Travel Rewards Credit Cards

Dec 15

Weekend Tidbits: Marriott, Ryanair, Fees

It’s Friday, so we’ll keep today rather light. Enjoy.

Can Marriott Get Luxurious?

marriott flights and hotels

No, this isn’t a luxury property. It would just be nice to be in Hawaii.

Publicly traded hotel companies have had success in virtually every segment of the market, with one segment: the luxury end. They can certainly run high-end hotels, they just can’t do it as well as the independents. Let’s face it: When you’re running thousands of hotels, it’s hard not to let some of the “one size fits all” attitude slip in.

Marriott, though, is going to give it a shot in 2018, growing its luxury base by 10%. With Starwood hotels now being folded into the family, the company will have a variety of brands, ranging from the well-known Ritz-Carlton to the more obscure Bulgari properties.

To give Marriott credit, they’ve done a better job of maintaining the high-end feel of Ritz Carlton than its competitors have done (I’m looking at you, St. Regis.), but that’s likely because it bought a brand that had already been built. The culture was there.

Ryanair

Ryanair was the original ultra-low cost carrier, a UK-based airline selling tickets for as little as one British pound, but adding on enough fees to drive a normal person crazy. Known for their enigmatic CEO and bare bones customer service, the airline which nobody wants to fly has grown to over 400 airplanes. Apparently, there are a lot of nobodies out there, and the airline has quickly become one of the top carriers in Europe.

Today, Ryan did something that it swore it would never do: It announced that it would recognize pilot unions. This is not a small step, as the flexibility in its labor contracts (Its pilots are, for the most part, contracted.) has helped keep its costs down. But a threatened strike and an EU ruling regarding base locations and negotiations made it clear that the current system wouldn’t last.

Don’t worry, I’m sure that a “Union Facilitation Fee” will soon show up on your ticket.

Speaking Of Fees…

You won’t necessarily be paying more in the US, but it may be harder for you to locate the figures. The Department of Transportation has dropped a proposal that would have required airlines to show you any fees at the same time that they showed you the ticket price, rather than adding them later in the process.

To be clear, the system isn’t changing from how it looks currently. Rather, the DoT has limited potential improvements in pricing transparency.

 

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Dec 14

Delta Airlines: Your Seat Is Branded

Every year, Delta Airlines has a meeting for Wall Street analysts to talk about their financial situation and future strategy. That meeting took place today and, as it relates to miles and flying, I thought the most interesting part was their discussion on branded fares.

Branded fares

delta

Delta is rooting for “up and to the right”

Hey, a plain old ticket isn’t good enough anymore. Your ticket now has a name (and, of course, has for some time). Instead of just coach or first, Delta has as many as six categories of fares. Of course, they still economy, business (domestic first class) and true first class (now called Delta One). But they also have some in-between: If you want to spend a bit more, you can get Comfort Plus (a bit more extra space on narrow bodies) or Premium Economy (2×2 seating and more legroom on wide bodies). Don’t care about a seat assignment or boarding quickly? Basic Economy will get you the same seat, just not an assigned one.

So What Does It Mean?

Should these branded fares matter to you? Probably. Choice is always a good thing, so you can buy up or buy down. But, in addition to segmenting fares, Delta is also making it easier to buy up to a better class of service, which means that free upgrades will be harder to come by for elite members.

But it could also mean that those upgrades won’t be as good. Eventually, elite members won’t get upgraded from coach to business or first. Rather, it is likely that the free upgrade on narrow bodies will eventually be one category to comfort plus, and that the freebies on international flights will be to premium economy. Want the good stuff? Sorry, you’ll have to buy a C+ or PE seat initially and use your one category upgrade from there.

The Bottom Line: Delta is a publicly traded company that is trying to make money for its shareholders, so it’s nothing personal, only business. But it may eventually be that much tougher for you to get into the class that you want for free.

 

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Dec 13

End Of Year Thoughts And A Good Marriott-Starwood Article

Don’t Let Your Points Expire

Your new year won’t be so happy if your points expire.                          Photo Credit: Creative Commons

As you move into the new year, it’s time to make sure that your points don’t expire. Every program has different rules about how frequently you need to have activity in your accounts, and it can be as few as three months (I’m looking at you, Spirit.).

