Wise Flyer – May, 14 2014

Wise Flyer – May, 14 2014

QUESTION: Quite a few years ago (1990-1997 to be exact) our company retained airline frequent flyer points and used those points back towards business travel.

It was a process that saved money for the company but brought angst to the business traveler. The company decided to discontinue the program but it is coming forward again along with the possible program of managing hotel and car rental points. Have you ever heard of any other company retaining hotel and car rental points? I thought I would come directly to the experts on frequent flyer points. Your help would really be appreciated.
Cheryl H.

WISEFLYER: Good question. During the most recent economic turndown, there was a revival in the interest of managing business-funded frequent flyer miles for the benefit of the company. That has cooled back down because of the reasons that you posed – the angst of the business traveler. However, there have been several companies that retain hotel points because they are seen as the “softer landing” compared to retaining frequent flyer miles. Arguably the capture of hotel points has been more successful than airline miles because of the continued focus by business travelers on their miles – even with what seems like a change in the value of miles. Miles are still important to business travelers and travelers view companies that retain those miles as being insensitive to the life of a road warrior – it’s not all fun and games.

In understanding the softer acceptance of hotel points vs. miles, it can often be traced to two different views: 1) The large majority of road warriors / frequent flyers have personal credit cards tied to their frequent flyer programs, not their hotel loyalty programs, and as such feel less intrusion on their collection of points. 2) Because hotel points are earned on a revenue basis there are often not as many hotel points as miles in a typical frequent flyer program; and while it is likely that hotel points hold greater actual value overall than frequent flyer miles, the average traveler typically does not compute the comparison of this apples and oranges.

As we move from hotel points to car rental points the equation moved to kumquats. There is no company I am aware of that singles out the corporate capture of car rental points. Two reasons: 1) Most car rental points are actually car rental miles. There is a huge difference in the number of road warriors / frequent flyers who claim points via actual car rental programs vs. earning frequent flyer miles via car rentals. To truly capture car rental points, you’d have to return to where their greatest number is and that is as frequent flyer miles; and then you start the corporate capture topic all over again. 2) Because of this, it is generally assumed that there is de minimis value in this sort of low hanging fruit and not worth the inference of taking something away with likely little return. Of course the irony is that many programs have moved to include car rental redemption as an award option with frequent flyer miles, which with so many more miles in one’s account, would mean much more value to the capture of those redemptions.
The most interesting twist to all this is how does the new revenue-based direction of frequent flyer programs impact the company? That is, does earning more miles from more expensive tickets mean that the average frequent flyer will cost corporate America more as they continue to seek the most miles from their travels? I’m not sure that this story will ever be played out to the satisfaction of either the corporate travel manager or the traveler.