Miles devaluation - trend or here to stay?
Sep 13, 2006 | 12:48 am
#1
Original Poster
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Miles devaluation - trend or here to stay?
Randy:
My question has to do with the devaluation of miles both airlines and hotels. With programs not giving much notice and yet not having availability for many awards prior to the changes, what would you suggest are the best strategies for "maximizing" the miles currently being held along with the miles to be earned yet?
Also, I know you don't have a crystal ball, but do you think that this is a trend that will continue and each year we will see more and more devaluation with the programs?
Thanks.
My question has to do with the devaluation of miles both airlines and hotels. With programs not giving much notice and yet not having availability for many awards prior to the changes, what would you suggest are the best strategies for "maximizing" the miles currently being held along with the miles to be earned yet?
Also, I know you don't have a crystal ball, but do you think that this is a trend that will continue and each year we will see more and more devaluation with the programs?
Thanks.
Sep 13, 2006 | 3:09 am
#2
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Hotel devaluation is a fact of economic logic - most hotel programmes give out points based on $ spent, so as inflation pushes up room rates each year, the hotels are giving out more and more points for the same stay.
If 5 years ago a room was $100 (earnimg 10 points per $1) and earned 1,000 points in a scheme that needed 3k points for a free night, you'd get a free night for every 3 stays. If inflation has pushed up that room to $150 today, you'd get a free night for every 1.5 stays. The hotels have to increase the points needed for a night or it would be too easy to earn a free one.
The airlines, on the other hand, have no excuses, since miles earned are based on distance flown and not $ spent.
If 5 years ago a room was $100 (earnimg 10 points per $1) and earned 1,000 points in a scheme that needed 3k points for a free night, you'd get a free night for every 3 stays. If inflation has pushed up that room to $150 today, you'd get a free night for every 1.5 stays. The hotels have to increase the points needed for a night or it would be too easy to earn a free one.
The airlines, on the other hand, have no excuses, since miles earned are based on distance flown and not $ spent.
Sep 13, 2006 | 10:48 am
#3
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The problem the airlines face is that miles are created in many different ways--not just flying. Miles are actually a nice revenue source for airlines; however, there's no equivalent of a central bank regulating what these miles are worth. Airlines have to maintain a contingent liability on their financials to reflect the value of these miles. I think that airlines will continue to find ways to devalue these miles, thus mitigating their liability.