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Is the Internet and the economy killing Airline and Hotel Loyalty?

Is the Internet and the economy killing Airline and Hotel Loyalty?

Old Dec 23, 11, 2:53 am
  #16  
 
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Originally Posted by pinniped View Post
I give the hotels credit for one thing though: they've generally been pursuing a course that, while unfortunately decreasing differentiation and character in the race to cut costs, has generally yielded greater total value for most end users over time. That is, the hotel quality that one real dollar buys me in 2011 is actually pretty good compared to the past 20 years or so (my traveling lifetime). Example: $152 gets you a night at the Renaissance 57 in NYC in January 2012...just a normal rate with normal cancel rules on Marriott.com. I don't think I've ever stayed in a quality Manhattan hotel for $152 - even in nominal terms back through the 1990s!!

I've seen the same pattern in many cities: the hotels are competing hard, offering better promotions than ever and more paths to status than ever, driving down the net cost per unit of lodging, almost no matter how you choose to interpret/measure quality. For their stockholders, it may not be good...I don't trade them directly.

Airlines, on the other hand, I give little credit. If they're destroying loyalty, they're doing through their crappy product. Their main weapon to try to retain loyalty is to simply treat the no-status and low-status members worse and worse, thus creating very high switching costs - at least for people who don't know about or don't have any way to get a status match to another carrier. Unlike the hotels, I'm getting less value per air travel dollar spent.
This is a really good and interesting point. Not only have real-time hotel prices gone down, but unlike the airlines, quality has definitely gone up! Ending up in an overpriced total dump is a much rarer occurrence than it used to be, at least in the US. I guess they didn't have any inclusive meals to cut and no oil price to worry about - and they were able to replace overpriced phone calls with overpriced internet access charges.
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Old Dec 23, 11, 5:01 am
  #17  
 
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Kinda complicated. Before the widespread use of the Internet, travel agents played a much bigger role in travel arrangements.

As far as I'm concerned, "loyalty" is pretty valuable. Preferred check-in, preferred security, access to better economy seats, (better) ability to upgrade to business/first class, bonus RDM, airline lounge access, preferred service in IRROPS... these are worth something -- especially as travel hassles have increased, because of higher yields on airplanes, TSA nonsense, etc.

I have gold status on Marriott (earned) and Hilton (gifted). These are nice too -- complimentary Internet access, access to executive lounges. Sometimes I get room upgrades, though I don't care about that.
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Old Dec 23, 11, 5:26 am
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In the day of travel agents, though, I was far more loyal to my TA than I was to an airline (except back when I had status on CO).
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Old Dec 23, 11, 7:39 am
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Originally Posted by AlanInDC View Post
As far as I'm concerned, "loyalty" is pretty valuable. Preferred check-in, preferred security, access to better economy seats, (better) ability to upgrade to business/first class, bonus RDM, airline lounge access, preferred service in IRROPS... these are worth something -- especially as travel hassles have increased, because of higher yields on airplanes, TSA nonsense, etc.
When travelling for business, preferred check-in (when I have to check a bag) or preferred boarding (when I'm schlepping a rollaboard), preferred security, and priority handling of IRROPs are essential, especially when flying between two points with no non-stop service.

My opinion is that this level of service will eventually be something you buy into, either by maintaining a co-branded credit card, paying outright, or being a top tier FF member (but will probably begin to disappear at the 25k tier level).
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Old Dec 23, 11, 8:18 am
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Originally Posted by Joshua View Post
When travelling for business, preferred check-in (when I have to check a bag) or preferred boarding (when I'm schlepping a rollaboard), preferred security, and priority handling of IRROPs are essential, especially when flying between two points with no non-stop service.

My opinion is that this level of service will eventually be something you buy into, either by maintaining a co-branded credit card, paying outright, or being a top tier FF member (but will probably begin to disappear at the 25k tier level).
Or by buying a premium class ticket?
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Old Dec 23, 11, 9:42 am
  #21  
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Originally Posted by RobbieRunner View Post
Many times, Southwest is the same cost as the lowest fare on the major search engines. But I always check.

