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October 27, 2008 8:24 AM   Subscribe

Do consumer loyalty programs make sense or is it generally better to pick hotels and flights based on price and convenience?

My boss and I travel together on business about 12-15 times per year and all but one or two trips per year are domestic.

My boss is tied to one airline (American Airlines, ugh) and has 2-3 preferred hotel chains that he will go out of his way to patronize, often at a price premium. I prefer to travel on whichever airline is most direct and best for our schedule at a lower price and generally stay in the hotel most convenient to our event.

Is there any general consensus as to whether reward programs ultimately pay off versus lower priced and more convenient schedules? Should we factor in the time spent on a layover when a competing airline offers a direct flight or cab fares to get us across town? Did reward programs make sense at one time and have they worsened over the past 10-15 years? Has anyone ever done the math or should I keep a running tab of the cost and time differential?

I should also mention that I am mid-twenties while my boss is in his fifties and I believe there is a generational difference at play here. Yes he is my boss and also the owner of the company so this question is ultimately academic. Neither of us use our points for "personal" travel (I would but I fly JetBlue personally). To my knowledge, we have never accumulated enough hotel points to get anything free and we only use our frequent flyer miles to upgrade our flights to first class.
posted by 2bucksplus to Travel & Transportation (6 answers total) 2 users marked this as a favorite
Well, you've sort of answered your own question. You've had some airline upgrades, and that's it. So I'd say these programs are not worth it, based on your experiences. (Of course, the crucial missing difference is what the price difference typically is.)

On the other hand, I fly about as often as you, and stay in hotels about five or six nights a week. I accumulate enough points a year between flights, hotel stays and my United credit card to fly free to Europe each year and to accumulate about ten nights worth of hotel stays. The programs seem to work for me, but unlike your boss, I have frequent flier miles with three airlines and I'm signed up to four different hotel chains, so I'm not terribly tied to anything. It's pretty easy to make sure the points don't expire with a little planning . . . so I suspect the answer is to use these programs, just be a little more liberal in the number you use.
posted by Dee Xtrovert at 8:38 AM on October 27, 2008

If you get enough points in a single year to reach a program's elite level, then the perks for that can be well worth it, and perhaps more valuable than the free travel from banked mileage. If you aren't earning that many points, then you aren't going to be earning much in the way of miles anyway.

If you are on American and you and your boss do not have elite status already, you should look into doing a gold or platinum challenge if you will be flying about 10,000 miles in discount economy (or 5,000 miles in full fare economy) in a three month period.

If your boss really wants elite status, you might convince him to charge business expenses on an AAdvantage credit card. That way he can get up to a lifetime million miles earned quicker which means lifetime gold status. The second million is lifetime platinum. Unfortunately these lifetime elite programs are not guaranteed and may change at any time.
posted by grouse at 8:46 AM on October 27, 2008

Yes, getting status is the real point. Then you get free upgrades / perks. You use your miles for personal travel, and you also get the status benefits on your personal travel. Note that AA will give status based on segments, so direct flights are actually worse than connecting ones in that respect.

To the bigger question, I've found that as the years pass, I care less and less about how the business spends its money. If they're OK with paying more, so am I. The only valuable thing is my time, and I only care about that if it's outside of work hours.
posted by smackfu at 8:54 AM on October 27, 2008

It really depends on 1) how much you travel, and 2) who is paying.

How much you travel makes a huge difference. I used to work for one of the Hilton brands, and if you travel a lot, their rewards program is actually pretty amazing. The top tier requires 28 stays or 60 nights in a calendar year--so you're on the road quite a bit--but the perks are pretty nice. Not only do you get a 50% bonus on points earned, but you get things like automatic complementary room upgrades, guaranteed reservations (as in the ability to bump other reservations), free breakfast, snacks, access to the executive lounge, etc. You'll also earn about a week's free stay you can cash in for a vacation pretty much anywhere in the world.

On the other hand, if you only do 4 stays or 10 nights a year, the perks really aren't worth that much. You do slowly build up points, and can eventually cash them in for a night or two, but unless you're doing at least twice that amount of travel every year, you aren't likely to earn enough for more than a few free nights every other year or so.

Flying is much the same way. I fly one or two times a year, and yeah, I could have a frequent flyer card, but honestly, it'd take me so long to earn enough miles to get anywhere I want to go that it's not even worth the hassle. But if you're putting in 20, 30, even 40 long-haul flights a year--especially if you aren't paying for them--brand loyalty can rapidly become a virtue, and companies will compete for your business.

The reason for this is that though there really aren't very many top-tier travelers, they make up an unexpectedly large percentage of hotel guests on an annual basis. At the hotel I worked at, I'd guess that about 10 people were responsible for at least 10% of all rooms booked over the course of a year. Out of potentially 36,500 bookings annually for a 100 room hotel, that's actually a pretty big deal. These people would stay a night or two every week. Losing just one of these people would represent a significant loss in reliable cash flow, something which is at a premium in the hospitality business, especially in off-seasons. There are weeks in January and early February when almost all the guests were at least Gold level members (the 2d highest rewards tier). Chains have a huge incentive to go after these people and ensure their loyalty.

The other big factor is who is paying. For most frequent travelers, the company pays for their room, so they usually don't care how much it costs. They're more than happy to go a little out of their way to stay some place familiar which will reward them for doing so. The company views the whole thing as a writeoff anyways, and whatever is worth paying for someone to travel to accomplish is generally worth paying an extra 20-30% in hotel bills to keep their people happy. Some of this has to do with the current tax structure. As corporate profits are taxed but corporate expenses are not, most businesses try to run as small a profit margin as will make their investors happy. Travel expenses are just one way businesses do this.
posted by valkyryn at 8:55 AM on October 27, 2008

The experts at this are the folks over at Flyertalk.
posted by micawber at 10:14 AM on October 27, 2008

I always look for the lowest price. Think about it: the way to get more points is to spend more money. Given the amount of money you need to spend on travel and hotels to get freebies, it's not worth it in the least. Shop around and use your money for more tangible benefits.
posted by reenum at 1:03 PM on October 27, 2008

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