Have you ever mentioned some travel plans to your family or friends, and they automatically assume you are traveling for free because you are paying with miles and points? Or, have you ever noticed slight changes in service or attitude when a staff learned that you are paying with miles or points? If so, you encountered what I deemed to be a perception problem with miles and points.
A fellow blogger recently wrote about his experience checking out of a hotel where the staff did not seem to view the rewards program in a positive light. In some ways, it’s not hard to see why. They don’t see the stay as “real” revenue; all they see is the $0 stay. I must admit that I think the perception is partly created due to the proliferation of travel blogs touting how to travel for FREE. The headline is catchy, but is it true? I’d say it’s not, and these are just 6 reasons why:
1. You Need to Spend to Earn Miles and Points
People often forget that reward programs were created to reward customers for their loyalty and incentivize them to come back for business. This means that in order to earn miles or points, you actually need to spend money with the airline or the hotel.
I don’t know about you, but (spending money != Free) to me.
2. The Opportunity Cost with Points-Earning Credit Card
There are now more ways than ever to earn miles and points, such as credit card rewards. I tend to think of it this way: Even the miles/points you earned on a points earning credit card are not free. There is an opportunity cost. If you use a miles earning credit card, you get miles and points. You could just as easily get a cash-back card and spend the “cash” reward on anything. Instead, your opportunity cost is trading your cash-back option in order to build up your miles/points balance.
3. Offsetting the Annual Fees
Some miles and points earning credit cards come with some hefty annual fees. For those of us who find value, some of the card benefits (i.e. travel reimbursement) can help to offset a portion of the annual fee. However, it’s merely an offset. You still need to spend for that travel reimbursement.
4. Award Fees and Other Incidentals
While some award redemption is truly free, others come with minor administrative fees (taxes, close-in ticketing fee, award fees) and fuel surcharge fees (I’m looking at you, British Airways). There are incidental costs to some of these “free” award redemption.
5. Your Time Investment
It takes time to figure out the various rewards programs and understand how to maximize an award redemption. This takes time investment and a certain level of interests. There is a reason why some people just can’t be bothered by them. As some might say, time is money.
6. Miles and Points Are Not Free on the Business Side
While it looks like consumers are the ones benefiting from the reward programs, it would do well for people to remember that the sale of miles/points to credit card companies is a revenue stream for the reward programs. By participating in the program, businesses also get more exposure and benefit in the form of new business and reimbursement for the award redemption.
I’ll be the first to say that I greatly value points and miles because they open up all sorts of travel opportunities. I am no stranger to award redemption (only a minor hiccup once), as I have taken some amazing trips with family. Generally, I’d like to tell people that if you know what to do with the miles and points, you can get very good value out of them. But free? I tend to shy away from making those kinds of claims, even if they are super catchy.
Have you run into family/friends who thinks you are always traveling for free? Have you done anything to change that perception? Or, have you run into changes in attitudes or service when using an award redemption? Sound off below.