Interesting sidebar; one of the companies I was a Principal of, we decided to only do business in Southwest cities. This business plan worked, and kept travel costs low.
The irony is that now, in 2011, I'm finding Southwest to be the most expensive U.S. carrier. I flew them a lot this past year and frequently paid a premium over the legacy carrier (in total net cost) to do so. Why? Because they're now the premium product - better operationally and using better airports for my specific routes.

If just keeping costs low is your concern, you don't have to focus on Southwest cities anymore. (Although they're pretty much everywhere in the U.S. now.) Employees can just fly some cheap, crappy legacy carrier if they have to.

Originally Posted by BigLar View Post
Airlines have difficulty making any money - the planes must be used as much as possible, the fuel costs keep rising, personnel costs go up, and all the kettles just want the lowest price. Once the plane takes off (which it has to do), any empty seats become worthless. A hotel can stay open all night.
I agree with you on the airlines' challenges, although they've created a lot of their own problems. I remember sitting at DEN a couple years back, looking out the window at a bunch of United planes. 737's, A320's, and 757's were scattered about. So I'm wondering....why am I seeing both A320's and 737's? Are the two that operationally different? (Maybe they were 321's or even 319's, but still...) I could ask the same thing about AA and their mix of Mad Dogs and 737's. Or any number of other examples. I'm sure some pilots might be able to make an argument that you have to have both 737's and A320's to fly all of United missions, but from a business standpoint I can't help but wonder if it's optimal.

Southwest makes a big deal about flying only the 737 platform. (Well, pre-Airtran anyway...) I get that a global carrier can't just fly 737's, but you'd think they could fly fewer types than they do now and operate more efficiently.

Originally Posted by cordelli View Post
By making status close to worthless in many cases, by selling things they use to give to members for free, or by generally telling people there's no reason to be loyal, people won't be loyal.
...And to make matters worse, their main mechanism to try to re-instill the "value" of status is to treat the non-status fliers bad enough to make your cable company's call center look like a five-star concierge service.

So for me, I still avidly pursue status, but it's different now. Instead of the pursuit of top-tier to enjoy nice benefits, my main mission is to simply ensure that I always have Star Silver. (I have Oneworld Ruby lifetime.) It's basically "escape the worst treatment", not "I like your product so I want to use it more."

If/when the airlines effectively render the "silver" level truly meaningless, I'll probably move more paid travel to non-alliance carriers and look for strategies to simply funnel partner RDM's into alliance accounts for premium cabin awards.

I really don't think the hotels and airlines value their frequent flyers and stayers any where near where those members think they do. Just looking at how they have been losing benefits in many programs pretty much shows that.
I'm willing to throw out one compliment here: this has been my first year as a Starwood Platinum, and I think some hotels genuinely treat Platinums very well, perhaps better than we deserve. Dallas North Le Meridien always made me feel like a true VIP, even on cheap rates as a first-year barely-Platinum.

But generally, no real disagreement. I'm going to lose Marriott Platinum this year and I don't think my treatment at any hotels will change at all. The hotels will still treat me....okay....as long as it isn't a weekend or a resort property.

Originally Posted by Passmethesickbag View Post
Or by buying a premium class ticket?
I've noticed some airlines trying a novel concept in the past 2-3 years on certain routes: actually attempting to sell premium cabin tickets. For most of my flying life, F/J have had extremely high "list" prices, which I have since learned are about 60-70% higher than buyers with corporate contracts actually pay for them. But now I'm seeing a lot more situations where coach is $1,500 R/T and there's a restricted biz fare for, say, $2,500 R/T. Now we're in a reasonable realm where people actually think about value vs. cost and, in some cases, might justify buying the premium seat.

For domestic F, I've seen more "-UP" fares off of midrange coach fares, not just YUP/BUP. Situations where the difference between the best coach fare on the route and the -UP fare is $200-300 R/T.

