Airlines, hotels, and Starbucks test customers’ loyalty with changes to reward programs
Remember collecting cereal box-tops (or more recently, digital codes to enter online) in order to collect a prize, such as a toy or a free movie ticket?
Well, imagine that you needed 10 of those things to get the freebie, but once you had collected 8 or 9, the rules changed so that you needed 20. In addition to perhaps feeling cheated — that’s kind of like changing the rules in the middle of a game — such a change would make the value of those things you collected worth less.
Well, that sort of thing has become commonplace for airline and hotel loyalty programs, and some retailer loyalty programs. You collect their points, or miles, or stars, or whatever they call their alternative currency, and then they devalue that currency or make it harder to accrue (such as Starbucks changing its Rewards rules so that people will have to spend more than $62, starting in April, to get a free cup of coffee).
A cup of coffee’s no big deal, but when you’re talking about airline tickets and hotel rooms, you’re getting into serious money.
Hotel points and airline miles can be earned by paying for stays and flights, or received as a credit card perk, or obtained through promotional deals. Many ways one can accrue miles and points compete with cash-back offers, so the goal is to end up with the highest value.
For example, some credit cards will give you 1 percent back, or a little more, in cash. So, spend $3,000 and get $30 back. I have a Starwood hotels branded card that gives me hotel points instead. If I use those points wisely, I end up getting the equivalent of 4 percent to 5 percent back on my charges.
That’s where program rule changes can make a big difference. Starwood and other hotel chains typically sort their properties into different tiers that require different levels of points for a free night. And they reshuffle them yearly.
About a month ago I used 3,000 Starwood points for a free weekend night at an Aloft hotel in Jacksonville, Fla., while visiting relatives. On March 1, Starwood shifted hundreds of hotels to different categories, and if I want to stay at that Aloft hotel again I’ll need 7,000 points. So, next time I’m in Jacksonville I will find a better opportunity for my hotel points (such as Starwood’s Four Points/Sheraton that’s still 3,000 points for a weekend night).
With rules changing frequently, it makes sense to view loyalty program points as something that should be used when good opportunities present themselves. It may be tempting to, for example, save up airline miles for a trip to Europe, but ever-changing rules mean the goal post may keep moving.
For example, American Airlines is changing its frequent flyer award rules for flights booked after March 22. Currently, you can get an off-peak round-trip to Europe for 40,000 frequent flyer miles and travel from October through mid-May. After March 22, that ticket will require 45,000 miles, and the off-peak window shrinks, allowing travel only from November to mid-March with a nearly month-long blackout in the middle.
There is one silver lining to the American Airlines changes, which is a new tier of “MileSAAver” awards for domestic flights covering less than 500 miles. A one-way ticket will require 7,500 miles, versus the current 12,500. That presents an opportunity, for people who have at least 7,500 miles sitting in their accounts, but not enough for a free flight under the current rules.
As I noted in a previous column, most airlines with mile-based loyalty programs now allow customers to use miles for one-way tickets. That means you can get awards with fewer miles than a round-trip would require, and mix-and-match airlines. On a recent trip, my family used airline miles with American to fly one way, and miles with Delta to fly back.
Websites that closely watch what’s happening with airline and hotel loyalty programs, such as thepointsguy.com, can be handy. That’s where I found charts illustrating the changes at American.
I know that in many cases, loyalty programs are just an incidental perk. If I buy enough coffee at Starbucks they’ll eventually give me a free one, if I have a loyalty card. If I buy a plane ticket, I’ll earn airline miles if I’m a member of that program.
However, for people who jump through all sorts of hoops to acquire airline miles or hotel points — signing up for a credit card, joining a dining for miles program, shopping through the company’s online portal, and so on — major rule changes can feel like a betrayal. Loyalty programs are supposed to, well, reward loyalty, and not feel like a bait-and-switch.
Paying attention to program changes and figuring how to get the best value for your miles and points is the only way to try and keep up. It can be a complicated game, but a financially rewarding one.
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