What is dynamic rewards pricing?

How much does it cost to redeem your next flight or hotel stay?

Well, it depends on whether the plan you choose uses dynamic pricing or a more traditional (published) rewards chart.

Frequent flyer programs have been around for more than four decades, but the way award tickets and hotel stays are priced has changed significantly in recent years.

If you’ve heard the term “dynamic pricing” before but aren’t sure what it means, here’s a quick primer.

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What is dynamic rewards pricing?

Some airline and hotel loyalty programs believe that since cash fares fluctuate significantly throughout the calendar year, it is unreasonable to offer all redemptions at a fixed price.

Therefore, they price redemptions based on equivalent demand for cash tickets. Starting prices are typically comparable to standard and/or off-peak dates on the rewards chart, but can rise significantly during periods of higher demand.

One could argue that dynamic pricing has some benefits. Most notably, this means that all seats or hotel stays are available for redemption, rather than the limited number of programs using an award chart. This makes it easier to use points or miles from the program.

The biggest drawback to dynamic pricing, however, is that redemption rates spike to incredibly high levels during peak periods, making your points and miles worth much less than expected.

Unfortunately, there’s no way to determine how much a dynamically priced flight or hotel stay will cost until you search for a specific date. It might be 100,000 points or miles one day and 200,000 the next. If an award chart is not published, an airline or hotel chain may suddenly decide to increase award rates with little warning.

This makes it difficult to plan a trip and save the points and miles you need to redeem, because you might be close to a flight today but tens of thousands of points or miles short tomorrow.

Related: Dynamic Pricing vs. Fuel Surcharges – Which Is the Lesser of Two Evils Your Next Redemption?

Dynamic pricing for airline redemptions

The following major airline loyalty programs use dynamic pricing to a large extent on their own operated flights:

Let’s examine the American Airlines AAdvantage program to illustrate how prices fluctuate.

Let’s say you want to use business class AAdvantage miles to fly from New York’s John F. Kennedy International Airport (JFK) to Paris Charles de Gaulle (CDG) in June 2026.

Depending on the date you want to travel, prices for the same nonstop flight vary widely, from as low as 181,000 AAdvantage miles on June 8 to 402,500 AAdvantage miles four days later on June 12.

That’s because American prices these flights based on its forecast of demand for cash tickets. Therefore, prices may be higher on weekends or during school holidays or major holidays when travel is more attractive.

A quick check of the cash prices for these flights reveals a significant difference in the cheapest nonstop cash fares in business class, which helps explain the huge difference in redemption costs.

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American Airlines

Dynamic pricing in hotel projects

The following major hotel loyalty programs use dynamic pricing:

How this works in practice. New York City comes alive during the December holidays, and Times Square Edition is a great place to enjoy some holiday cheer. You can book this hotel using Marriott Bonvoy points, but the prices are steep, especially right before Christmas. Many nights start at around 100,000 Bonvoy points per night.

Then, in early January, when most of the excitement is over and demand is over, redemption costs drop dramatically and you can book a room for just 71,000 points per night.

Related: Could Edition Survive Without Originality? Marriott thinks so

Which shows still use awards charts?

Many airline loyalty programs maintain reward charts, including:

These programs typically use distance-based or zone-based reward charts.

The distance-based award chart divides all flight distances into different tiers or categories, with prices determined by distance and cabin class. For example, a flight with a distance of 1,000 miles might cost 10,000 miles, while a flight with a distance of 1,001 to 2,000 miles might cost 15,000 miles. You can calculate the distance of the flight you want to book (using a tool like Great Circle Mapper) and then find the corresponding band or category to see how much it charges.

Region-based award charts allow you to fly from anywhere in one region (such as the United States) to anywhere in another region (such as Europe) for a stated price. Short-haul flights, such as Boston Logan International Airport (BOS) to Dublin Airport (DUB), cost the same as long-haul flights, such as Los Angeles International Airport (LAX) to Athens International Airport (ATH) in Greece. Therefore, you can maximize your trip by taking longer flights within the region or regional pair.

On the hotel side, World of Hyatt maintains an awards chart (excluding the dynamically priced Mr. and Mrs. Smith hotels) that categorizes each participating hotel from Category 1 to Category 8. It also has a separate all-inclusive rewards chart, and while it updates these categories regularly, you still have a clear published goal when strategizing to earn enough points for your trip.

There are some differences even in published award charts for airline and hotel programs. There may be peak and off-peak dates, with prices higher on days with higher demand (such as school holidays). Additionally, some programs limit inventory for the lowest-priced prizes, but once those seats are sold, additional seats become available at higher tiers. This is a great option for those who are willing to pay a little more to ensure they get the exact seat on the specific date they want.

However, one thing is generally true about published rewards charts: members will always know what they need to pay for their next redemption, assuming there are rewards available.

How to beat dynamic pricing

If you don’t want any nasty surprises the next time you search for award flights or hotel stays, here are a few ways to beat dynamic pricing:

• Check partner pricing to see if you can get the award you want at a flat rate by flying on a partner airline rather than the airline that operates the program.
• Please book through the partner program.
• Consider seasonal flights during the off-season.
• Find exchange specials.
• Take advantage of credit card or elite status benefits to get discounts on select rewards.

For example, most Delta Air Lines American Express cards offer at least 15% off award tickets operated by Delta Air Lines, while many popular United Airlines credit cards offer effective discounts through their expanded award availability offers.

bottom line

Many airline and hotel loyalty programs have moved to dynamic pricing models that use points and miles. Simply put, this means the price you pay for your rewards can vary from day to day—sometimes by a lot.

Dynamic pricing can be a shock when the flight or hotel you’re searching for suddenly costs double (or triple) the price you expected. You can still find bargains if you travel outside of peak times, but if you want to travel during peak holiday times, you may have to pay more.

By understanding this pricing method and becoming familiar with ways to beat it, you can make the most of your travel rewards.