Thirfty Consumers Using Miles to Pay for Gas

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Published March 31, 2011

| FOXBusiness

Travelers today are looking for more than just a free bag of peanuts and soda on flights and during hotel stays.

According to a recent survey, by joining traveler loyalty programs with airlines and hotels around the globe, consumers are earning points and redeeming them for not only free travel, but gift cards and even cash, to offset the slowly recovering economy—even if they are traveling on their company's dime. Don Berg, vice president of Loyalty Programs and Partnerships for InterContinental Hotels Group (IHG) said due to the economic climate, members of loyalty programs are looking to cash in more and more on everyday items, instead of another vacation.

"What we have seen with the recession is that people are more engaged with these programs," Berg said. "They shift their behavior more towards gift cards, gas cards—things they would have bought normally on their own budget. When times are tough, they are looking to loyalty programs to redeem everyday items."

This week, IHG released results from its global travel loyalty industry study. The study is three years of quantitative and qualitative research of more than 10,000 frequent travelers at IHG and other major hotel companies around the world. The study found frequent travelers place more value on hotel loyalty program points than they do frequent flier miles, and business travelers value loyalty over price.

Business travelers choose loyalty programs for themselves, their company doesn’t make the decision, and the vast majority of corporate IHG guests are not paying for their rooms, Berg said. They are charging back to their companies instead, often making them rate-insensitive.

"91% of them don't pay for the rooms," he said. "It's a personal decision, and the company rarely gets involved. It's almost always a personal preference."

What Berg found most common in survey participants was that they wanted to redeem and use their loyalty points not for miles, but instead as if they were cash.

"They want to manage points just as if it were cash in their wallet, with no restrictions on it," he said.

Consumer savings expert Andrea Woroch said many recession-scarred travelers have been getting on the loyalty rewards programs bandwagon, and those who haven’t are missing out on a ton of savings.

"I think now, with gas and food prices rising, people are really tightening their belts again," Woroch said. "They are uncertain about things, and are taking a step back and looking for new ways to save money."

Woroch said Web sites like points.com allow consumers to track their points from all loyalty programs in one spot, as well as exchange and trade them to grow new balances. The site also allows consumers to redeem their points for gift cards and even PayPal account cash.

Senior PR manager for Travelocity Joel Frey said many programs make it difficult for consumers to actually redeem their points for travel, which is why they opt for merchandise and gift cards. He agreed with the study findings that consumers today like to be able to use their points whenever they want to use them, as if they were actual dollars.

"Travel is a big expense for people, and that seems to be the rationale behind getting one of those (rewards) cards in the first place," he said.

URL

http://www.foxbusiness.com/travel/2011/03/31/travel-loyalty-rewards-programs/