?

72

Marriott recently made the announcement that they will ditch award charts in 2022 and that starting in 2023, award rates will more closely reflect cash prices. Some members immediately swore off the program and declared that now is the time to abandon ship on Marriott Bonvoy. We even talked about saying Bon Voyage to Marriott Bonvoy on the podcast. I am as unhappy as anyone to hear that award charts are going away, but is it time to abandon ship — or just change up strategy?

Marriott free night certificates will become more valuable for most people

By most accounts, the most exciting thing to come out of Marriott’s announcement was the fact that starting in early 2022 members will be able to add up to 15,000 points to a free night certificate to stay at a property costing more points than the certificate covers. There is no doubt that I think this will be extremely valuable for a short window and a big convenience long-term, but I think this major improvement to the program is likely to be a second-best piece of the announcement by some measure. I think free night certificates are likely to become more valuable even before considering this newfound flexibility.

Personally, I am a maximizer. I always prefer to get as much value as possible. I want to use free night certificates to stay at the swankiest place possible. I want to use 35K Marriott free night certificates to stay at a St. Regis when rates are $979.75 per night. However, those instances are very rare. Sure, I have a ton of flexibility and I happen to be the kind of dude who will plan a trip to Astana, Kazakhstan in order to get that kind of value in a more normal world.

That is to say that I was disappointed to hear that Marriott is going to more dynamic pricing that will more closely track room rates starting in 2023. I fully expect the St. Regis Astana will be far out of my price range both in terms of cash rates and points in 2023.

But for most people, that example has zero relevancy. I’m going guess that there aren’t many Marriott members joining me on that journey.

The average Marriott member is infinitely more likely to want to book a Courtyard in the Dallas-Fort Worth area (there are 20 of them!) than the St. Regis Astana.

Seriously, these are *all* Courtyards.

I didn’t do an extensive search, but I am willing to bet that today you will get poor value more often than not when redeeming for a Courtyard in the Dallas-Fort Worth area whether using a free night certificate or points.

However, when points become more closely associated with cash rates, it should be easier to get consistently solid value out of free night certificates.

We don’t yet know exactly how much Marriott points will be worth in the long term, but we expect that points will have a more fixed value against cash rates. Our educated guess is that points probably won’t be worth more than the rate at which Marriott sells points. While the ordinary price for Marriott points is 1.25c per point, they go on sale periodically for less than 0.9c per point. Greg’s most recent analysis found Marriott points to be worth about 0.63c per point. After award charts are eliminated, I expect that we’ll see a consistent Marriott point value somewhere between 0.63 and 0.9c per point.

If we split the difference and assume that Marriott points will be worth about 0.77c per point in cash value, the value of free night certificates will increase. Greg’s most recent analysis of Marriott free night certificates found 35K certificates to be worth about $225. However, if Marriott prices hotel awards based on points being worth about 0.77c per point, we can expect that a hotel costing 35K points would alternatively cost around $269.50 in cash. That makes certificates a better deal than today. More importantly, it will likely be a more consistent deal. Suddenly, rather than redeeming your 35K free night certificate for a less-than-ideal Courtyard in Fort Worth, you’ll likely be able to use it for a night at an Autograph Collection property there or alternatively in even the most expensive cities in the US (where 35K free night certificates can be tough to use currently when most properties are peak-priced at 40K).

I feel particularly bullish about free night certificates for use in cities like New York where I expect that I’ll usually be able to find a Marriott property in the $270-per-night-or-less range but where I have sometimes struggled to find properties bookable with 35K free night certificates.

The same is true with 50K free night certificates which would be worth about $385 if points were worth 0.77c each.

Granted, I’m just making a wild guess about the value of points. They certainly may be worth less than that. They could end up being closer to Greg’s most recent observed value of 0.63c or could even be less. However, even if points were only worth 0.63c per point when award rates become dynamic, free night certificates would only be worth marginally less than Greg’s recent estimates and that value would be more consistent. That only gets bolstered by the ability to add points on top to get precisely the property you want.