Remember, you don’t have to stay at a property or fly to keep your points going. You can probably use a survey site, shop through the company’s web site or even earn pick some up on social media, such as at La Quinta. Note that Marriott’s social media points do not count as activity when it comes to preventing expiration.

Bottom Line: It’s worth keeping a list of your accounts and checking them every six months to make sure that you have nothing about to expire.

And a hat tip to beachmouse for the La Quinta tip.

Is Marriott Cool Enough For Starwood?

The New York Times does a pretty good job explaining the dilemma that Marriott faces as it integrates Starwood’s loyalty program into Marriott Rewards. SPG has always been the innovative one, while Marriott is, um, “reliable.” In particular, elite benefits at Starwood far exceeded those at many of its competitors and the program had a real fan base.

To be fair, Marriott has already started to integrate some of SPG’s most popular features. Elite members in the top two tiers, for instance, can now get guaranteed 4pm checkouts (except at resorts and conference centers). But the big kahuna of Starwood top-tier benefits, the upgrade to select suites, is still not included and may not be, unless Marriott offers upgrade credit for nights above the 75 minimum to earn Platinum. Hey, I need some reason to keep going with them, now that they’ve eliminated rollover nights.

 

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Dec 12

JetBlue Flash Sale: 15% Off (Sort Of)

The winter is a slower time for airlines, particularly midweek, when kids are in school. Thus, many of them take advantage of the time to throw in a fare sale.

JetBlue Flash Sale*

jetblue

JetBlue’s flash sale

This one’s good for only two days, so hurry.

Book by tomorrow night for travel 1/10-2/14 and 2/26-3/14 and you’ll get 15% off through this JetBlue promo. JetBlue is known for running strong flash sales, although this one isn’t as strong as many in the past have been, since it comes with a long list of restrictions:

  • Promo code: RECESS
  • 15% off base airfare on all flights (base airfare excludes government taxes/fees)
  • Book by 12/13/17
  • Travel 1/10 – 2/14 & 2/26 – 3/14/18. Excludes travel on Friday and Sunday.
  • Not valid on previous bookings
  • Only one code per booking

There’s nothing in there, though, to stop a Saturday to Saturday trip, although they have blocked out the most common “ski week” vacations in February. Still, 15% off is a big number for an airline and if you have been planning to book a trip, now would be a good time to do so.

 


*Beginner’s Hint: A flash sale is one that can be announced at any time and lasts only for a short duration. They often have better than average promotions.

 

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And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!

Dec 11

How Delta Rescued Diamond Medallion Status

As you know, this blog is tailored to novices in the frequent flyer world but, every so often, it’s fun to get a little deeper on a particular subject. Today, I’ll talk about Delta’s Medallion program and its top status, Diamond Medallion, in particular. If you need a quick review of what elite status is, you can refer back to this post.

Was Delta’s Diamond Status Too Easy To Earn?

delta, medallion, diamond

Status is earned by flying a certain number of miles or number of segments, combined with spending.

While top tier status at each of the major airlines has its own advantages, Delta’s Diamond status is arguably the most valuable. In addition to the standard upgrades 120 hours prior to departure and 11 miles per dollar spent, Diamond earns you the ability to roll over unlimited Medallion qualifying miles (MQM), a free Clear membership and several choice benefits, among other perks. Earning Diamond status required flying either 125,000 status miles or 140 segments, in addition to spending $15,000 on Delta (Medallion qualifying dollars, or MQD, which was the ticket price minus any taxes and fees) or earning an MQD waiver by spending at least $25,000 on a Delta American Express card.

The problem was that achieving Diamond status had become too easy (a relative term). Too many Diamond elite members devalued the status for everyone, in particular, making it that much more difficult to get free upgrades.* 125,000 miles isn’t exactly simple, but it is doable, since many of the Delta credit cards offer you miles toward elite status if you spend enough. On the other hand, spending $15,000 on tickets was out of a lot of people’s reach, so the waiver was a huge benefit.

Volume to Value

Almost 20 years ago, Kellogg’s CEO (and future Secretary of Commerce) Carlos Gutierrez implemented a policy called “volume to value.” Instead of focusing on how many boxes of cereal the company sold, it spent more energy worrying about how much profit it could generate from each box. Making a dollar on one box of cereal was much better than selling three boxes that only generated 25c of profit each.

