Ridesharing Programs 101

Today’s 101 topic is only tangentially related to frequent flyer programs. It’s about ride-sharing services (RSS), such as Uber and Lyft. If you’ve never used one, they may seem intimidating at first, but can save you time and money.

The concept behind RSS is a relatively simple one. Instead of buying or renting a taxi medallion, individuals can sign up with one of the major services to become a driver with their own car. They are paid electronically, with about 25% of their earnings going to the parent company. There are no set work schedules; drivers decide if and when they want to be on the clock.

Uber, the largest of the RSS, was the quintessential industry disruptor, disintermediating the traditional taxi business in a decade. It succeeded by eliminating many of the “pain points” that came with an industry that hadn’t changed in decades. Need a car? No problem, you simply hit a button on your phone. Not sure where your car is, or even if it would show up? The app tracks the car. Dirty cabs that smell bad? Most of the RSS drivers have newer cars. Want to pay with a credit card and move quickly? Your ride is charged automatically. You just step out and go. Tipping? In theory, not required (more on that later) Etc.

The two major RSS are Uber and Lyft, although different geographies also offer local services. Personally, I find the Uber technology, particularly the GPS telling the driver where you are, to be a little better. On the other hand, Lyft drivers tend to be a little friendlier, although many drivers are employed by both. A quick Google search will also give you details on some of the internal cultural issues that Uber has faced.

Things to keep in mind as you consider rideshares

Lyft

Pink mustache not guaranteed                                                                Photo Credit: Creative Commons

  • RSS use the same basis for determining your rate as taxis do, basing it on distance and time. They are usually much cheaper than taxis but can turn out to be more expensive during busy periods because, unlike cabs, their rates can vary. You may have heard the term “surge pricing” before. When demand spikes, for example during rush hour or a storm, Uber and Lyft add a multiplier to your fare to take advantage of the demand and draw out more drivers. Until recently, they would tell you what that multiplier is. Now, they just tell you what the fare is and leave it up to you to guess how much above normal prices that is.
  • Here’s a hint: You should have check both Uber and Lyft whenever you want a ride. Just because prices are spiking at one doesn’t mean that they won’t be cheaper at the other.
  • One of the original appeals to RSS was that there was no tipping. It was, theoretically, built into the price. That was too good to last, and tipping has become a gray area. Some people do, some don’t. You can give the driver cash or add a tip through the app. Why has tipping come into the equation? First, people are used to it from taxis. But the RSS also encouraged it, particularly Uber. The more you give the driver, the less they have to worry about drivers complaining about pay. So why would you bother tipping?…
  • Because of ratings. Not only do you rate drivers at the end of the ride, but they rate you, on a scale of 1 to 5, and there’s some serious grade inflation. Anything less than a 5 is considered to be problematic, and a driver who averages below 4.5 will have trouble getting business. Same thing for the consumer, though, so there’s additional pressure to tip and keep up your rating. It’s become a little better now, since you can tip after the ride, and your driver won’t know whether you did before they rate you, so lack of a tip is no longer as likely to get you a lower grade. But if you do decide to tip, best to give the driver a couple of dollars in cash.
  • Laws and regulations vary by geography. You won’t know anything about your driver ahead of time, other than what they look like, their rating and how many rides they’ve given.
  • The GPS technology is good, but not perfect. When you request a driver, it’s important that you check to make sure that you are actually where the device thinks you are. If you’re not, adjust the virtual “pin” on your map. Likewise, the drivers aren’t perfect, either. Your app may tell you that the driver is three minutes away but, if they take a wrong turn or traffic suddenly picks up, that three minutes could turn into eight. Based on how long you’ve been waiting, there may be a charge to cancel, although the app will tell you if there is.
  • Don’t sign up for either of them without getting a sign-up bonus. I have referral links for both Uber (Sign up with code michaelf1649)and Lyft (Sign up with code MICHAEL918142), which gets us both something (and I really appreciate it if you use my link), but a quick Google search could end up finding you a bigger promotional credit.

 

Points And Miles

 Okay, I had to tie this back to points and miles a little. Both Lyft and Uber have various partnerships that can get you rewards somewhere. For example, I get Delta miles whenever I ride on Lyft. For Uber, I use Visa Local Offers to get rebates that I can use on Uber. And naturally, you’ll get points on the credit card you use when you pay for your ride (Uber even has its own card.).