That is to say that you would be able to count on that ~$220 value whether you’re staying in New York or Dallas or Astana or Argentina if you’re using it for a property that otherwise costs 35K points per night. Given that the 35K certificates come on cards that cost $95-$125 per year, that seems like a fantastic trade.

In fact, I think that trade will make Marriott credit cards one of the best value plays in terms of credit cards to have and hold long term. Many of us with the old $49 IHG Rewards Club card (which hasn’t been available for new applicants for years) find that card to be one to have and hold because it is very easy to use the card’s annual free night certificate for value beyond $49. I think the same will likely be true for Marriott credit cards if I am right that point value will be somewhere between 0.63c and 0.77c per point and that the move to dynamic pricing makes value more consistent. That sentence is not without conditions, so be aware that this post may not age well. But at the moment, I am holding more firmly to Marriott credit cards than ever before, which is a remarkable change from the time not that long ago when I planned to say goodbye to all of my Marriott cards (thank goodness for procrastination).

Spending on Marriott cards will be a bad deal (but it already is)

Greg knows that spending on his Marriott card is a raw deal.

When point value becomes more closely associated with cash rates, the opportunities for outsized value will likely dry up if not disappear. That makes the value of collecting Marriott points an easily calculable proposition. Even if points are worth 0.9c after dynamic pricing (which is probably foolishly optimistic), the 2 points per dollar spent that you earn on most purchases with most of the Marriott credit cards would be worth 1.8c per point. You would be better off using a 2% cash back credit card and then paying for your Marriott stays.

But that’s not a change from today. When Marriott points are on sale, you can typically buy them for less than 0.9c per point. A 2% cash back credit card therefore earns about 2.22 Marriott points per dollar spent. If you use the Alliant Cashback Visa (2.5% back on the first $10K in purchases per billing cycle for Tier One Rewards members), you’re looking at an effective 2.78 Marriott points per dollar spent. You are already better off using a cash back credit card and using your cash to buy Marriott points if you want Marriott points.

New credit card welcome bonuses will continue to be valuable. Even at 0.63c per point, a bonus of 75,000 or 100,000 or 125,000 points will continue to be solid return on required spend.

But in the new Marriott world, I expect that there will be little reason to buy Marriott points since I expect the value of them to be less than the purchase price. That doesn’t mean that I’ll eschew Marriott, it just means that I’ll use cash back earned from my cash back credit cards to pay the cash rate rather than using points most of the time.

That’s not a bad strategy. Assuming points are tied to cash rates, I’ll get value on par with an award stay anyway and I’ll earn Marriott points while I’m at it. With Marriott Platinum status, I’ll earn 15 points per dollar spent. Even at our 0.63c valuation, that’s worth about 9.5% back toward future Marriott stays — and when the value of points are more consistent, I’ll know that I can count on that actually being worth about 9.5% even when I’m staying at one of the 20 Courtyards in the Dallas Fort Worth area.

Unfortunately, that means that I probably won’t ever book the St. Regis Astana for New Year’s Eve. And on some level, I find that disappointing because chasing wacky sweet spot redemptions like that has led me to interesting places that were never on my radar like the JW Marriott Phu Quoc or the Hyatt Regency Saipan (a non-Marriott example).

Saipan was beautiful, interesting, and a great value with points. In that case, I was taking advantage of United and Hyatt sweet spots, but nonetheless I only ended up there because of award program sweet spots.

That part makes me a little sad. However, the truth is that Marriott has such a convenient footprint that while my knee-jerk reaction was the same as everyone else’s — I even said just last week on the podcast “here’s to one more year with Marriott” as though I was joining the chorus in swearing them off — I know that in the end I’ll likely end up staying at a lot of Marriotts. I may go for one last hurrah at the St. Regis Bora Bora while the opportunity knocks, but then I’ll probably look to Hyatt for luxury stays with transferred Ultimate Rewards points and Marriott for most other stuff. I’d love for Hyatt to gain the footprint where that wouldn’t be the truth, but I recognize that isn’t likely to happen soon.

