Recession Drives More Mileage Redemptions
Just as we predicted, the recession is heightening activity in frequent flyer programs as travelers try to find ways to save money on trips instead of forgoing travel altogether. In fact, according to a study released by Deloitte, nearly two-thirds of the respondents (64%) are taking a summer vacation this year, although half of them are going to cut down spending due to economic concerns.
One very obvious way to do this is to start cashing in miles and points in return for award fares and free room stays. Airlines and hoteliers are seeing substantial boosts in award redemptions as travelers increasingly trade them in for family trips and weekend getaways in lieu of expensive international forays. United Airlines reported a 12% increase in 2008 over the previous year, and I would suspect the difference to be even greater in 2009.
Business travelers in particular collect hundreds of thousands of miles/points on company-sponsored trips and don’t have the time or motivation to use miles effectively in a good economy. But now as companies cut travel benefits and money becomes tight, business traveles are taking the time to become re-engaged with their programs, particularly on the hotel side (which tends to be underutilized in favor of airlines).
For instance, Intercontinental Hotel Group has seen a 15% increase in Priority Club redemptions in the first quarter of 2009 compared to last year. Best Western has experienced even more extravagant growth in their redemptions, which are up 30% year over year thus far in 2009. Dorothy Dowling, the senior vice president, attributes the economic meltdown as part of the reason for this increase.
“We’ve never seen this kind of redemption activity in the past. Consumers today want a vacation. They want to do it closer to home to save on expenses. They’re looking at harnessing every way they can to make that vacation happen.”