Earlier this year, Delta made a similar decision. The airline doesn’t generate profits based on how many miles its passengers flew, but rather, how much money they spent.** Thus, it wanted to tie elite status to that number, as well. Spending $25,000 on your American Express credit card is not nearly as profitable for Delta as when you spend $15,000 on tickets. So Delta made an adjustment. Starting next year, you can still earn status for 2019 by spending the $15,000 but, in order to get the waiver, you need to spend $250,000 on your Delta American Express card (or combination of more than one). Ouch. That’s ten times the former number and puts it out of reach for most consumers, particularly since American Express has been cracking down on Manufactured Spending.***

Loyalty Or Value?

As a publicly traded company, Delta has an obligation to maximize profits for its shareholders, and it decided to differentiate between its own views on loyalty and value (which may or may not differ from how customers view those terms). In other words, Delta is placing significantly more value on customers who fly fewer miles but are willing to pay more to fly them. There’s a risk, of course, that the airline is only able to sell a few expensive tickets and can’t generate incremental revenue in the back of the plane, but it’s unlikely. If you’re reading this now, you care more about miles than 99.99% of the population, and most people don’t make their flight decisions based on what they’ll earn (and shame on them for that).

And It’s Probably Good for High-Value Passengers

If you spend a ton of money on Delta, the change to the waiver is good for you.

  • Obviously, you’ll have less competition for upgrades. Making it harder to achieve Diamond status can only lower the total pool size, and I believe that it’s a pretty significant decline. Delta will still sell upgrades, but those holding out for a freebie will find it a bit easier.
  • It reduces the risk of “benefit devaluation.” Give everybody an easy shot at Diamond status and the valuable upgrades and choice benefits that come with it and Delta will be tempted to reduce those options.
  • Platinum is still a strong status and maintains the old waiver. Platinum is one step below Diamond and requires 75,000 MQM plus either $9,000 in spending on Delta or $25,000 on the credit card. Thus, it’s still “easy” to earn some great benefits, while maintaining the integrity of Diamond status.

Otherwise…

Vote with your feet. American and United only require $12,000 in airline spending for top-tier status, but the former has no waivers at all and United only offers a credit card spending waiver for its bottom two tiers.

And if you’re not in a position to hit the top tier anyway, I’d avoid the various elite battles altogether. Status is great to have, but it’s rarely worth spending thousands of dollars to leap up a tier. There’s always somebody above you.

 


*Delta hasn’t made it any easier to get those free upgrades, regardless of how many Diamonds are on a flight. It has done a better job than its competitors of monetizing upgrades, figuring that earning a couple of hundred dollars from somebody buying an upgrade at a discount is better than giving it away for free.

**From the beginning, the airlines would have been better off awarding points based on how many dollars you spent rather than how many miles you flew. Any program created in the past ten years, airline or hotel, has been based on spending.

***Beginner’s Hint: “Manufactured Spending” is a way of spending money on your credit card to buy cash equivalents, thereby earning miles while being out of pocket as little as possible. The classic example is using your credit card to buy Visa gift cards, which you would then convert to cash by buying money orders. You’d only be out of pocket for the fees, which are usually far less than the value of the miles that you earn. I spend almost no time on MSing, but two good blogs that do are Frequent Miler and Point Chaser.

 

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Dec 09

Weekend Tidbits

Hope everyone’s weekend is off to a good start. Here are a few tidbits to mull over today:

Updated Marriott Megabonus

marriott, megabonus

I don’t actually see a hotel in that picture.

Well, that was anti-climactic. One of the most interesting things about this time period’s Megabonus offer was that, if you finished the two stays and earned your free night, they would give you an additional promotion.

Sadly, it wasn’t a particularly good one, although it might be different for everyone. I get a lousy 10,000 points, not even enough for a free night, for five more stays through January 15. Marriott’s generosity was good while it lasted.

Discover 5% Cashback for Jan-Mar

Discover

Discover announced that its 5% categories back for January through March. Make purchases with your eligible Discover card at gas stations or wholesale clubs for the first three months of the new year and they’ll kick back 5% of your purchases, up to a maximum of $1,500 what you buy. Discover offers 5% categories every quarter of the year, so you can pick up an easy $300 in rebates.

