Once in a while, something happens to you that seems isolated, and along comes an event that makes you realize that the seemingly unique event in fact connects you to millions of other people in ways you don’t expect.
Last Friday, my wife asked me if we should redeem airline miles to buy a Wii for a Christmas gift. I immediately said that sounded like a good idea. Question presented, decision made, one less gift to worry about. Next.
In today’s Wall Street Journal, it was reported that hotels are increasingly seeing their loyalty points being redeemed for merchandise instead of hotel stays. IHG reported an increase of 15% in usage of points for merchandise, Marriott ticked up 14%, and Hilton recorded a 23% increase.
Hotel companies carry loyalty programs expenses as a means of keeping travelers loyal. On the surface, nothing has changed. If I keep staying at Marriott, I get points that I can use. Does Marriott care how I spend my points? Well…they should.
With those points now spent on a gift-wrapped box under a Christmas tree, the hotel operator misses the opportunity to sell a room, because they are paid by the parent company when the points are redeemed. Moreover, they miss ancillary revenue opportunities in their F&B outlets, spas, and even PPV Movies. Travelers often spend loyalty points for leisure stays where there is an increase in discretionary purchases. Somewhere along the way, a bellman, room attendant, and bartender lost tip, while the loyalty points were redeemed for merchandise.
Returning back to the Wii story, when I made the decision to use the points, I had no idea what a Wii actually costs retail, how many air miles I would need to spend, or how many miles I actually have. Now that I look at the decision more closely, I suppose it is because the airline miles have no actual value today (no travel plans until after the holiday) and very limited future value, because those miles are only as valuable as the lowest cost flight available when I want to use them. The calculations for the value of the airline miles is not only complex, but it changes based on needs and the prevailing market rates. The decision to buy a Wii is alarmingly simple.
Now that I think about, I won’t be redeeming my hotel or airline loyalty points outside of the industry any time soon. Let’s put them to work supporting the men and women that make the travel industries what they are. Let’s hope that the hotel and airlines that peddle the points make that redemption decision a no-brainer.