I want these sunsets one more time out of Marriott. Then it will probably be mostly Residence Inns and SpringHill Suites for me.

Cash back continues to become a better strategy

The real takeaway for me is that I will likely be using more cash at Marriott properties. Cash back cards with great everywhere rates like the Alliant Cashback Visa or the Bank of America Unlimited Cash Rewards or Premium Rewards (when paired with Platinum Honors) will likely play a more pivotal role in my hotel strategy.

I already currently use my Capital One Venture card with the primary goal of generating Marriott gift cards, but the advantageous redemption option I utilize isn’t available for most people. I’ll also keep my eye open for opportunities to buy Marriott gift cards at a discount.

Beyond my niche Capital One play, I think the upcoming changes mean that the Alliant and Bank of America cards will become my default “hotel points” cards. With Hilton and IHG also being dynamically priced, I think it just makes sense to collect cash back for hotel stays (apart from obviously continuing to collect Ultimate Rewards points for Hyatt).

With the Alliant card specifically, every dollar spent is like 5 IHG or Hilton points (since those programs frequently sell points at half a cent each) and will likely be worth somewhere around 3 Marriott points per dollar spent with the added flexibility of paying for a stay and earning points when that is more beneficial. I could even use the Marriott cards (that I intend to keep) to earn 6 points per dollar on the amount spent on-property at Marriott properties and then cash out cash back earned on my Alliant card (from other day-to-day purchases) to pay myself back. The flexibility to use cash back to either buy points in any of the major programs or get good value when cash rates are cheap (or buy Marriott gift cards when available at a discount) will only make more sense when Marriott becomes more fully dynamic.

Again, that is somewhat disappointing, but not really a change from today. I do sometimes use my Marriott cards on ordinary purchases (I don’t always worry about which card to use for very small purchases that won’t earn a significant number of points anyway), but I recognize that it makes more sense to use other cards in most situations and I don’t use them for any significant amount of spend.

Bottom line

Many of us are disappointed to hear that Marriott will eliminate award charts in 2022. I am as disappointed as anyone about that. However, I am optimistic that free night certificates will be easier to use since I’ll worry less about using them for outsized sweet spot redemptions and use them instead for consistent value even at a property that isn’t a destination in itself. I’ll probably get more consistently-reliable value out of those free night certificates than ever before. And if I’m being truthful, I’ll probably still spend money at Marriott hotels — perhaps I’ll spend more cash at Marriott properties than ever before since it will make more sense to collect cash back than Marriott points. I guess that’s what Marriott wants and while part of me doesn’t love giving in to that, the maximizer in me knows that it will probably be the best way to get good value moving forward.

4.6 8 votes
Post Rating

Email subscription form header
Please enter all required fields Click to hide
Correct invalid entries Click to hide
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

72 Comments
Inline Feedbacks
View all comments
Suzanne Michelle Meyers

I think if you are looking to value for money, customer service must also be considered. Marriott consistently has subpar staffing and a management model, which will crumble under itself long before any rewards program they offer. Ultimately people have to feel like they are stay at a clean, capable establishment which can take care of post COVID consumers as we being to work /play again. After attempting to stay there last week, my feeling is , an overhaul in management must be addressed before they even consider what kind of travel points they’re giving out. I for one, will never darken any Marriott doorway again.

Reno Joe

Suzanne, you are right. But, the failure is at two different levels. The first level is at Marriott corporate in the gutting of the loyalty program. The second level is at the property owner level in 1) the failure to provide an acceptable hotel environment and 2) the denying of tier status benefits at the point of delivery.

I have been at various Marriott properties in which 1) upon checking into my room, the toilet had a sizable present left for me (how did housekeeping miss it?), 2) upon checking into my room, the shower stall had hair and reeked of urine (housekeeping?), 3) an entire floor continually reeked of weed, . . . I could go on.

To be fare, the other chains experience these problems as well.

ElliotFinkelman

I was most disappointed when they removed the breakfast from Gold Elite and moved it to the next level.