Business Travelers: Is Loyalty Dead?
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Upgrades and other perks have been the promise of airline and hotel loyalty programs since the early 1980s. More than 30 years on, loyalty has been devalued.
Exhibit A: This spring United Airlines overhauled its MileagePlus program to award miles based not on distance flown but on price paid per ticket (following a similar move by Delta Air Lines). Now a flight that once earned you 1,000 points may earn just 300.
Exhibit B: Several hotel companies, including Hilton and Marriott, raised their reward categories over the past few years, effectively making it more expensive to get a free night or an upgrade.
These changes beg the question: Is loyalty dead?
Up, up and away
For fliers operating below the most elite levels, loyalty has been degraded by escalating reward minimums and unbundled ticket prices—the reason you now pay extra to check your bags or get a bit more legroom.
“There’s a widening divide between fliers,” says Brian Kelly, aka The Points Guy, who blogs about loyalty programs. “Status still has value, but it’s harder to attain.”
If you’ll fly at least 50,000 miles—or the cash equivalent—with one airline during a calendar year, the perks still seem to outweigh the costs, especially when you consider the hidden benefit of prioritization for rebooking in the event of a cancelation (which is common for status fliers).
Below that level, an airline-branded credit card, which runs about $50 to $95 per year in annual fees, often guarantees a free checked bag and early boarding—perks once reserved for loyal fliers. Other credit cards such as the Chase Sapphire Preferred ($95 per year) offer more affiliations, allowing you to spend amassed points with multiple airlines.
The future may hold even more devaluation as the number of seats remains static and the number of miles to claim them grows. “The airline industry is a commodity industry, so when you go to book your flight on Expedia or Kayak, many passengers aren’t really looking at what logo is on the left-hand side; they’re just looking at the price,” says Nicolas Michaelsen, co-founder of AirHelp, which assists travelers seeking compensation from airlines. “I think there will be less and less to gain for airlines with these frequent-flier programs because they only move the needle so much.”
Rooms for more
Like airline programs, hotel frequent-stay programs are free to join. But unlike airlines, hotels offer valuable perks to the lowest levels of membership. Hilton HHonors offers late check-out upon request; Marriott Rewards and Starwood Preferred Guest members get free Wi-Fi.
“Hotels have devalued their programs just like airlines in terms of making the price per night more expensive in points,” Kelly says. “The difference is that hotels are expanding, and there are more rooms available per night.”
Vertical integration makes it easier to accrue points. The Marriott portfolio, for example, offers an array of hotels running up the price ladder, from Fairfield Inn & Suites to The Ritz-Carlton, allowing members to earn and spend at any budget.
“Walking in with status at hotels is better than at airlines, [where] unless you’re at the tippy, tippy top, you get nothing,” says Joe Brancatelli, a business-travel expert who runs the site JoeSentMe.com. “Hotel programs are more rational and soundly based financially. Hotels have to buy a hotel room for you from their chain when you use points to book.”
And hotels are known to reward regular guests with free drinks, bottles of wine in the room and other cockle-warming extras that create positive associations and drive true loyalty. “When they love you,” Brancatelli says, “they know how to show it.”