Truthfully, though, the biggest money-maker at Discover is available year round through its Discover Deals. Earn 5% back or more when you shop through the portal, which is one of the best cash back sites out there.

More Airline Fees Coming?

According to the Wall Street Journal, airports are agitating for an $8 per round-trip ticket increase to the current “passenger facility charge” to help pay for renovations. It seems to make perfect sense: The users of the facility should pay extra for it.

Except that’s not how things work. Airports benefit an entire community and we all pay taxes for benefits that we don’t use (as well as use facilities that we didn’t necessarily pay for). Airlines are already one of the most taxed and “fee’d” industries, and another $8 per passenger might not seem like a lot, but I guarantee that it will lead to routes being cancelled and/or fewer passengers.

Airports in the United States clearly trail their peers around the world, but you’re already paying a small fortune on every ticket. Either the government needs to invest in its local facilities or they need to at least partially privatize the entire system.

 

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Dec 08

IHG Brings Back Accelerate Promotion

Another year, another Accelerate promotion from IHG, parent of several brands including InterContinental, the Holiday Inn themes and a few others. This one is for January 1 – April 30.

Accelerate 1Q18

The Accelerate promo is the IHG bonus that we see every four months. The company gives you a list of “tasks” and, the more you complete, the more points you get. They usually throw in a completion kicker, giving you extra points if you finish a certain number of tasks.

Traditionally, Accelerate, which is tailored differently to each person, has been a better deal for customers who rarely stay with IHG than those who stay frequently. Why? Because they want to influence your future behavior and aren’t afraid to use points to do so. If you only stay with them a couple times per year, but they can get a few extra nights out of you to complete the promotion, that’s a huge step up for them. You’re probably spending most of your time with another brand, and they have a chance to win your business. On the other hand, if you are already staying with them 100 nights per year, they can be pretty certain that you are staying almost exclusively with them. They would get your nights anyway, so why bother to give you extra points?

Here’s What I Got

accelerate

Five nights? No thank you.

I’m not a frequent IHG customer, but I was disappointed with my promotion. The easiest path would be to complete #1,3 and 4 (skipping the five nights). Staying two nights at Intercontinentals would get the job done and earn me 30,000 bonus points, but those aren’t cheap properties. So I’ll be passing on the promotion this time around. Thanks, but no thanks.

 

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Dec 06

Update On The Marriott Credit Card

The Marriott/Starwood merger has been in the news recently. Yesterday, it issued a press release regarding the future of its credit card business.

Multiple Marriott Credit Card Issuers

frenchmen's reef, marriott

Marriott’s Frenchmen’s Reef.

The Marriott/Starwood merger meant that the new parent had a big decision to make regarding its credit card partner. Marriott had traditionally issued cards through Chase, while Starwood had always used Amex.

And nothing is changing as, starting next year, Marriott will roll out co-branded cards with both companies. American Express will issue the high-end stuff, with a Super Premium card and business card. For the Super Premium, I’m guessing that it will be something along the lines of the Hilton Ascend product. Chase will issue the premium card (likely  equivalent to the one that costs $85 per year) and a “mass” card, which will probably not carry a fee.

So should you get one of the current cards ahead of next year’s switch? Maybe, but only for the sign-up bonus. Marriott is currently offering 80,000 points to sign up for its Premier Card and spend $3,000 over three months.  That’s enough points to get you as many as many as 13 nights (although you’re unlikely to get that much utility from them, considering the mix of properties) at a traditional Marriott property or 1-2 nights at a Ritz Carlton.*

Biggest Winner: Consumers. With two different companies competing for your business, the rewards will be better.

Big Winner: American Express, who could have easily lost the entire contract. After having lost Costco a few years ago and JetBlue after that, Amex needed a win.

Possible Loser: Marriott Platinum Elite members. There’s a reason that I said “possible,” since benefits for the super-premium card haven’t been announced yet. The equivalent card at Hilton (Aspire) offers top-tier Diamond status just for having the card. If Marriott offers the equivalent with its own high-annual fee product, it will significantly dilute the Platinum pool, not to mention set the value for Platinum status at $450.

 


*Note that Chase has its own “anti-spammer” program. If you have applied for five cards anywhere within the last 24 months, it will automatically decline your application for certain cards. Its Premier Card is one, although the rule is not applicable to the business version.

