When Kathy Kieffer tried to book an award ticket from Medford, Ore., to Bangkok for this December, she didn’t expect any post-pandemic point inflation — at least not yet.
Then she saw the price for her economy class ticket on United Airlines and its partners to get to Thailand: 88,000 miles, or about 10 percent more than it had been only a few months before. She wishes she hadn’t waited.
“I just sucked it up and bought a ticket,” says Kieffer, a nurse from Grants Pass, Ore.
A lot of travelers are facing a similar problem — and a dilemma. As the pandemic begins to ease in some countries and travel gradually resumes, the price of “free” award tickets is rising. And they’re wondering if they should use the miles and points now, or wait for the point inflation to ease.
“These changes are simply driven by supply and demand,” explains Tim Derdenger, associate professor of marketing and strategy at Carnegie Mellon University’s Tepper School of Business. “There’s sizable pent-up demand for travel because of the pandemic and with more families feeling comfortable traveling post-vaccination. As a result, travel companies are adjusting their redemption levels.”
Kieffer is hardly alone in her frustration. Bill Mapp wanted to cash in some of his points at the Holiday Inn Express & Suites Wytheville, Va. Normally, he can secure a room for 20,000 points per night. But, when he checked, the rate had risen by 85 percent. Mapp, a retired recruiting coach from Bristol, Va., could have opted to pay 22,000 plus $90 for the room, but he instead decided to change his itinerary.
“I feel as if my points have been devalued,” he says.
Maybe, maybe not. I asked IHG Hotels & Resorts, which owns Holiday Inn, about the point requirements. A representative said that in recent weeks, with “significant” growth in demand in certain locations, a reward night may cost more.
For example, the redemption rate at the Holiday Inn Express in Wytheville reflected a busier time for the hotel, according to IHG. Had Mapp waited a few more weeks, the redemption levels would have fallen back to 20,000 points.
Bryce Conway, founder of the loyalty site 10xTravel, euphemistically calls the moves an “adjustment” of redemption rates. And he says more such adjustments are to come.
“As companies try to regain revenue lost because of covid, I expect to see more loyalty program devaluations as airlines and hotels take the opportunity to reduce the value of their points and miles to save money,” he says.
But the timing is good for some travelers. Since they’re sitting on a stockpile of points and miles collected during the pandemic, they probably have more to spend. And spend is exactly what travel companies want them to do. Having trillions of miles of outstanding award credits on their balance sheets is not a good look for any travel company.
For other travelers, the timing isn’t so good. Arie Boris, a restaurant critic from New York, had enough miles saved up for a first-class seat from New York to Tokyo, where he planned to begin a cruise. In 2019, a round trip premium class seat cost 25,000 miles each way. Now it’s 120,000 miles. He doesn’t have enough miles for that.
“Looks like the best I can do now is premium economy — or revenue economy,” says Boris, who publishes a cruise food website.
Travel companies are using other strategies to reduce their points liability. Consider what happened to Mary Paris. She had saved up 90,719 American Airlines miles during the pandemic and hoped to use them for a flight this summer. Then she received an email from American in early spring. “Don’t let 90,719 miles fly away!” it warned her. “Your miles will expire within 90 days.”
“Evidently, no exceptions are being made for the covid lockdown,” says Paris, a photo editor and archivist from Alexandria, Va. “I think it’s wrong to revoke the miles I’ve earned over many years with four or more AA flights a year because I observed lockdown recommendations.”
American would not comment on Paris’s case. But earlier this month, the airline bowed to pressure from passengers like her and paused the expiration of AAdvantage miles through Dec. 31. So Paris has until the end of the year to redeem the points.
Derdenger, the Carnegie Mellon professor, says it is possible that when demand for travel drops again, some point requirements will drop. But this could take a while.
“Consumers have two choices,” he says. “Either spend their points now when prices are high or they can continue to save them — as long as their points don’t expire, for a later time when demand levels out and prices fall.”
He thinks travel demand will flatten — in about a year.
The takeaway is clear. With the pandemic starting to fade, travel companies are either raising their redemption levels or finding other ways to shed their award liabilities. If you’re thinking of using your points or miles for a ticket or hotel, you may want to hold off on a redemption until award levels come back down to earth.
Read more from Travel: Read past Navigator columns here
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