There’s a lot more to be aware of if you want to know RSS inside-out, but hopefully, this was a good start.

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Hilton Double Points (Link)

Forgot about this one but, if you haven’t signed up for the Hilton double points promo, now is a good time to do so.

Hilton Honors Double Points

hilton

Hilton Hawaiian Village Waikiki

A few weeks ago, I mentioned that this quarter’s Hilton promotion would be returning to double points. I’m all for that, since the bonus is one of their best.

The problem is that the registration link wasn’t available at the time, but has since become available now. Remember, you must register* or you won’t be enrolled in the bonus. If you haven’t already done so, you can register yourself here.

 


*Beginner’s Hint: Registering for a promotion may seem like an unnecessary additional step, but it serves a particular purpose for the hotels. These bonuses exist as a means to force you to shift your behavior to take advantage of them. If customers received the bonuses automatically, it would be harder for the companies to measure their efficacy, not to mention awarding extra points to those who would have stayed with them, anyway.

 

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Weekend wrapup: 100K BA Miles, Amazon Prime, Manufactured Spending Getting More Expensive

It was a moderately busy weekend in the world of miles. Here are a few of the things that are going on:

100,000 British Airways Miles 

avios

Using Avios to fly

In an attempt to sound even more pretentious and offset their declining service, BA calls its miles Avios, but they do the same thing. Don’t let the terminology confuse you.

BA had what I believe to be the first ever 100,000 miles (er, Avios) credit card offer, and has brought it back. It’s no longer as good as the original, but you can earn 50,000 Avios when you spend $3,000 in the first three month; 25,000 more when you spend $10,000 total in your first year, and; another 25,000 when you spend an additional $10,000.

One of the oddities about BA is the way that they price tickets, which is based on the number of miles that you fly, rather than the geographic zone. Thus, really short flights are ridiculously cheap, although tickets on partner carriers start at the zone two peak rate of 7,500 one-way.* Still not terrible.

One note: The last place that you want to use British Airways miles is actually to fly on BA. The airline charges obscene fees, particularly on premium awards. They’re best used on American, or a partner that does not have crazy surcharges.

If you do want the card, you can apply for it at British Airways’ website.

Amazon Prime Movin’ On Up

If you’re one of the seven people in the world who don’t have Amazon Prime, now is the time to get it. On May 11, the price changes from $99 to $119. It’s still a great deal if you’re a frequent shopper.

Manufactured Spending to Get More Expensive

Manufactured spending (MS) is a subject that I don’t talk a lot about. MS consists of spending money to get credit card points in such a manner that you’re not actually out of pocket anything. For example, it’s possible to use your credit card to buy Visa or Mastercard gift cards, and then redeem those gift cards for money orders, which you can deposit in a bank account.

While there are fees involved, the trick to coming out ahead is to order the gift cards through a shopping rebate site, which gives you money back on just about any purchase. The 1-1.5% rebate that you used to get on cards from giftcards.com is going away, per a post at Point Chaser.** That rebate was usually enough to offset the fees from gift card purchases, and its loss means that the arbitrage on MS becomes much lower. It’s still possible to make money on the deal, but it may not be worth the time.

 


*Beginner’s Hint: Take a glance at this note if you want to learn a little more about how alliances work.

**When it comes to manufactured spending, particularly as it relates to gift cards, Point Chaser is my go-to site recommendation.

 

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American: Double Trouble Will Lead To Higher Ticket Prices

American Airlines had their quarterly earnings call with the Wall Street types and it was more eventful than their typical announcement. But one thing stood out: fuel prices.

The $2 Billion Problem

american airlines

Now, just imagine that these bills are filling a big barrel of oil…

You probably don’t pay much attention to the daily fluctuations in the price of oil, but the airlines do. It’s their second-largest cost, and even a penny move in the price of a gallon can affect their earnings by tens of millions of dollars. Yesterday, due to a recent spike in the price of oil, American announced that it would not meet its previous estimates for full-year profit. The stock declined 6%.

Rising oil prices generate a two-fold problem for ticket prices. First, airlines raise prices to offset the fuel costs. Second, they cut capacity on unprofitable routes, driving up prices on those flights.

