The Lie of “Dynamic Pricing”

🎧 Always Turn Left: Dynamic Pricing Deception Why Your Loyalty Points Are Worth Less and How to Fight Back

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Dynamic pricing is marketed as flexibility. In reality, it’s controlled inflation dressed up as choice. Airlines and hotels will tell you that “prices vary with demand, so you can find deals anytime.” What they don’t say is that dynamic pricing is the perfect corporate trick: a floating exchange rate on the fake currency they sold you.

In cash, inflation makes headlines. In loyalty, it hides in footnotes. And while everyone argues about CPI, your 60,000-mile Europe fantasy became 90,000 “starting from” before you noticed.

Let’s break down why dynamic pricing isn’t what it looks like, how it actually functions inside airline and hotel balance sheets, and what it means for anyone who plays the points game.

Act I: The Marketing Mirage

When United scrapped its award chart, the headline was “More flexibility.” Same with Delta. Same with Marriott’s Bonvoy pivot to “points vary by demand.” The story was simple:

• You’ll have access to more seats
• You’ll never have to guess what’s available
• You’ll find deals at off-peak times

Sounds fair. Transparent, even. Except it’s none of those things.

Dynamic pricing is not designed to give you more options. It’s designed to let loyalty teams match their liability (the miles you hold) to their revenue needs (the cash they want). By removing fixed award prices, programs gain the ultimate lever: they can re-price at will, mask inflation as “market adjustment,” and kill arbitrage without saying the word devaluation.

Act II: Why Airlines Love It

Airlines don’t just fly planes. They sell billions of dollars of miles every year to banks. American, Delta, and United all generate more profit from loyalty than from operations. Those miles sold to Chase, Amex, or Citi are booked as deferred revenue and as a liability.

That liability is dangerous if redemption values are fixed. A chart that promises “business class to Europe = 60,000 miles” anchors the airline to a predictable cost. If fuel spikes, if premium cabins sell out, if demand surges, the liability gets expensive.

Dynamic pricing dissolves that anchor. Now the airline can:

• Charge 30,000 miles for a Tuesday in February to Madrid (to generate blog buzz)
• Charge 350,000 miles for July to Paris (because you’ll still book)
• Adjust redemption bands daily, even hourly, to control costs

From an accounting perspective, this is genius. It turns a rigid liability into a flexible one. From a consumer perspective, it’s a moving target.

Act III: Hotels Play the Same Game

Marriott’s 2022 move to dynamic pricing was pitched as “points pricing will more closely align with cash rates.” Translation: we reserve the right to jack up rates whenever demand spikes.

Example:

• Old Chart: A top-tier property like the St. Regis New York was 85,000 points
• Dynamic World: That same room can be 120,000–150,000 points on a peak night

Hilton was ahead of the curve, scrapping charts years ago. Hyatt held out, but even its “peak/off-peak” model is a soft form of dynamic pricing. Everyone eventually follows because the math is irresistible:

• Cash rates up = points rates up
• Cash rates down = … points don’t always fall in sync

Hotels love this because points are liabilities, not money. If they can stretch the redemption cost to match high cash nights, the liability stays flat. If they keep off-peak “deals” alive, bloggers will still write about sweet spots.

Act IV: The Illusion of Control

Programs sell dynamic pricing as empowerment: you choose when to travel, and you’ll find deals if you’re flexible. The fine print is brutal:

• Saver space is still capacity-controlled
• “Deals” exist mostly on routes nobody wants, at times nobody is traveling
• Peak pricing is pushed so high it makes cash look reasonable, steering you back into revenue tickets

What’s really happening: dynamic pricing gives the program - not the traveler - control. You think you’re picking. You’re being steered.

Act V: Inflation Without Headlines

Here’s why dynamic pricing is the perfect inflation machine:

• No public award chart means no benchmark
• No benchmark means no obvious devaluation
• Every re-pricing can be spun as “market adjustment”

Compare this to cash inflation: you see prices rise, you get angry, politicians answer questions. In points inflation, your 70,000-mile award quietly becomes 110,000, and you shrug because maybe that’s just “demand.”

The effect is identical to inflation: your savings buy less. But because points aren’t money, it doesn’t show up in CPI. It shows up in your Instagram caption when you say, “Well, at least it was free.”

Act VI: The Behavioral Trap

Dynamic pricing works because it leverages psychology:

• Anchoring: Programs advertise “from 30,000 miles.” That’s the anchor, even if you never see it
• Scarcity Theater: Limited seats “at this price” create urgency. You’ll book before checking alternatives
• Sunk Costs: If you already earned 200,000 miles, you’ll pay the new rate rather than start over with another program

Behavioral economics turns a frustrating system into one that feels just tolerable enough to keep you engaged.

Act VII: The SMB Angle

Small businesses get hit harder than anyone. Why?

• They generate massive spend, often millions a year
• They collect points fast, which means they notice inflation faster
• But they rarely have a redemption strategy, so they end up overpaying in miles for mediocre flights

A CEO who thinks he’s booking a “free” Presidents Club trip at 100,000 miles per head suddenly faces 180,000 per head. Multiply by 20 employees, and the company just burned through millions of points with a 30% haircut in value.

That haircut is invisible in the P&L, but very real in opportunity cost. That’s why SMBs need strategy.

Act VIII: Thought Experiment – What If Dynamic Pricing Didn’t Exist?

Imagine a world where award charts still ruled:

• Airlines would have to honor 60,000 miles to Europe, no matter how full the plane
• Hotels would eat the cost of top-tier redemptions during peak holidays
• Liabilities would spike during travel booms, creating quarterly earnings volatility

That volatility is what Wall Street hates. Dynamic pricing flattens it. Programs protect their margins. Shareholders smile. Customers adapt.

So the answer is simple: dynamic pricing isn’t going away.

Act IX: How to Play When the House Keeps Moving the Goalposts

If dynamic pricing is here to stay, the only strategy is adaptation:

1. Burn Faster – Points are perishable. Don’t hoard. Treat them like fruit, not bonds
2. Flexible Currencies – Bank points (Chase, Amex, CapOne) give you optionality. Transfer when you’re ready, not before
3. Floor Value Math – Know your minimum acceptable value per point. If the redemption is below your floor, pay cash
4. Diversify – Don’t tie your entire balance sheet to one airline or hotel. Spread risk across ecosystems
5. Stay Opportunistic – Transfer bonuses, off-peak windows, and oddball partners are where the hidden value lives

Act X: The Punchline

Dynamic pricing isn’t about fairness or flexibility. It’s about control. It’s the perfect corporate lever: a floating exchange rate on the fake money they sold you, with no regulators breathing down their necks.

It’s inflation without headlines, a chartless system that hides the devaluation of your loyalty under the guise of “choice.”

The game hasn’t ended. It’s just tilted further toward the house. If you know the rules - and you move faster than the average traveler - you can still win. But don’t kid yourself: the system isn’t built for you. It’s built to protect margins, smooth liabilities, and keep you running on the treadmill.

And that, in one sentence, is the lie of dynamic pricing: it promises freedom while quietly raising the walls of the cage.