Monday, 6 May 2019

An ethical pitfall of business travel: who's paying for loyalty benefits?

Looking down from The Shard in London


My assumption is that most loyalty programs in the travel industry have been designed to get the loyalty of employees by letting their employers pay for their loyalty benefits. Often, it only helps to be a member of an airline or hotel loyalty program if you're a really frequent traveller, and that probably means that someone else is paying your bills.

It is very attractive for an individual to have benefits from business travel and then use these for leisure travel. When I would do a lot of business travelling, it might affect my decisions in such a manner that I would benefit from them for my leisure travelling. It would probably cost my employer more money than strictly necessary.

The thing is this: it hardly ever pays to be a loyal customer. It is far more economical to find the cheapest tickets and rooms every time you have to travel. This works properly as long as the traveller's interests are aligned with those of the one taking up the bill. But if the traveller, or their secretary, is the one booking the tickets and rooms, the alignment is no longer there.

For example, I can easily book two cheap return tickets instead of one flexible ticket, and still save money. But the number of airline miles I can earn with the flexible ticket will far outweigh the ones for one cheap ticket (remember you don't earn miles for segments not flown). So the most economical solution (two cheap returns for added flexibility) might not be chosen in the real world.

The same is valid for hotel rooms. Most hotel programs are revenue based nowadays. This means that the more expensive a hotel room is, the more points you can earn, which will get you a free hotel room for a leisure trip more easily. Not to mention the tricks hotel loyalty programs have to let you book more nights than strictly necessary. There's your incentive to decrease travel costs...

When I was the company's internal travel agent at my latest employer, I had a few rules that should ban all risks associated with the above dilemmas. I booked all tickets and hotel rooms based on only price and convenience. Employees could still use loyalty programs but were not likely to benefit from them because I put them on any airline that provided the right price and time (and a direct flight).

Of course, using cashback sites is absolutely out of the question in a business travel setting. Even in case of channeling the money back to the employer, it might be too time-consuming to be effective. It is important to let employees realise that benefits from travelling are not an obvious thing if they do not pay for them themselves. Ultimately, all loyalty benefits are being paid for in cold, hard cash.

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