Probably doesn't bode well for those of us who like upgrades, but I can't blame the airlines for trying to get more revenue out of their F seats. Especially as more companies restrict their policies as to who and when employees can actually book them for business trips.
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Old Dec 24, 11, 1:00 am
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I think mergers and YQ both have a lot to do with it.

Every time there has been a merger - first AF/KL, then DL/NW, and now UA/CO, the ff program has been severely downgraded and lost much of its appeal at least to many segments of travelers.

YQ is not yet the problem in the US that it is in Europe, but the imposition of YQ on award tickets, an absolute fraud on ff members, plus the practice of shortchanging on mile earning on many leisure tickets has given legacy airlines in Europe a very bad taste in one's mouth. The upshot for me is that while I have never set foot on an LCC in the US, that is what I mainly fly for my leisure travel in Europe. I consciously book away from YQ-charging airlines and from those which shortchange on miles, which is most of the legacies. I have even once or twice gotten my corporate travel office to book an LCC for work related travel. The YQ game and the shortchanging on miles on leisure tickets has given me quite a bit of animosity toward most of the European legacy airlines, and so that leaves the LCC's.

While Ryanair is my least favorite LCC, I do love to see its CEO Michael O'Leary bashing what he calls ''the fuel-surcharging airlines''.
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Old Dec 24, 11, 1:27 am
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The internet is weighing on the profitability.. Its easier than ever to query available prices to the public.. and researching programs, prices and inclusions.

The companies used to depend on travel agents, and forced the public to do the research themselves to an extent.. now to the extent that frequent travellers have become research savvy..
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Old Dec 24, 11, 9:29 am
  #24  
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Interesting thread so far. Thanks guys and gals.

For me, I have never found Southwest to be "more" than the legacies. Many times the same. And if I'm checking bags... especially two... I'll go Southwest and save the $50 bag fee.

I'm also wondering how current fortune 500's do travel in today's economy. When I was an executive for a large corporation (back in the 90's) I'd always have my secretary book a Y fare on TWA. Then I'd upgrade for $10 to first class. More often than not there was room. The company did not even blink for Marriott stays or full Y fares back then. Today? I guess it depends on the company and your position.

As a current entrepreneur running two companies, I do watch every penny. If I can save $50 on an airfare, or $75 on a hotel, I will. The internet has helped me extensively in doing this.
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Old Dec 24, 11, 10:19 am
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Originally Posted by pinniped View Post
The irony is that now, in 2011, I'm finding Southwest to be the most expensive U.S. carrier. I flew them a lot this past year and frequently paid a premium over the legacy carrier (in total net cost) to do so. Why? Because they're now the premium product - better operationally and using better airports for my specific routes.
Southwest is not the most expensive carrier if you are checking a bag. They simply bundle that into their pricing. OTOH, if you are flying with only carry-ons, they might be $10-20 more expensive per leg of a trip on comparable fares.
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Old Dec 25, 11, 1:30 am
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Originally Posted by RobbieRunner View Post
As a current entrepreneur running two companies, I do watch every penny. If I can save $50 on an airfare, or $75 on a hotel, I will. The internet has helped me extensively in doing this.
Concur.. small savings add up to big savings as an entrepreneur.. so when divising itineraries for employees, it all adds up.. fiscal restraint is important..
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Old Dec 25, 11, 3:33 am
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As a leisure traveller, cost does come into the consideration. I am paying 100% myself. No tax rebate no nothing. And if I fly more frequently than my co workers, it's not gonna be a once off extravanet spend up. Travelling to me is just something I always do now and then.

With the Internet, I don't use agents anymore. I can go to Hotels.com et al .. look up a location maybe filter down into the 4 stars or what ... and it gives you all the options from lowest price to highest price.

As a leisure traveller I cannot afford 50 nights in a Hilton let alone 10 if I am paying myself 100% without bulk discounts or coroporate discounts.


Equally i think with the arrival of LCC, I am still not that certain. I am not in the USA so we don't get as much competition and with our FFPs the cheap fares don't get any points. So it's pretty much travelling in peak seasons and pay the market price but I travel in the offpeak season. There are much more availability of sale prices and flexibility in flight times/days to choose from a LCC. The larger carriers do have them but need to watch out for daily sales.

