How does category allocation work?
 

So, I have made a reservation for a category 2 hotel, for 5 nights, which would cost 2.100 EUR if I booked in cash, but 40.000 points. It makes me a bit curious as to how the hotels are categorised and also, how Marriott compensates hotels for redemptions. Because I feel like the typical category 2 hotel is less than 400 EUR per night, so would seem odd if they all receive same level of compensation.

Marriott categories are largely based on the demand for free nights by MR program participants during the previous year. It doesn't have anything, except indirectly, to do with hotel quality or features (unlike some stars or rating systems) and might not correlate very well with rates, which tend to be based on availability for the particular nights you're staying.

It may or may not be like SPG, where the propoerty gets a flat fee for an award guest, unless they are near capacity, when they get a % of the average daily rate.

I guess what made me laugh, is that you can buy 40.000 points for 500 USD. And that would be less than a quarter of the cost of paying for the room outright. And that just seems... kind of funny.

Very few people would realize this.

And I would guess anyone up for paying $2300 a night for a room really care?

It's 2100 Euro for five nights or only about $500 per night for that standard room.

$500/night for a Cat 2 tells me there is a special event/peak demand period that is out of the ordinary. The fact that points stays are available is a bit surprising - someone at revenue management may have missed it.

If you need to stay during that period, points is certainly the way to go.

What property/when?

My bad, didn't follow close enough.

Hence the problem with static categories the way it stands. A few events per year might spike demand at an otherwise nondescript property and other redeemers get screwed or stay away.

I sometimes stay at a FI near NYC that wants 30,000 or 35,000 per night yet the rooms can be bought for $109 at times.

It seems to be at least 300 Euros per night for most of the year. It is the JW in Ankara.

Once again, remember that Marriott categories are largely based on demand for award stays, NOT the hotel's average rates.

While you are probably correct about both points, my go-to example on this has always been the Addison TX Marriott. It's location is near many businesses, so it commands about $300/weeknight without anything special happening in the area. Nobody wants to vacation in Addison, though, so it is a Cat 3, which is quite low for a very nice Marriott in a major metro area. (Dallas)

Fun Fact: Addison claims to have the most restaurants per capita of any North American city. While other cities make this claim, the facts that very few people actually live in Addison, so many businesses are located in Addison and at one point most of the bigger cities in the Metroplex were dry, it's conceivable.

As noted above, I guess not enough folks think it through. This appears to be an "always use points" no-brainer.

I live in Addison! Thanks for the tourism boost.