Raising prices may seem like an obvious response to higher costs, but it isn’t that easy. Most travelers pick their flight based on the lowest cost, so if one airline raises prices but a competitor doesn’t, the more expensive one will lose business. Thus, for the first few dollars of a price in the cost of oil, airlines just eat it. But eventually, the impact on profits grows too high, especially for the low cost and ultra-low cost carriers, whose lower employee wages means that fuel makes up an even higher percentage of their total costs. Once the Spirits of the world start raising prices, the carriers who fly against them have the ability to do so, as well. We’ve reached that point.

Sometimes, though, airlines don’t even have to raise prices. Instead, they simply cut capacity. A flight from A to B may be profitable for the airline if oil is at $40 per barrel, but at the current $70+, that same route doesn’t make sense. Cutting out one flight on a route doesn’t even require raising prices on remaining flights. The airlines will simply carve out the cheapest seats.* The fare you pay will likely go up.

Bottom Line: Summer travel is, for the most part sold, and they won’t cut capacity through August, since the planes are full. But, if history’s any guide, there will be fewer seats available for sale in the fall, and they’ll come at higher prices.

 


*Think of it this way (highly simplified): Sunny Airlines flies three flights per day from A to B. 1/3 of the tickets sell for $100, 1/3  for $200 and 1/3 for $300. If the airline cuts one of those three flights, demand will stay relatively stable, but there will be far fewer seats available. Most of the tickets will sell for $200 or $300, with the $100 fares getting eliminated.

 

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Summer’s Coming: Be Prepared

Hard as it may be to believe, particularly for those of us living in the northeast, summer is around the corner and, with a change in seasons comes a change in leisure travel.

Be Like The Boy Scouts

summer travel

Good, Bad or Both?                                                                                          Photo Credit: Creative Commons

Every season has its own challenges, but the ones in summer turn mainly to those of congestion. Most of us remember the 2001 “summer of hell,” when you’d be taxiing to the runway and the pilot would say, “Well, folks,* we’re 26th in line for take-off,” and you would think, “Oh, good, we’re only 26th…” It makes sense. leisure travel picks up, everyone is flying into (and, more importantly, out of) the same airports and summer storms can throw things into chaos (from the guy who’s wife arrived after midnight last night because of a Boston thunderstorm). And while I don’t think that this summer will be as bad as 2001, airlines have been building capacity and that’s impossible to avoid. Keep in mind the following:

  • Leisure travel often means families. If you don’t like kids, well, sorry, summer travel isn’t for you.
  • If you do have kids, be sure to bring extra snacks and be prepared for unexpected delays. During the winter, everyone expects the bad weather. During the summer, people tend to be more footloose and fancy-free.
  • Bring your own in-flight entertainment. Not only are companies pulling out seat-back TVs (for further research, see “Airlines, American.”) but you also can’t count on perfect video on-demand, working power ports or anything else that might make your life more convenient. Will everything work fine? Probably. But why take the risk?
  • If you are using miles, don’t just look at economy. Since so many leisure travelers are booking rewards, the cabins up-front have lower load factors. First class seats might be just a few miles more than economy tickets.
  • Have fun, and remember, the airline employees are likely having a worse day than you are.

 


*In the history of aviation, nothing good has ever followed the words, “Well, folks…”

 

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Tuesday Tidbits: Extra Hotel Points, Illegal Apples

A few bits and pieces to get you started today…

Bonus AA Miles from Hotel Points

american

Helping you get sunshine on a cloudy day

Airlines and hotels often partner together to allow you to convert points. The rate is rarely advantageous, but it can be a good way to get those last few miles for your next flight.

American is making it just a bit easier, adding a 25% bonus to miles that you convert from several hotel partners, including Marriott and Starwood (for those of you looking to divest yourself of points if you are switching programs). Even with the 25% bonus, you’re still paying a hefty price for the miles, although Starwood looks a little better if you convert in intervals of 20,000 SPG points, since they already give you a 25% bonus. The bonuses do “stack”* on top of each other. Don’t forget to register.

