Mar 132013
 

The underlying premise of both airline and hotel loyalty programs, although obscured by complications such as points and miles, is that after spending/staying/flying a certain amount, you get some small percentage of your participation returned back to you for free.  In its simplest form, there have been programs like ‘stay nine nights (or take nine flights), get the tenth for free’, and that’s an easy equation to understand – one of every ten is free.

Now the thing about such programs is that they should be inflation-proof.  One free night for every nine paid nights, or whatever the formula ends up as being, is nothing to do with the dollars paid or the equivalent dollar value of the free reward.  If hotel room rates go up, then the value of your reward increases, but so too does the cost of the nine nights you paid for to qualify for the tenth night free.

So why don’t hotels, airlines, etc, just offer straightforward simple programs like this?  Well, for one, think of all the high-powered marketing MBA’s – ‘loyalty program managers’ – who would be out of jobs!  More seriously, not only do the loyalty programs try to ‘dress up’ their prog

Choose your hotel based on value and location, not on loyalty program.

Choose your hotel based on value and location, not on loyalty program.

rams to make them more appealing, but they also have a valid reason for ‘complicating’ things – matching together high and low value stays/flights on the earnings side of the equation with high/low value rewards on the other side of the equation.

And, by some amazing coincidence, by somewhat disconnecting the underlying simple concept of ‘one free in every ten’ such as you might get with a punch card at your local coffee store, it also, alas, makes it easier for the program managers to change the rules without making it blatantly obvious that you’re losing out every time they do so.

Over time, and little by little, we’ve seen massive reductions in the value of rewards in all these programs.  For example, when was the last time you used only 20,000 flown miles to get a free roundtrip ticket anywhere in the US an airline flies, and without any additional fees and taxes?  And I fondly remember a Holiday Inn program twenty or more years ago that required staying at their hotels for maybe only a dozen nights or so and getting a free roundtrip air ticket to London in return!  Wow.

But with the chains continually playing games to obscure the underlying link (which does exist) between ‘how much do I have to stay/spend and what do I get in return for this’ equation which is the ultimate measure of a program’s value, the value we receive goes down and down – even though we’re often told the opposite when changes occur (see the Starwood quote in a few paragraphs time for the most recent example of that).

Some program changes are valid and fair.  For example, if a hotel becomes twice as ‘good’ as it formerly was, it is fair to move it up to a higher level of points required for a free stay, but it is not free to increase the number of points needed per level of reward.

This article details the latest round of increases – well, better to call them this year’s round of value decreases in hotel loyalty programs.  You’ve got to particularly like the 180° opposite response to what their customers asked for adopted by Starwood – their members were complaining about a shortage of available free rooms to cash in their points with, so Starwood’s response was not to release more rooms for award redemption, but rather to increase the number of points it takes to get a free room!

Fighting Back Against Diminished Program Benefits

Unless you’re an elite level guest and able to benefit from upgrades and other perks, the article’s advice is sensible.  The diminishing value of the hotel loyalty programs weakens their hold on you.  You should book and buy your hotel rooms through the cheapest source possible, and treat the disloyalty on the part of the hotels to their frequent guests with similar disloyalty on your part.

Stay at the hotel that is best value and most convenient, not at the one you’re trying to amass reward points with.  Perhaps when the hotels realize their loyalty programs are no longer working them, they’ll start making them more valuable again.

If you are booking reasonably close to when you’ll be staying at the hotel, it is sensible to consider sites such as lastminute.com and laterooms.com.  They sometimes have excellent rates on offer.

The other great resource when booking hotel rooms close to arrival is Priceline and use their bidding process for hotels.  You can get huge savings on what you’d pay to the hotel by going through Priceline, more than enough to compensate for the loss of loyalty program points.

There are some tricks and techniques you can use to get the best value from Priceline.  I have a very extensive four part series on how to save money by booking hotels through Priceline.  Recommended reading for the weekend, perhaps!

There’s also an article series about how to negotiate a lower rate with a hotel that might also be helpful.  If you’re successful at negotiating a better rate directly with the hotel, that presumably allows you to collect loyalty points too.

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