What Changes to Loyalty Programs in 2016 Will Mean for Travelers
With shifting program policies that devalue elite-status perks and make it trickier to rack up points without paying a hefty sum, you may wonder whether playing -- and winning -- the rewards game is still possible. And if you're a value-conscious traveler, you may even reconsider whether loyalty is still lucrative. Let's face it: Airline rewards programs have made it harder in the past few years to collect and redeem awards or land upgrades, and with increasing consolidation within the industry, rewards programs are becoming less generous than in the past. Happily, reward program updates in 2016 aren't all bleak. We got the scoop from points pros to help you navigate the changes and reassess your own strategy to maximize rewards and benefits.
Hotel Loyalty Programs
Once the deal is finalized in mid-2016 and the Marriott-Starwood merger is complete, Marriott will create the world's largest hotel chain, which will translate to substantial changes for program members. "We've never seen a merger of this magnitude," says Brian Kelly, the mastermind behind the points and miles advice site The Points Guy.
Exactly how Starwood Preferred Guest program members will be impacted by the merger is still unknown, but Starwood fans are especially wary of the takeover since the program is known for its lucrative elite-tier benefits, says Ben Schlappig, author of One Mile at a Time, a travel blog for points enthusiasts. "My hope is that they keep guaranteed 4 p.m. late checkout and complimentary suite upgrades for top-tier elite members, which Starwood offers but Marriott doesn't." (Starwood Preferred Guest Gold and Platinum members can take advantage of late checkout times at select participating hotels.) But the more pressing question for rewards members is how points will be affected by the merger, Schlappig explains. "The points are worth substantially different amounts," he adds, emphasizing that the points conversion scale will likely translate to a 1-to-2 or 1-to-3 rate. Still, members should be provided with notice before Starwood is absorbed into Marriott, making it easier to decide whether it's more advantageous to use points or convert them, he adds.
"It's not all negative," Kelly says. Though top-tier Platinum members have the most to lose, with a shared footprint, Marriott Rewards members now have myriad ways to earn and redeem points, he says.
While you might find a little less value of the program if you're a Starwood loyalist with top-tier elite status privileges, for Marriott Rewards members, Marriott points are going to be more generous, says Gary Leff, co-founder of InsideFlyer.com and author of frequent flier site View From the Wing. "It will be interesting if they will find a way to meet in the middle," he adds.
And the Marriott-Starwood merger isn't the first news of industry consolidation. Last year, the InterContinental Hotels Group acquired Kimpton Hotels & Restaurants, and in December, AccorHotels announced its acquisition of three chains: Fairmont, Raffles and Swissôtel. How members will be affected by the latest acquisitions is still shaking out, but Schlappig predicts that the trend will follow a similar pattern to frequent flier programs. "Fewer brands mean less of an incentive to offer a lucrative loyalty program, which is used as a point of distinction," he says. On the other hand, hotel brands will still face competition from one another, he adds, and with the number of available rooms increasing, he does not expect prices to climb based on these mergers.
Frequent Flier Programs
With a rising number of airline programs reconfiguring their earning structures to reward fliers based on the dollar spent rather than distance flown, it's becoming harder for the average flier to rack up points, Leff says. Most recently, American Airlines announced that its AAdvantage program will become fare-based, following suit with the other legacy carriers, Delta Air Lines and United. "They're essentially converting it from a frequent flier program to a frequent buyer program" Schlappig says.
"With only three global U.S. carriers, people are choosing airlines based on their route network rather than the frequent flier programs," Schlappig says. "As a result, we're seeing some reduction in elite benefits," he cautions. "For example, as of the 2016 program year, American Executive Platinum members (top-tier elite members who earn at least 100,000 elite qualifying miles per year) will only earn four system-wide upgrades upon earning status, rather than eight."
Generally, privileges are getting scaled back for the majority of fliers, says Scott Mackenzie, the guru behind the travel advice blog Travel Codex, pointing to Delta's recent decision to change the number of companion passes available to elite-status members. Starting in May, 2016, Delta Diamond and Platinum Medallion members can take advantage of up to one companion upgrade, rather than eight, the previous number allotted to elite-tier loyalists.
"Expecting a free upgrade is a fool's errand in 2016," Kelly says. For the top elite tiers, there is still value to be had, he says, but perks such as priority boarding access for the lowest elite-tier members are disappearing.
Still, for international jet-setters legacy carriers offer extensive alliances, providing greater award choice and flexibility for frequent travelers, Leff says. Less than a decade ago, "you didn't have the vast array of partnerships you have today," he explains. And while the award pricing changes to American's AAdvantage program coming in March 2016 mean more expensive award flight prices, two-thirds of rewards points are earned from avenues apart from flying, he says.
Beyond these changes, Schlappig also points out that upgrades will become increasingly difficult to obtain as unlimited complimentary upgrades have become contingent on availability, and U.S. carriers are trying to sell more first-class seats by reducing the price to incentivize more purchased seat upgrades, he says. Ultimately, this translates to fewer upgrades, he explains. Award redemption levels on business- and first-class seats for domestic and international flights will continue to rise, but the greatest devaluation will come from carriers selling more premium-class seats than ever by "lowering fares and offering more opportunities to pay cash to buy-up to first class," he says. What's more, carriers are offering fewer saver-level award seats, which means that "even if award prices are low, it will be extremely difficult to actually redeem your miles at that level, as there won't be any award availability," he adds.
How to Shift Your Strategy
Despite airlines diluting the value of their points and privileges, on the bright side, there are a variety of ways to earn miles apart from flying. A multitude of airline-backed credit cards offer major category bonuses that allow cardholders to earn two to five times as many points for spending. A smart technique for raking in rewards is investing in a card that caters to your spending habits and allows you to transfer accumulated points, Schlappig says. He suggests picking a card that enables you to transfer points to many carriers. "That way, you can just transfer points when you know you're ready to book. That's much smarter than accruing points in an individual mileage program."
You should also evaluate how often you fly, Mackenzie says. As airline programs continue to shift to a fare-driven model, chances are, occasional leisure travelers aren't going to get much out of low elite-tier status privileges, he says. Instead of trying to rack up points by flying more, "maybe it's time to get off the merry-go-round," he says. And unless you're buying expensive tickets, the majority of miles will come from a credit card or program partners.
"Put a goal in mind and work back from there," Kelly says. If you want to earn more miles, collect rewards points with a credit card that offers a generous sign-up bonus and lucrative points for other categories like dining. The Chase Sapphire Preferred Card, for example, offers a free intro annual fee for the first year, and awards two points per dollar spent in the dining and travel category, along with a one-to-one point to frequent-flier program mile or rewards point ratio. Meanwhile, the Citi ThankYou Premier card offers a low $95 annual fee and allows cardholders to earn up to three points per dollar spend on travel expenses and two points per dollar spent on entertainment and dining.
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