Even Worse Than Snow White’s Wicked Queen…

A story about a woman who was fined $500 at customs for forgetting to declare an apple has been making the rounds. I have no idea what actually happened at customs or if the woman was as calm as she appeared, since this story simply sounds unbelievable. But I’ve heard too many similar stories to discount her version (and I’ve never met anyone from Denver who wasn’t ridiculously laid back). Note that this violation could also cost her her global entry privileges.

Entering the US can be a bad experience on the best of days, and Customs & Border Protection (CBP) has seemingly unlimited authority. The bottom line is, double-check your bags to make sure that you’re not bringing produce into the country.

American, Bring Back The IFE…

American Airlines has started ripping out seat back in-flight entertainment (IFE) on its narrowbody fleet, claiming that the extra weight is costing them too much. Instead, they now offer “bring your own device (BYOD)” capability, in which you use your laptop/tablet/smartphone to stream entertainment that they provide. In theory, that sounds fine.

In practice, it isn’t. The system is fickle, causing movies to freeze occasionally, and flight attendants don’t appear to have been trained on the system, which means you’re on your own if there’s a problem. For now, I’d advise downloading movies onto your devices ahead of time, just in case.

 


Beginner’s Hint: Stacking bonuses means using more than one at the same time. It can be an effective way to accelerate earnings if the company allows you to do so.

 

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Silvercar Review: Renting Cars As It Should Be

Silvercar has been around for a few years but, because of geographic restrictions, I haven’t had a chance to use it. I was finally able to do so this week and was quite pleased. Here’s the review.

Silvercar: What Is It?

silvercar

Stolen from the Silvercar website

The word “disruptor” is overused, but I’ll use it anyway. Silvercar is a rental car agency disruptor. Like taxis, until a few years ago, the rental industry hadn’t changed in decades, controlled by a few key competitors who had a handle not only on pricing but on the ridiculous rules that often accompany contracts.

Silvercar is looking to change how you rent a car by eliminating many of the annoying bumps along the way. Every car is an Audi A4, and mine was a recent year, either 2017 or 2018. They’ve got tons of interior features, connect to your phone, have free Sirius XM radio and eliminate the exorbitant fueling charges, charging you gas station rates plus $5 if you don’t return it full.

Getting the car is just as easy. Once you reserve the car, everything is done on your phone. You let them know when you arrive through the app and they pick you up at the designated spot. They took me to the local outlet and I was on my way. No ridiculous forms to fill out, no trying to sell me excess insurance, free bottles of water.

When I returned the car, it was just as easy. Since the Phoenix site was located a couple of miles from the airport, they paid for a Lyft to take us to the terminal. Couldn’t have been simpler.

Since the car was new, it drove well and had all the bells and whistles that you could ask for. Trunk space was adequate, as was the interior. Having an in-dashboard GPS system was also extremely useful, since I didn’t have to constantly be looking at a phone.

The website and app are, thankfully, easy to use and have all the information that you need. The address of the drop-off location is programmed into the GPS.

And The Disadvantages?…

Luxury car, great service, easy rental, couldn’t be perfect, could it? It isn’t, but most of the problems aren’t big ones.

  • At this point, they only have 20 locations. Those locations are obviously in most of the big cities, but they’re not available elsewhere.
  • Their rate is above-market. It’s a premium product, and they advertise it as such. They’re probably going to be right around the high end, or slightly above, what you would see from a list of the traditional car agencies.
  • You get any car you want, as long as you want a Silver Audi A4. The controls are, at times, idiosyncratic.

The Bottom Line

Overall, I was very happy with the experience. Service was great, the car was fantastic and I was in and out easily. Silvercar will never have the impact on its industry that Uber did on the taxi industry, given the lack of local monopolies and limited locations, but it’s still good for the industry and even better for consumers.

Note: If you want $25 to try it out, use code WLMTSFOR at their website when you register. If you do so, we’ll each get $25 after your first rental. Thanks!

 

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The New Marriott Elite Status: Where Does It Get Good?

Last year, I wrote about the various hotel elite programs and the benefits that you get with each status. Specifically, I asked the question, “What status level do I need to achieve to get the majority of the best benefits, even if I can’t reach the top tier?” Well, throw out that chart for Marriott Rewards (MR) and Starwood (SPG), since the new program starts in August. Here’s what to look for.

