Cards & Payments

Is it the Experience or the Money? Both.

loyalty programs

Loyalty is allegedly about the experience. But as when someone says, “It’s not the money, it’s the principle of the thing,” you can always bet it’s about the money.

We tend to think of loyalty programs as a somewhat recent phenomenon but hotel and airlines’ points plans preceded many of today’s popular affinity schemes. Of course, for as long as they’ve been in existence, we’ve heard grousing about points, expirations, blackout days and the like. Sometimes, it seems more like a dysfunctional relationship than one of loyalty. Seriously, has anyone ever been happy or even not dissatisfied with the points-mileage-travel plan? If so, they’ve never declared it out loud. Am I wrong? (Feel free to contact me if you have evidence to the contrary.)

Travel points may have originated as specific perqs with their providers (airlines, hotels, rental car agencies) but many migrated to branded credit cards. In fact, most of the action on the travel side of loyalty takes place on the credit-card front.

The Points Guy says, “Overall, the premium card market continues to dominate the headlines and heat up with unexpected contenders like the Hilton Honors Aspire Card from American Express. With the economy and Dow Jones continuing to grow, I don’t think there’s any reason to believe consumer borrowing will slow down or interchange fees will be altered. That means credit card incentives should continue to grow in 2018.”

It sounds terrific but like Las Vegas, the House almost always wins. If a customer doesn’t spend enough to cover costs, credit card companies aren’t going to play. “Card-issuing banks continue to crack down on who they perceive as non-profitable cardholders and ratchet up the heat on suspected award abusers. There’s no end in sight for Chase’s 5/24 rule, and American Express has made its presence particularly known so far this year by denying sign-up bonuses and limited-time spend offer bonuses if they feel your purchases are an attempt to game the system.”

In the meantime, U.S. News & World Report announced its “2018-19 Best Travel Rewards Programs. The annual rankings identify 25 hotel and airline loyalty programs with the most rewarding perks for everyday travelers. For the second consecutive year, Marriott Rewards ranks No. 1 in Best Hotel Rewards Programs. The Alaska Airlines Mileage Plan holds on to the top spot in Best Airline Rewards Programs for the fourth year in a row.”

Interesting. Wonder how they reckon that?

“The methodologies take into account membership benefits — such as free amenities, program-affiliated credit cards and redeemable experiences — network coverage and a strong emphasis on the ease of earning and redeeming free flights or nights. Additionally, U.S. News factors in property diversity for the Best Hotel Rewards Programs and Airline Quality Rating scores for the Best Airline Rewards Programs.

And new research from rDialogue takes stock of just what guests want from loyalty programs, and it’s not all about the points. For example, 78 percent of travel members value a program that recognizes them as a member and 67 percent value experiences just for members.”

So it’s supposedly not just about the bucks, at least for consumers. It’s allegedly more about the experience. But when someone says, “It’s not the money, it’s the principle of the thing,” you can always bet it’s about the money.

Let’s give The Points Guy the last word: “In 2018, it’s more imperative than ever to realize this hobby is a marathon, not a sprint. You don’t need to open all the credit cards this quarter, nor do you need to risk being told your business is no longer welcome by a bank whose instruments you want to utilize for the next few decades. Slow down, and take it one trip at a time.”

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