Devaluations draw the ire of people who collect travel points more than any other negative thing a program can do. This anger intensifies when programs devalue points without notice.
I concur that unannounced changes to a program are terrible and destroy trust between a program and its members, if any trust is left to begin with. However, we need to understand that if programs keep offering bigger and bigger bonuses, the only logical response to keep things in balance is to make points less valuable.
To reference (and change) this lyric from the Broadway show Avenue Q:
Bonuses and Devaluations
They’re like two brothers who go on a date
Where one of them goes
The other one follows
You invite large bonuses
He also brings devaluations
When offers like these show up regularly.
More than likely, you’ll see headlines like these shortly thereafter.
I picked out these three examples because they’ve happened in the last few months but this cycle has been going on for a while. There’s not a direct correlation between a large bonus and a devaluation. The equation can stay out of balance for a while and that’s when we, as the consumer, need to take advantage. But sweet spot redemptions only last as long as programs want them to.
People will moan about how an ultra-luxury hotel used to be available for 50,000 points and now costs 90,000 points but they forget that the co-brand credit card used to offer a 40,000 point sign-up bonus and it’s now up to over 100K. In this case, you’re still getting one night at the hotel free. Does that make it a worse redemption because it cost more points that now have less value?
This also brings about the question of how will the transferable point mega-bonuses affect individual programs. These points may end up in an award program, further diluting the value of points.
Maybe it’s because I’ve been doing this for a while but devaluations are nothing new. If programs keep issuing bigger sign-up bonuses and larger spending multiple categories, it’s only a matter of time before the points start to lose value. If you’re stuck with points in a single program, there’s nothing much you can do. At least if you have transferrable points, you can find a program that hasn’t gotten around to recalibrating the value of its points.
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This post first appeared on Your Mileage May Vary
1 comment
Fine logic except the hotels and airlines are the one that is left with a damaged loyalty base. Sure folks churn cards for big bonuses that lead to devaluations but the average loyal customer that maybe got a bonus but travels a lot, earns a lot of points and miles is VERY disappointed when their points go down in value. My family is a good example of this damage. I have really liked IHG for many years. It’s not the sexiest hotel chain but the locations mostly fit my travel as well as my wife’s business travel. In a non-covid year we would spend 100+ nights in hotels and earn a lot of points as well as some 35k and 40k free night certs. Right now, just as we are coming off covid and IHG may need to shore up our loyalty at least a little bit they devalued. We have 4 or 5 certs between us and we are looking at a vacation location we go to every year or two and the prices are all nearly double and guess what, the lowest price is 41,000 per night. Doesn’t make me very loyal. I agree that devaluation is inevitable but it will cost these companies loyalty in the long run at a greater expense. I think the credit card companies are mostly at fault in all of this.