Airlines and Hotels Have Used 2021 to Shake Up the Miles and Points Game

Loyalty programs play a critical role in travel brands' efforts to stay relevant

Dallas/Fort Worth International Airport
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We’re dedicating our December features to examining the biggest travel trends of 2021. Read on for our collection of stories that take a look at the shifts driving the future of travel, including the rise of new budget airlines, major overhauls of airline loyalty programs, the growing popularity of “adult study abroad” programs, and a look ahead at the top travel and outdoor gear trends of 2022. 

Wooing future business and maintaining a connection with the customer is the focus of airline and hotel loyalty programs. Throw in a global pandemic with travel trends that yo-yo from robust to weak at the spur of the moment, and loyalty programs play an even more critical role for a travel brand to stay relevant. 

Over the last year, we've seen a bevy of promotions, status and perk extensions, and regular communications between loyalty programs and members. The goal of staying top of mind, even when business is slow, was paramount.

As the economy begins to rebound, some loyalty programs are making significant changes as they bet on the future of travel. While tweaks to program rules and benefits are not unusual, some of the biggest names in travel have made sweeping changes to loyalty that could affect the way you earn and burn miles and points in 2022. Here's a rundown of the changes and what you can expect from the loyalty landscape in the new year.

American Airlines, the largest carrier in the country, is changing how it awards elite status...big time. Instead of relying on a mix of elite-qualifying dollars and miles (a combination of how much you spend and how far you fly, including the option to qualify on the number of segments flown), the new program focuses primarily on spending. But, it's not just about how much you spend on flights—other spending will count, too.

American's new plan is to award people loyal to its brand and its partners. This includes spending with American co-branded credit cards, dining and retail partners, and more connected relationships that, according to American, are still in the works. In other words, you can earn elite status on American without even flying as long as you spend enough on its credit cards and with its partners. Of course, elite status does you no good if you don't fly, but it certainly incentivizes you to do more business with American's partners, even if you fly occasionally. The airline, no doubt, earns a percentage of the spend from these partners, too.

Under the new system, Gold status (the lowest tier in American AAdvantage) requires earning 30,000 Loyalty Points while the highest level, Executive Platinum, requires earning 200,000 points. Remember that points are different than AAdvantage miles. Are you confused yet? Read on.

You'll earn one loyalty point for every AAdvantage mile that you earn. The way you earn miles varies based on your current elite status. For example, AAdvantage members without status earn five miles for every dollar they spend on an American Airlines flight. In contrast, an Executive Platinum or Concierge Key member earns 11 miles per dollar spent. Translating that to Loyalty Points, Gold members will earn five Loyalty Points for every dollar they spend on flights. In comparison, Executive Platinum members will earn 11 Loyalty Points for every dollar they spend. This means it will be easier for you to renew elite status in the future if you already have it to begin with now.

For example, an existing Executive Platinum member would need to spend just over $18,000 to keep the same status under this new program (previously, they needed to spend $15,000 and earn 120,000 elite-qualifying miles). For some, this new program will be more challenging. People without any American status will need to spend $40,000 on flights to make top-tier status or do enough business with the airline's partners to earn 200,000 Loyalty Points. It becomes easier if you are only shooting for lower-tier status, but the new system is confusing and cumbersome to manage since it is different from other airlines.

To earn top Executive Platinum status without flying, you can spend $200,000 on an American co-branded credit card or by doing enough business with American's program partners to earn 200,000 Loyalty Points. 

Also changing is the calendar for earning status, which American has already extended for existing status holders through March 31, 2022. Previously, it was based on the calendar year, but from now on, it will be based on your spending patterns between March 1 and the end of February the following year.

American says it's a more straightforward program, but many fliers may disagree. In reality, though, it opens up a more accessible pathway to status for many members who may not fly as often but still do business with American AAdvantage partners.

Pay close attention to your American Airlines app or account in the new year to ensure you meet the correct requirements to keep or earn status next year. 

Meanwhile, following similarly disappointing moves by other loyalty programs like Hilton Honors and IHG Rewards, Marriott Bonvoy is tossing out the helpful award charts that made it easy to understand how many points you would need for a redemption night. Its new system will use dynamic award pricing (instead of fixed award prices based on a chart with off-peak or peak pricing).

Critics see this as a way to reduce transparency because it calculates the cost in points for a redemption night based on a combination of demand and the cash price for that specific night's stay. It's great for hotel owners but confusing for loyalty program members because it makes it hard to plan how many points you need to save for a future trip. 

Like the cash rate, the points rate can fluctuate by the day based on demand, and when you think you have saved up just enough for a free night, the price can go up. That was not the case with award charts because you had guidelines on the minimum or the maximum number of points you would need to spend.

Of course, the opposite is true, the price can go down, too, but it depends on demand. Expect it to become more expensive to redeem for a free night at popular resorts or hotels during peak periods and cheaper to use points at less-frequented hotels with lower demand. Luckily, you have until March 2022 to redeem for future stays using the more consumer-friendly charts before the new dynamic pricing system kicks into play.

With so many miles and points issued to consumers via credit cards and travel, loyalty programs have to resort to making inflation-style changes to their previously issued loyalty currency. This can make your miles and points less valuable. 

Other smackdowns on loyalty program benefits include Delta punishing its top-tier Medallions by making global upgrades only good for one cabin of service (previously you could buy economy tickets and upgrade to business class; now it's just an upgrade to the airline's premium economy cabin). World of Hyatt, too, recently updated its award chart to include off-peak and peak pricing, which means you could spend more (or sometimes less) than you did for a redemption night based on local demand. At least, the hotel company remains transparent in providing a helpful range of redemption prices based on an award chart.

The adage "earn and burn" could never be truer. Don't sit on a pile of miles and points. Redeem them as soon as you can because their value can shift with just a few program changes and little advance notice. 

Perhaps the best strategy of all is to, at least, shift your credit card spending to a program like American Express Membership Rewards or Chase Ultimate Rewards, where the points you earn are more flexible and can be redeemed like cash for travel spending or merchandise. It could be better than hitching your wagon to one specific program that might suddenly change its tune.

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