The travel industry, like most other businesses, was knocked upside down in the past year. And so, too, was the world of points and miles. Those exotic travel plans many people made while taking advantage of those hard-earned frequent flier miles and hotel points were erased from the books.
But while the plans are moot, the points are still on the books – for now. During difficult economic times, loyalty programs can still play an important role. In 2020, airline and hotel companies relied heavily on their loyalty programs to remain connected to customers at a time when traveling was not an option. And this year, as travel ramps up, loyalty program members play an essential part in building back pre-pandemic traveler confidence.
Many loyalty experts believe this is a great time to participate in such programs because this is where brands will turn to first to re-engage with their audience. This means there is significant upside to staying connected with your preferred airline and hotel brands if you’re paying attention.
An Olive Branch
Last year, most airlines and hotels extended elite status and paused mileage and point expiration. The hope was that when travel resumes, members will turn to their preferred programs first. There was great uncertainty over when travel would be possible again, but the extensions greatly comforted members who worked diligently to accrue hard-earned benefits.
Now more than a year since the start of the pandemic, some travel companies have extended status again. Others are choosing to incentivize travel with promotions or lowered elite status qualification thresholds. For example, American, United, Hilton and IHG are just some of the travel brands that have lowered the requirements for elite status. Delta and Alaska are offering promotions that award bonus miles for booking tickets. Delta is even counting award ticket travel toward elite status qualification. So if you were looking to redeem SkyMiles this year and are looking to make Medallion status for next year, now is the time.
Loyalty program managers are finding creative ways to dangle the proverbial carrot to encourage travel. If you haven’t logged into your accounts recently, it may be wise to check that you aren’t close to losing any miles and points due to inactivity. You may also be pleasantly surprised to learn that any elite status or program perks you had – like free night awards or upgrade certificates – may have been extended.
Since travel remains uneven, it’s a tricky business for airlines and hotels, which must balance the possibility of being too generous against the risk of losing business to a competitor. Business travel, the bastion of profits for many travel companies, seems slower to restart than leisure travel, and loyalty programs are the lever that many travel brands can use to dial up demand.
Advice for Members
In the coming year, there is sure to be a bevy of promotions, discounts and offers to entice members to use their miles and points. After all, loyalty program currency is a liability to travel companies and sits on their balance sheet waiting to be redeemed. Accountants are not too fond of that, and you can bet they are ogling ways to erase this burden on the bottom line.
It’s wise to avoid hoarding miles and points as they rarely increase in value. In fact, we have seen some airlines like Delta and United unceremoniously raise rates for partner
airline redemptions within the past year making it more expensive to use miles for flights. That seems to be the opposite way to encourage travel, but since airlines must pay their partner airlines a fee when members redeem miles on the other airline’s flights, it makes some sense.
The standard adage from those familiar with loyalty programs is to redeem what you have earned while you can. Miles and points rarely rise in value, and travel brands are always keen on finding ways to raise the cost of awards over time. If you use them wisely, there is often excellent value to be had.
Keep an eye out for summer and fall promotions, especially in business-heavy destinations like New York or Chicago, where hotels are looking to fill rooms that might otherwise go unsold. With meetings and conventions slow to rebound, many hotels are lowering paid and points rates. Leisure destinations, where demand was first to rise, like Caribbean islands, national parks, Miami or Las Vegas, will probably be less likely to offer similar promotions.
It is becoming easier to search for deals, too. American Airlines has an award map search tool on its website that shows you all the destinations you can redeem your miles to on a specific date based on the number of miles you have. Like American, Delta and United allow you to search an entire calendar of dates for award travel, which can be helpful for spotting the lowest-priced awards (rather than overpaying).
New Credit Card Perks Abound
Credit cards, especially those with travel-related perks, were quick to jump on the bandwagon, too. Since cardholders were unable to take advantage of particular perks (like airport lounge access, free checked bags and travel credits), many banks pivoted and introduced new amenities to keep members engaged. After all, if people do not perceive they are getting much benefit from their credit card, they may be inclined to downgrade or cancel it instead of paying an annual fee.
The customer-friendly adjustments were swift and plentiful. For example, The Platinum Card from American Express introduced monthly Paypal credits and beefed up its Amex Offers page where members can score cash-back offers or discounts. Chase Sapphire Reserve and Chase Sapphire Preferred cardholders, among others, awarded bonus points for grocery store spending, another temporary redirection that benefited consumers when travel had slowed. Review your credit card’s website to see what changes they have made to the benefit roster as you may be missing out on some excellent opportunities.
The COVID-19 pandemic affected us all in differing ways. And as travel slowly starts to rebound, it can be worth checking your program balances. It could be your golden ticket to a long-anticipated trip.