The New Best Value: Platinum

marriott rewards, spg

The new, not necessarily improved, status chart

Five status levels, not including the base level? C’mon, you’ve gotta be kidding me. But yeah, that’s where we’re going. But how many of those levels are actually worth something? Just for being a member, you get:

  • Free internet access
  • Member rates
  • Mobile check-in

And for a lot of people, they really don’t need much more than that. Sure, the last two aren’t worth much, but not everyone cares, either.

Still, if you’re looking to pick up a few extras, where does it stop? At what level do you say, “I’ve probably got most of what I need and don’t have to worry about accumulating through meetings and credit cards?” Obviously, the answer is different for everyone but, for the majority of heavy users, you can get the maximum value at Platinum, equivalent to the old MR gold.

Silver status (10-24 nights) picks up almost nothing extra. You’ll get priority late checkout, based on availability (It won’t be available.), a special phone number to call and a 10% points bonus on top of your base points. Yawn.

Gold status (25-49 nights) gives you what I consider to be the first of the worthy hard benefits: free enhanced internet access. Slow internet access at hotels is a constant annoyance to me, so getting the good stuff (sometimes good, anyway) for free is a start. Your point bonus is now 25%, you’ll get a few points at check-in as a welcome gift and you may get an upgrade, but not to a suite.

Now It Gets Interesting…

As far as I’m concerned, the move from Gold to Platinum is the biggest breakpoint, where things start to get interesting. It takes a lot more of your time, requiring 50-74 nights per year, but the benefits are noticeably better than Gold. Among the benefits that you’ll now get…

  • A choice of welcome gifts, one of which is breakfast (which is getting expanded to almost all brands).
  • Room upgrades that include select suites. Suite upgrades were a big benefit of the Starwood program but were almost non-existent at Marriott.
  • Lounge access. The lounges provide breakfast, evening appetizers and are often open throughout the day to grab drinks and snacks. If you’re lucky, your favorite hotel will offer little boxes of cereal instead of big canisters that you just pour into a bowl.
  • An annual choice benefit, which is a gift option or five “suite nights.” A suite night lets you request an upgrade in advance. It’s not guaranteed, but you have some sort of priority for five nights per year.

So, is it worth going higher? Platinum Premier, 75-99 nights per year, gets you an additional five suite nights or gift option each year. It also gets you a 48-hour room guarantee, although you’ll be paying through the nose for that room if you force one open. But that’s it. How much are those additional suite nights worth? Well, if it’s easy for you to get to 75, sure, go for it. But if you’re struggling to hit 50 nights per year, I don’t see the additional value.

Ambassador

And then there’s Ambassador status, which is sure to be the most controversial one (if there is such a thing as a controversial elite status).

Ambassador can be earned not only by staying at least 100 nights but also spending at least $20,000. Ouch. And what do you pick up? In addition to a higher bonus rate, you get your own ambassador, who serves as a sort of concierge. An ambassador’s powers are mixed. I’ve had good ones in the past and also poor ones. Some will fight for upgrades and benefits for you, others are simply order takers. It can be the luck of the draw, but if you give Marriott enough business to earn Ambassador status, be sure to call and request a change if you’re not happy with your chosen person.

 

 

 

 

 

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Marriott And Starwood Merge Programs. It’s Not Terrible.

A few days ago, Marriott and Starwood announced what the new combined program will look like and, for the most part, it’s not terrible. I know that’s not a ringing endorsement but, compared to what they could have done, they kept many of the best attributes of each. That’s not to stop them from decimating the program in the future, of course.

Marriott And SPG Merge

marriott, spg

Turn and face the strange

There are a lot of excellent blog posts out there that analyze the minute details of each change. Mine will not be one of them, but I’ll hit a few of the high points.

Before we start, though, I will say that I am curious as to what people like and don’t like about the changes. Feel free to throw your thoughts in the comments.

Okay, here are the basics. The new program starts in August and will be a combination of the Starwood, Marriott and Ritz Carlton plans. Everything will be based on the Marriott system that revolves around nights, not stays, so that’s a negative for Starwood people who earned status on many short stays. Your Starwood points will convert to Marriott at the standard 3 Marriott Rewards (MR) points for every SPG point that converts.

You’ll earn 10 points per dollar spent at almost all hotels, with bonuses if you have elite status in the new program.

marriott rewards, elite status

New elite status comes with five tiers above the base.

