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Tuesday, September 17, 2013

Using Travel Company Loyalty Programs

If you travel for a living one of the perks of the trade is the ability to keep you "points" from airlines, hotels and rental car companies.  These once were a lot more generous than they are now, with almost all of them cutting back on benefits or devaluing their points during the Recession.  Once you get elite status and can board early, avoid bag fees, and get free weekend leisure rentals and rooms then losing that status feels punitive.  There is always a catch so you need to know the fine print.

For instance after being Gold and then Platinum with American Airlines I took several trips on Southwest because their fare was lower.  I recently got on an American flight and found that I had dropped, without notice, all the way from Platinum to Schmuck in four months.  It didn't matter that I had been Gold with them since the 90's: you keep up your segments or board with the last group.

I had a similar "catch" with Avis.  After having a Wizard number since the 90s, and even though I am tracking towards 100-150 rental car days a year, I can't use all the free days I have accumulated to help my daughter on her vacation or for one of the charities with whom I work.  As such about half of them will expire.

So how do you use these programs?  Which ones are the best?

For airlines it depends on where you fly.  Searching the web for the best airline loyalty programs four show up at the top of every list in some order: American AAdvantage, Southwest Rapid Rewards , United/Continental Mileage Plus and  Delta Skymiles.  Since I cover coast-to-coast south of a line between Annapolis and San Francisco my city pairs match up best with American and Southwest.  Were I to go into small cities in the south Delta would be better as they are the strongest carrier out of Atlanta Hartsfield airport.  However living in Nashville it is cheaper to drive to the places where Delta is strongest. United owns the Midwest, both large and small cities.

For hotels the top four are Marriott Rewards, Hilton HHonors, Intercontinental (IHG/Holiday Inn), and Starwood.  All are strong in major markets so it really depends on whose hotel you like.  I prefer the IHG brand for reasons I've written about before.  Being diabetic I never need to be without access to a meal or snack, so a full-service Holiday Inn is a safe choice at a price my clients won't protest. Also their hotels are almost all new or refurbished.  As a backup I use Hilton HHonors which for the same price offers the Hilton Garden Inn brand.  Many of my fellow company travelers use Marriott properties although I find them more expensive on the top-end and with ice-cream laden pantries on the low-end (not good for my dietary needs).

With rental car companies the ones that get you out the door with the least hassle are Hertz, Avis and National.  While you can get great service and great cars through the others, you can kill a half hour at a backed-up counter and who wants that?   I think you go with who has the best counter in the most places you travel. For years I had a Hertz #1 Gold membership through Thomas Nelson and Hertz does a great job overall.  However regionally I fly to DFW a lot and the Hertz counter there just stinks and has for years.  Avis/Budget are one company and are everywhere I fly, and getting elite status with them gives you benefits like swapping out for any car you like and automated check-out with no rental agreement.  You get free weekends and discount coupons along the way, but I don't like their restrictions on how you use those rewards. I have contacted Hertz and National to see if they have similar restrictions and may change companies.

In terms of credit cards I prefer to use a Gold American Express although I have purchased a Southwest Airlines  Rapid Rewards Visa.  I like my AMEX because I have had it since the 80's and their security and customer service are strong.  Most travel sites I have seen list the Southwest Visa as the best card due to the lower interest rate and the accumulation of points towards free Southwest flights.  Were I using exclusively American I would use their Citi AAdvantage Card, and were I flying with Delta I would change over to their Delta Skymiles American Express.  I use my own AMEX because the points can be used for any purpose: airline tickets, hotel rooms, rental cars, or if your toaster oven goes out.

Finally, all this assumes that you are not paying for your own travel.  Mine is charged to my employer or my clients so participating in these programs costs me very little. The points and perks are just part of my compensation.  However if you are a solopreneur paying your own way I would stay away from loyalty programs altogether for these reasons:

  1. They are no longer rewards programs.  They are marketing and alternative revenue stream programs for the benefit of the company, not you.
  2. All require your loyalty to their brand even when their price is higher.
  3. The credit cards cost money to active ($200 for Southwest Visa: $450 for AMEX Platinum) and can carry high interest rates.  Mine are 12 -18% even though my credit is excellent.
  4. With most airlines and hotels you can buy-in to their loyalty program if you like their perks. 

 If you are in business for yourself  you are better off to get the lowest interest rate credit card you can find, buy the best value-for-the-dollar airline, hotel and rental car regardless of brand, and put cash instead of points in the bank.  Greenbacks never expire and can be used for all destinations.


Jim Thomason said...

Update on AMEX: I decided to redeem my 70,000+ AMEX points for vacation coming up in a few weeks. I discovered that the exchange rate of points to dollars is 10,000 points = $100. So my 70,000 points accumulated over 10 months is worth $700. Meanwhile I have been paying 18% interest and, due to the volume of my travel, maintaining a $10-12,000 balance. Most likely I have paid interest far in excess of the rewards that I'll get. This is a big disappointment and I am switching over to Southwest Rapid Rewards Visa for my travel.

Jim Thomason said...

Update on airline rewards. In booking vacation trips American Airlines requires 12,500 miles per segment for back-of-the-plane seating and restricted flight times, usually very early morning or very late evening flights. For anytime tickets it is 25,000 per segment. This means a roundtrip free ticket is 25-50,000 points. conversely, Southwest is charging 5-9,000 per segment or about 14-15,000 points. By checking in early using my SWA iPhone app I should get a high boarding number and thus good seats. This is part of my decision to start using Southwest's Rapid Rewards Visa for all my travel instead of AMEX: I will get more SWA points, which in turn will go farther.