Wednesday, March 18, 2009

Miles, Points and Perks

I have a very special relationship with my American Express card, Hilton Hotels and American Airlines. They all give me points (at least one per dollar spent!), which I frequently redeem for free flights, hotel nights and Lakers tickets.

I selected brands and began collecting points five years ago - and I've become so tied to their promises of free hotel nights and roundtrip tickets that I’m incapable of trying cute new boutique hotels, flying the hip upstart airlines, and using a Visa card for business purchases. What if I don’t make my status this year?!?

These psychological wonders – aptly named Loyalty Programs - began in 1981 with the launch of the American Airlines AAdvantage program and have gained steam over the last few decades as companies realized the fiscal benefit of retaining current customers to the cost of wooing new ones. According to Jonathan Barsky, a consultant for the hospitality industry, in 2007, 37% of guests said that the loyalty program was a key factor in deciding where to stay. Not a shabby statistic.

But that ever-steady number began to decline in the first nine months of 2008.

Could this down-turn be attributed to cost-cutting measures that resulted in decreased service, added blackout dates, and fewer perks? Or an outcome of a slowing economy? Yes.

But I also think part of it may be due to a new generation of younger, savvier consumers who expect more from their brands and are willing to pay for an experience that is important to them. Many of these brands don’t have the old-school loyalty programs we have become accustomed to – and that’s probably what adds to their appeal.

Now that there’s been a nationwide shift in saving vs. spending, maybe the added benefits of traditional loyalty programs seem more important - fiscally, a free breakfast might outweigh the desire to sleep in a room with solvent-free paint.

As I begin planning my spring travel season, I wonder… should I stick to the comforts of priority boarding, first class upgrades and free nights at the Hilton? Or do I venture off for an exciting personal experience at a trendy hotel via an airline that offers a healthy food choices and internet access? What are you planning to do this year?

Either way, I know I will be charging it to my American Express card, whose Membership Rewards program only seems to get better with age - and gets me great seats to see the Lakers.


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