Marriott is carrying over many of the most popular benefits from the Starwood program, although they have raised the level for many. Most of the key benefits start once you hit 25 nights and earn Gold in the new program. You’ll pick up free enhanced internet access, 2pm late checkout (based on availability) and a 25% points bonus. The other big jump is from Gold to Platinum, which gets you lounge access and five “suite night” awards. The latter, for those of you who aren’t familiar with the SPG program, are guaranteed upgrades. They’ll start checking for upgrades five days out from your check-in date and keep going until you check in. I’ve heard mixed reviews on their efficacy from Starwood people. Move to Platinum Premier at 75 nights and you’ll get an additional five nights or an alternative gift.

The highest level, Ambassador, comes with your own personal concierge. It requires 100 nights and $20,000 in spend, though. Ouch. Goodbye, top-tier, hello booking meetings.

Redemptions

marriott

Yeah, we crossed the 100,000 mark.

Redemptions, though, aren’t quite as exciting. While there will be a fixed reward chart, which will have peak and off-peak rewards, the redemptions at the high end are going up in price, particularly if you are a pre-merger Marriott customer, whose award chart had always been a little more generous. The hotels will be broken down into seven categories, with an eighth to be added in 2019. Get ready to spend more points for your nights.

Credit Cards

One of the most lucrative areas for companies are their co-branded credit cards. Chase and American express, the former partners of Marriott and SPG, respectively, will be sharing the duty, with Amex picking up a high-end card that gives you lounge access, a free night, a $300 hotel credit and lots of other goodies. Marriott is introducing a new card as well, although one of the features that it lacks is getting a free elite night credit for every $3,000 that you spend. That’s a big loss for those who earn elite status on heavy card spending. I’ve seen mixed messages on whether that benefit will carry over under the new plan on existing cards once we hit August. Chase was actually able to tell me very little about what would happen, although the representative that I spoke to indicated that it looked like the business version of the card would stay like it is, including the ability to earn an elite night credit for $3,000 in spend. Your guess is as good as mine, however, as to how it turns out.

One benefit that’s going, though, is earning multiple 15-night credits for having multiple cards. In the past, you have earned 15 elite night credits for each card that you have. That appears to be changing to one per account, regardless of how many cards you have.

The Bottom Line: We have not seen all the changes that will eventually come, nor the unintended consequences of what the current changes will bring. But the first pass appears to be rather benign. Hopefully, Marriott has recognized the value of the loyalty program and the enthusiasm that Starwood customers have for SPG.

 

 

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IHG Shows Why Loyalty Programs Are Anything But That

I love the term “loyalty program.” Kind of makes you seem like the merchant is giving you something for having done lots of business with them. It isn’t, but it sounds a lot better than “trying to influence your future behavior” program.*

IHG Accelerate

IHG, accelerate

Some of my “tasks” for this quarter’s promotion

No company makes the point better than IHG, the parent of InterContinental and Holiday Inn hotels, which does some version of its Accelerate promotion every quarter. The concept is an interesting one, and different customers are given different offers, based on their stay history. IHG figures that if you stay with them, you also stay with other hotel companies. It knows that it won’t win every stay from you, so the point of the promotion is simply to make you stay a few more nights than you otherwise would have. Incremental profits.

If it were a true loyalty program, they’d give you bonus points based on how much you stayed with them last quarter. Instead, they “punish” you for your loyalty. For someone like me, who almost never stays with them, they have made it relatively easy for me to pick up a quick 40,000 points by staying with them five nights over the period of the quarter (See the picture above for a peek at my Accelerate promotion.). That’s five more nights than they would have gotten from me otherwise. Not a bad thing. But if I had stayed with them, say, 30 nights, instead of zero, in the past several months, they would have made the tasks much more difficult. After all, why should they give me bonus points for nights that they probably would have gotten from me anyway?

It’s worth checking out the Accelerate page and seeing what they are offering you. It may be enough to get you to visit one of their properties over the next few months.

 


*Two things: First, I don’t begrudge a company’s desire to influence your behavior in an attempt to make money. If the promotion is a good one, it works out for everyone. And second, lodging companies and airlines actually do have programs that reward you for past, not future, behavior. That’s their elite status levels.

 

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