Before Joining a Loyalty Program, Pick Your Destinations
Airline miles, hotel points, credit card rewards… there are a slew of loyalty programs permeating the travel industry, each with its own quirks and idiosyncrasies. Among all this confusion, the biggest mistake travelers make when it comes to joining a program is choosing the wrong one.
What's the "right" program? The answer to that question is another question — where do you want to go?
If you're hoping to use points or miles for a dream trip, pick your destination first. Once you've done that, you can work backward to figure out how to fly there, where to stay and how to amass enough reward points to do it all for free.
Although many consumers think all airline loyalty programs are created equal when it comes to traveling within the United States, some programs are better than others. In fact, sometimes the best program isn't even domestic.
Southwest Rapid Rewards is a good example. The airline has an extensive domestic route network and offers a "fixed-value" rewards program, meaning points can be used for any flight at any time and you never have to worry about availability. As long as there's a seat for sale, you can use points to get it (though the more expensive the fare is, the more points you'll have to spend on it).
But Southwest doesn't offer flights to Hawaii, so if you've always wanted to visit Honolulu and you happen to live in the western part of the U.S., you might be better off collecting miles with British Airways.
British Airways is part of an airline alliance called oneworld, which also counts American Airlines as a member. This means you can redeem British Airways miles for flights on American Airlines. And because British Airways has an award redemption chart that's organized by distance flown instead of region, you'll only to cash in 25,000 British Airways miles on a roundtrip ticket from Los Angeles to Honolulu instead of the 45,000 miles American requires for that same flight.
But how can you acquire British Airways miles if you never fly with the carrier? One way is to sign up for a British Airways credit card, but you can also take advantage of the fact that you're allowed to credit flown miles from any airline in an alliance to any other airline in that alliance. So whenever you fly on American, you can credit your earned miles to your British Airways account.
On the other hand, if you're traveling to London, you'll want to avoid using British Airways miles entirely. This sounds counterintuitive, but British Airways charges expensive fees (known as fuel surcharges) when redeeming miles for its own flights. These fuel surcharges can easily cost hundreds or even thousands of dollars, making your "free" ticket almost as expensive as a regular fare.
Instead, for international trips you might want to stockpile United MileagePlus miles. Not only does United offer flights to a variety of major global cities, but it's also a member of the Star Alliance, which has a number of foreign partners, such as Lufthansa and Singapore Airlines. You can use United miles to redeem with any Star Alliance partner just like you would on United itself, and without any fuel surcharges.
Hotel programs are different than airline programs because hotel chains (such as Hilton and Marriott) don't own most of their properties. Instead, the hotels are owned by franchises and the chains market them all together under a brand name and rewards program. This means when you redeem points for a hotel room, the chain has to pay the hotel in cash for that room.
This tends to make hotel loyalty programs more expensive than airline programs, which means award redemptions often aren't as valuable. Since major tourist destinations have thousands of hotel rooms, it can be relatively easy to pay for cheap lodging with cash. An inexpensive room might not be particularly glamorous, but if you're visiting an exciting new city, you probably won't be spending a lot of time in the hotel room anyway.
But if you're vacationing in a resort-filled destination like Hawaii, sometimes staying at a stunning beachfront property is part of the magic of the trip. If that's your goal, aim to accumulate enough points to book a fantastic room that you'd never be able to afford with cash. Chains like Starwood and Hyatt routinely charge $500 to $1,000 per night at their high-end hotels, so using 25,000 points for those rooms is often more cost-effective.
What if you're not sure whether you want to focus on domestic or international travel, or you're torn between airline miles and hotel points? In that case, your best bet is to collect points with one of the major credit card rewards programs.
The advantage of these systems is that they allow points to be transferred directly to multiple airline and hotel programs, usually on a 1-to-1 basis (so 1,000 credit card points gets you 1,000 airline miles or hotel points). Better yet, you don't have to decide where to transfer your miles or points until you're ready to use them, which means these points offer tremendous flexibility.
There are two major credit card rewards programs: Ultimate Rewards by Chase, and Membership Rewards from American Express. Each program has its own distinct list of transfer partners, but there's at least one good domestic option and one good international option in both of them. Starwood also allows its Starpoints to be transferred to many airlines, so it's often considered a third "flexible" points program.
The downside of credit card programs is that you can only acquire points by spending with the card, not through traveling. If you're not comfortable with credit cards, these programs probably aren't for you.
Regardless of how you decide to accumulate points or miles, pick your destination and do some research before starting up your collection. With a little extra prep, you're less likely to end up sitting on a pile of points that don't get you where you really want to go.
About the author: Julian Mark Kheel learned the ins and outs of travel loyalty programs while flying more than 200,000 miles a year as a TV producer and director. He takes a contrarian view on travel wisdom in his "Devil's Advocate" series every Thursday at the blog Travel Codex. You can also reach him on Twitter @dvlsadvcate.