Are Flights and Hotels Really the Best Award Redemptions?

Mar 11, 2015

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Spoiler alert — most award travelers use their points and miles for travel. However, a new report by the Ideaworks Company highlights some of the other “wild, weird, and wonderful” rewards offered by frequent flyer programs across the globe, including flight simulator experiences, in-flight marriage proposal kits, and an actual pair of 747 business class seats.

Ideaworks is a business consultancy, and this report ostensibly targets Airline CFOs (or by extension anyone who manages a loyalty program), recommending that such programs should be crafted not only to provide a rebate in the form of travel rewards, but also to “engage individual members in a relationship that is unusual between a warm-bodied human and a cold corporate entity.” While the report is ironically rife with steely corporate speak, it does raise a few questions worth answering: namely, are award flights and hotel rooms really the best use of points, and what should loyalty programs do to actually engender loyalty?

Tours and adventures are becoming more popular as award redemptions.

As a general rule, I don’t advocate redeeming points and miles for alternative rewards like gift cards, retail items, or experiences. That’s mostly because those redemptions offer poor value, at least from a purely monetary point of view. Burning 25,000 airline miles on gift cards or an iPod when you’re (hopefully) getting one cent apiece is inefficient, considering you could use those same miles for award flights and get 2 cents or more out of each mile without too much difficulty.

That said, value is relative, and the true measure of an award redemption is how much it’s worth to you. Using 50,000 miles on a last-minute flight home at the highest award tier isn’t a good value from a purely economical standpoint, but if it means getting to spend the holidays with your family, then it’s worthwhile.

Also, there are some alternative redemptions that I think are worthwhile. I had an awesome time last fall redeeming Starpoints through SPG moments for two VIP tickets to see the Knicks with my dad. Not only was it a unique, memorable, and fun experience, but also the redemption value was incredible. I think it’s great that loyalty programs offer diverse awards, but as the Ideaworks report suggests, I believe there’s plenty of room for innovation and individualization.

Programs like SPG Moments offer alternative rewards that may be worth the cost, even if the redemption value isn’t off the charts.

As for the other question, I think loyalty goes way beyond rewards, but loyalty programs are definitely an important component. Brands win my affection (and my repeat business) by providing a quality product and good value, and a solid loyalty programs helps on both fronts. Delta offers a quality product (with good in-flight service and an extensive route network), but the plummeting SkyMiles program detracts from the value and keeps me from being a devout customer. My favorite players in the travel industry do a good job weaving their loyalty programs into the overall experience (like Starwood’s SPG Ambassador).

Having more award options is nice, but I’d rather have a program that does a single thing exceptionally well than one with an array of mediocre offerings. American Airlines could start selling ponies and sleigh rides for AAdvantage miles, but I’d prefer updated lounges and more off-peak awards.

How much do you value alternative redemption options?

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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