The point for us is that if you do stick to an alliance. You become a slave. You need to restrict yourself to limited availability of sales and flight times/days and many times pay more than a LCC non sale time. But if you do look for a sale time LCC they are even cheaper. And the rules says, if you are silver or gold / emerald or sapphire you need that card and you need a matching boarding pass of any class but the Airline needs to match up to that alliance.

Some yrs back before LCC made it to our place. We didn't have a choice. We went to a traditional travel agent and what was availale was just Qantas, AirNZ, Singapore Airlines etc etc .. to Asia from where we were. Maybe United, or Air Canada, American Airlines.
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Old Dec 25, 11, 8:20 am
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Originally Posted by rayonline View Post
With the Internet, I don't use agents anymore. I can go to Hotels.com et al .. look up a location maybe filter down into the 4 stars or what ... and it gives you all the options from lowest price to highest price.
I only use an agent now for more complex bookings, and I always use one for cruise bookings.
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Old Dec 25, 11, 12:23 pm
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Loyalty is a delusion generated by branding. Disloyalty comes from EXPERIENCE!!! LOL

The fact is that company A or company B are better on a case by case basis and need to be examined for relative advantages and disadvantages on each trip, never by default. To prevent people from being objective when in the market or to create goal-oriented spending, loyalty programs are created.

I may hate WN..and I really really DO hate them. But I fly them...I even have A list status. Why? Because before I go out and book each trip I input all the factors and variables. What is the most cost effective, efficient, time fitting, appropriately routed airline to get me to city X on date Y? If it's WN this time, I swallow my hate and fly it. If it's CO, AA or anyone else I cheer that it's not WN and fly that instead.

But I know many a flier who has drunk the kool aid on WN and treats it like a religion. They like the culture of it...fine, but I made it to the Houston convention on CO in F for 230 dollars, and WN "luver" made it to Hobby, schlepped their butt all they way up from there to Houston for the low price of 285 dollars...in WN's all-coach configuration. All I missed out on were the cornball jokes and cattle call.

Second priority is my miles of course..if I only need X amount for whatever airline to gradutate to the next status level or to score a free flight I will take that if it's reasonable and not much more expensive than the cheapest option.

Same with Hotels....I will go wherever suits me best based on price, location, membership and comfort. Although there are some I will NEVER stay in like Extended Stay Suites or any Hampton property. Sure, I like Marriot, but I am not going to seek them out over any other hotel where I could get a better deal. One of my many rules of road travel is to stay as close as I can to where I need to be so I can sleep as long as posible in the mornings! But when I first started out at my last job and to some degree today, I swore by Hotwire..it got me into 5 star resorts (you have to be clever about the city with Hotwire though) for the same price as a crappy Best Western frequently. I had travel agents in the 80's and 90's that were never quite that good. The internet has allowed hotels to cut margin on the fly to fill their empty rooms. Better to take a measly 5% mark up then to have nobody in the room at all, so it's win win for both the hotel and the guest.

Usually though, there is a mean average across the industry..meaning that most airline and hotel prices are pretty much the same give or take a few bucks, save for some rare exceptions and levels of service ( once saw a WN flight PHX-DEN at 85 dollars and an UA flight PHX-DEN at 635 dollars!!) . So other factors come into play like comfort, experience, customer service or directing your biz away from a specific company for some ethical or experiental reason.

The internet has made this research a million times easier and faster, and represents a great consumer liberation.

Last edited by pinworm; Dec 25, 11 at 12:39 pm
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Old Dec 25, 11, 4:54 pm
  #30  
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I have no problems flying on WN on a paid revenue ticket..

But the last bunch of times I've looked up their rates, WN has been more expensive than alternative carriers.. I booked DL last Christmas break for $320 all in round trip to MCO from YYC.. WN was 3 or 4 times more expensive..

So price is king when booking revenue tickets, but ultimately points first, but when its $320 all in, I'll save my points for another trip..
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