 

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Dec 05

United Miles For Sale At 1.8-1.9 Cents Per Mile

I often see attempts at valuing miles. On an airline like Southwest or JetBlue, it’s easy to do, since the price of a ticket in points is based on the cash cost of the ticket. Higher cash cost equals more points, and it tends to be a pretty consistent ratio.

It’s harder to do with the legacy carriers, where mileage awards are based on where you are flying. You may get a ton of value out of using miles for an expensive ticket, or very little value by using miles on a cheap ticket. But the old adage that airline miles are worth $.02 each no longer holds true. On average, that number should be somewhat lower, as programs have devalued the points over time.

United Offering Miles At 1.8-1.9 Cents Each

united, mileageplus

I’d rather have a different gift.

It’s not a terrible  offer if you need the miles right now to book a trip. United is offering miles as low as about 1.9 cents each, depending on how many you buy. Naturally, the more you buy, the better your rate, with the best price per mile available when you max out the deal:

There’s a pretty easy answer to the question of whether you should buy miles. Answer the following question: Is the flight that I want available right now and would paying for it with miles be less costly than paying for it with cash?* If the answer is yes, feel free to move ahead.

Don’t Bank Miles

Miles don’t earn interest. They devalue over time, as the supply of miles greatly exceeds what the airlines allow you to do with them at a reasonable cost.

Also, don’t get fooled by the 75% bonus, 100% bonus or whatever else the airline is offering you. Your final purchase price should be how much you pay per mile, nothing else. A month ago, American Airlines offered a 75% bonus on its top purchase. In the end, though, the cost per mile with a 75% bonus was almost exactly the same as the price with United’s 100% bonus, since the base rates are different.

 


*Beginner’s Hint: There are two other things to remember. First, if you fly using miles, you don’t earn miles, so be sure to add back the number of miles that you would have earned if you do end up purchasing miles. Second, check with the airline to see when your miles will hit your account. The last thing you want to do is spend thousands of dollars for miles, only to have that great reward ticket disappear.

 

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Dec 03

American Airlines Settles With Pilots, Will Fly Through Holidays

Well, that was quick. According to several media reports, American Airlines, which created a potential public relations nightmare for itself by allowing an unlimited number of pilots to take the holidays off, has solved the problem doing what airlines do best: buying off labor.

american airlines

It’s going to be a very Merry Christmas for the pilots.                                      Photo Credit: Creative Commons

The APA (Allied Pilots Association, the pilots’ union) knew that it had management over a barrel when American admitted that it had made an error with its schedule and allowed too many pilots to take time off around Christmas. Thus, they did what they’re best at: They rejected management’s first offer and took the disagreement to the media to scare the public.

American’s management is one of the smartest in the industry, but it didn’t take a genius to figure out that if they didn’t settle this one quickly, they would not only lose the business of anyone who hadn’t booked yet, as well as fall victim to other unintended consequences (How would you like to be head of American’s call centers for the next few weeks, as more and more panicked passengers called? The overtime alone would have been brutal.). Thus, it upped the ante to offer pilots double pay. The pilots, embracing the Christmas spirit, agreed to the new deal.

It’s been a good year for American’s pilots. They got an off-cycle raise and profit sharing, despite the fact that the most recent labor deal included raises so generous that management thought that it wouldn’t have to give profit sharing.* And there’s no guarantee that American won’t offer even more profit sharing next year, since the level that AA is paying is not as high as its competitors. So if you’re boarding an American Airlines flight over the holidays, ask your pilot if you can borrow a twenty. They can certainly afford it.

 


*Airlines engage in what is called “pattern bargaining” for their labor deals. Under the Railway Labor Act, which was first created almost a hundred years ago, contracts never expire, they simply become amendable. So how do the relevant parties determine the right price? Simple: They take whatever the last industry contract was and add a percent or two. The “problem” for AA was that, after they signed their contracts with the pilots, industry profits accelerated at a ridiculous rate and the AA pilots, who had gone before United and Delta (and thus had the lowest contract) asked to be matched to their competitors. To its credit, American gave the pilots raises and profit sharing.

It’s important to remember, of course, that when the airlines lose money, they frequently ask the pilots for givebacks, so I’m not surprised that labor is asking for a bigger cut of the pie.

 

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