Loyalty programs limiting non-travel redemption options
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While many frequent flyer and hotel loyalty programs offer a wide array of redemption options, including many that aren’t related to travel, here at TPG we tend to focus primarily on the ones that get you the most bang for your buck. This almost always means travel-specific redemptions, using your frequent flyer miles for flights and your hotel points for free nights.
For a long time many programs have expanded their non-travel redemption options, allowing you to use your points for things like gift cards, merchandise, car rentals and more. The catch is that these redemptions usually represent pretty bad values, with your hard-earned points often being worth less than 1 cent each.
As the novel coronavirus continues to stifle travel demand both in the U.S. and internationally, a number of programs have now removed the option to use points and miles for non-travel related redemptions, as reported by AwardWallet. This is a logical move to protect cash flow, especially if a large number of customers without immediate travel plans decided to suddenly cash out their points for something else.
Hertz Gold Plus Rewards
The coronavirus is affecting every corner of the travel industry, not just airlines. Hertz is in a difficult financial situation, with rumors of an impending bankruptcy filing swirling around. Recently, Hertz blocked the ability for Gold Plus Rewards members to redeem points for things other than rental cars, including transferring those points to airline partners and using them to bid on experiences.
While many airlines around the world are in precarious financial positions, Virgin Australia has been the first major airline to buckle under the pressure. Yesterday Virgin Australia voluntarily entered into administration (similar to bankruptcy protection in the U.S.), and almost immediately suspended all redemptions from its Velocity frequent flyer program for an initial period of four weeks. Velocity is run by a separate company within the Virgin business that is itself not under administration, and Virgin promised in a note to customers that their miles would be protected and would not expire or disappear during this suspension.
Doctor of Credit reported that American Airlines has also begun limiting non-travel redemptions, specifically by blocking redemptions via points.com. This partnership was rather limited to begin with, in that you needed to hold American Airlines elite status or have at least 25,000 miles in your account, but through points.com you were able to convert your miles into gift cards from a variety of different merchants.
Delta has always been a leader in innovative redemption options, and it was the first of the U.S. legacy carriers to switch to dynamic award pricing. Through its SkyMiles Marketplace, Delta allows customers to redeem their miles for merchandise, gift cards, car rentals, hotel stays, cruises and more.
However, as of March 16, 2020, Delta has added some new restrictions to the SkyMiles marketplace. While this has always been limited to Medallion elite members and Delta Amex cardholders, the option to redeem miles for gift cards has now disappeared entirely. Delta provided TPG the following statement:
“Suspension of Delta Gift Card redemptions available for SkyMiles members was a decision made as Delta continues to manage the unprecedented impact of the COVID-19 pandemic on its business. Marketplace continues to offer a wide selection of merchandise, Apple products, and travel experiences. Anyone can continue to purchase Delta Gift Card at delta.com/giftcard through a credit/debit card transaction.”
Southwest Rapid Rewards
Southwest’s customer-friendly fee structure, cheap fares and easy-to-use rewards program have made it a customer favorite for many years. Rapid Rewards members also have the ability to redeem their points for non-travel options like merchandise, gift cards and more via the “More Rewards” portal.
As of now, More Rewards has been temporarily suspended and most Southwest members can only use their Rapid Rewards points to book Southwest flights. If you try and log on to the More Rewards website, you’ll see the following error message attributing the change to COVID-19.
Similar to Delta, Southwest has made an exception for Chase Southwest Rapid Rewards credit card holders, allowing them to continue to redeem their points for things other than flights.
Best Western has also paused the ability to redeem points for gift cards and merchandise through its Redemption Mall portal, though as of now you can still donate your points to charity, convert them to miles with 14 different airline frequent flyer programs, or redeem them for a AAA/CAA membership, in addition of course to redeeming them for free hotel nights.
Related: The best hotel credit cards
Despite a record-setting government bailout, many companies in the travel industry are in very precarious financial positions. Expect to see more airlines and hotels follow the lead of these companies, and limit non-travel redemptions to protect cash flow.
Featured photo by filadendron/Getty Images.
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