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Update: Some offers mentioned below are no longer available – The Amex EveryDay Preferred Credit Card from American Express
Today TPG Contributor Nick Ewen continues his series The Weekly Wish, looking at flaws, shortcomings, and room for improvement in the world of travel and loyalty programs. Today’s wish: consistent transfer bonuses from Amex Membership Rewards to airline and hotel travel partners.
Last Thursday, my Weekly Wish focused on how the Starwood Preferred Guest program could improve by offering (more) immediate transfers to airline partners. As I showed, this is one area where American Express Membership Rewards has a clear advantage over SPG. However, when it comes to transfer bonuses, SPG has the edge, which brings me to this week’s post. My Weekly Wish is for Membership Rewards to offer threshold bonuses for transfers like those offered by SPG, and in this post I’ll explain how those bonuses could benefit not only Amex cardholders, but also American Express itself.
Just a few years ago, this wish would have seemed completely unrealistic and out of place. Membership Rewards used to offer an incredible variety of limited-time transfer bonuses to specific partners. Let’s take a walk down memory lane:
- British Airways offered 40-50% transfer bonuses frequently in 2011 and 2012, and even offered a 100% bonus to UK American Express cardholders back in 2010.
- Delta offered multiple 50% transfer bonuses in 2010 and 2011, and they even added bonuses of up to 25,000 MQM’s.
- Starwood Preferred Guest offered a 50% transfer bonus back in March, 2012.
Recently these transfer bonuses have all but dried up, and even when they do appear, they’re relatively lackluster and often apply to non-legacy airlines:
- Back in April, Virgin America offered a 30% transfer bonus, and then Virgin Atlantic matched that bonus for the month of May.
- Hawaiian Airlines offered a 20% transfer bonus in June.
- JetBlue then offered a 30% bonus in September.
The purpose of these bonuses, both past and present, is to encourage cardholders to make these transfers. American Express has agreements in place with all of these programs that allow transfers to happen, and the bonuses are simply limited-time extensions of these agreements. Both American Express and the respective partner are on the same page about the regular transfer rate and temporary bonus. It gets points off the books at Membership Rewards and impacts the partner’s bottom line, since American Express has in essence purchased the points/miles from the airline or hotel. In other words, it’s a win-win situation.
This mutually beneficial arrangement is exactly why Membership Rewards could benefit from offering a consistent bonus like the one offered by Starwood Preferred Guest. As a quick refresher, SPG points generally transfer to airline miles at a 1:1 ratio (with the exception of programs like Air New Zealand and LANPASS). Regular members have to transfer at least 2500 Starpoints, while Gold members can transfer as few as 1500 (Platinum members have no minimum). For every 20,000 points transferred, you receive a 5,000-mile bonus, which makes increments of 20,000 points the sweet spots for transfers. Here’s a quick table that shows this phenomenon in action:
|SPG Points to Transfer||Standard Miles||Bonus Miles||Total Miles||Bonus Percentage|
As you can see, any amount of points transferred between 20,000 and 40,000 results in a lower return in the bonus miles awarded.
Here’s where American Express can not only match SPG, but also come out ahead. In the past, transfer bonuses from Membership Rewards were occasionally plateaued, just like SPG (e.g., transfer X or more points, get a bonus of Y miles). However, many of them were percentages, where the bonus earned was proportional to the number of points transferred. That’s the model I would like to see American Express implement.
If you’ve been reading my Weekly Wish posts, you know that I try to be (at least somewhat) realistic. The above table shows that SPG offers between a 12.5% and 25% bonus for transfers of at least 20,000 points. These numbers would be fantastic for American Express, but let’s start small and simple: a 10% bonus on all transfers from Membership Rewards to their travel partners.
This would also allow American Express to differentiate between cardholders of different (read: more or less profitable) products. Not to take anything away from American Express EveryDay Preferred cardholders, but offering increased transfer bonuses for premium cardholders could be a gold mine of increased applications and account usage. Here’s a sample of how that might look:
- Every Membership Rewards account holder: 10%
- Those with 2 or more cards that accrue Membership Rewards: 15%
- Those with a corporate or Gold card: 20%
- Those with a Platinum Card: 25%
I know many of you hold The Platinum Card from American Express for benefits like lounge access and the $200 airline fee credit, but an automatic bonus on all transfers would be a nice addition, and would help make up for the loss of both Admirals Club access and guest privileges at Delta SkyClubs.
This would also be a great way for American Express to encourage transfers at any time. Though the recent infrequency of transfer bonuses may have changed this, I know many of you have held onto your Membership Rewards points in the hopes of a transfer bonus showing up (or coming back, as the case may be). Making transfer bonuses consistent would remove that uncertainty, which would help both Amex and its cardholders.
Forecasting and predicting consumer behavior is one of the most important components of business planning, as it impacts inventory, pricing, promotions, cash flow, product launches, and other elements of day-to-day operations. However, it’s incredibly difficult. Having a consistent transfer bonus might help American Express gather more consistent data, and prevent a limited-time bonus from taking them by surprise when it’s 10 times more popular than originally predicted.
As with many of my Weekly Wishes, this one will only come to fruition if the number crunchers at American Express decide there’s a case for it, but I do think it would encourage transfers and drive applicants toward cards that accrue Membership Rewards, which seems like a winning combination.
What do you think? Would you rather have a consistent bonus like SPG or occasional (and temporary) transfer bonuses like Membership Rewards has offered in the past? Please share your thoughts in the comments below! The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), up to a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at Marriott and Hilton. Combined with the 60,000 point welcome offer -- worth $1,200 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the annual fee makes sense for you.
The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), up to a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at Marriott and Hilton. Combined with the 60,000 point welcome offer -- worth $1,200 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the annual fee makes sense for you.
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