Frequent flyer programs are 25 years old! Where are the airline and hotel loyalty programs today? How did they get to this point? Where are they headed? And what strategies should program members adopt going forward?

In previous installments of this multi-part series, we've solicited input from program operators (major and discount airlines, hotel chains) and from consultants. In this, the fifth and final installment, we've sought feedback from an ad hoc panel of frequent travelers.

Ten road warriors (see bottom of article for their names and travel profiles) weigh in on nine questions, ranging from the value of a frequent flyer mile to their favorite award trips to advice for up-and-coming frequent travelers.

The Loyalty Effect

1. How much is your current choice of airline or hotel influenced by your mileage program participation?

RC - Not much influence due to mileage as much as Northwest has the most nonstops from DTW. Mainly it’s price although upgrades are nice due to status. However, redeeming frequent flyer miles is so difficult, the only thing keeping me “semi-loyal” to NW is upgrades (not possible on RJs however).

TC - Very much. The benefits received in both air and hotel programs are a great selling point to ensure I choose these programs above all others.

DD - For airlines, 100 percent. If I wasn’t getting the free upgrades I would switch carriers. For hotels, 50 percent. I try to accumulate points in three chains a year.

WD - I basically try to only fly Delta or United and their partners.

CF - Greatly, however it is NOT the mileage awards, it is channel 9, extended seating in coach, and being able to select a seat I want.

CH - Very much. I am usually willing to pay a 5-10 percent premium to fly with my preferred carriers or stay with my preferred hotel chain.

DP - The loyalty program plays a major role in my decision for hotel selections. I will search for a Hilton property and will stay there, even if it is less convenient. I am not as loyal with Delta as I had been 10 years ago. I look at schedules more closely now.

GR - I fly Delta whenever the price is reasonably close to the competition, or I book NW or Continental, and have the miles credited to Delta. Courtyard Marriott is my first choice in hotels—updated rooms, free Internet access and consistency of service—some of the best.

WW - As much as possible.

HZ - Living in Denver and flying internationally, there is only one potential choice, namely United. Their program is very important to me. I still have over a million miles total in the Delta, Continental and US Air programs from when I lived in the Boston area.

2. How has that changed over the past 10 years?

RC - Much less loyal than before.

DD - No change.

WD - Redemption is horrible especially for overseas travel. Delta has taken away lots of things like free Crown Room membership for Platinum members. This cost them about five international Business Class trips. For me and the two or three people who normally travel with me that is well over $100,000 in revenue for them to get my $125 for Crown Room dues if I decide to give it to them.

CF - Hotels have improved—Marriot has a great program but the airlines—UAL, AA and DAL—have gotten to the point where they don’t even care anymore and we, the customers, are dumb enough to take it. Ten and 12 years ago, I took my family (four) to Hawaii, First Class with miles and it was great. Today, good luck finding even one seat in Coach available from May to September. Today, airlines announce iPod capability—big deal, they don’t even realize that frequent flyers don’t even watch the movie (for the 10th time) anymore.

CH - It hasn’t, although my preferred carriers have changed, depending on my flying habits and how badly an airline wants my business (i.e., elite comping, bonus mile/point promotions, ease of upgrading, etc.). For example, in the past 10 years, I have been UA Premier Executive; AA Executive Platinum; CO Gold (now would be Platinum).

DP - My hotel loyalty has increased. I like Hilton’s Honors program and feel it is fair. It is easy to redeem rewards. My loyalty with Delta has waned since they eliminated the old Frequent Flyer program and moved to SkyMiles. I fly Northwest and Continental more.

GR - I used to fly on price alone—seemed to be the only differentiator, same with hotels. After traveling for a while, the level of comfort, service and cost varied, but not always proportionately. When all the programs gained some stability and acceptance, and I didn’t have to turn miles in, I realized there was something in it for me, and decided to concentrate on fewer airlines and hotels whenever possible.

WW - Have narrowed my focus from several different programs down to one airline and one hotel program.

HZ - Formerly flew Continental as #1 choice for better service and large, large carry-on bins. Since moving to Denver, I have tried other carriers besides United, and none have the Star Alliance route system. Thus I remain a United 1K more out of necessity than choice.

3. If you had to put a price on a frequent flyer mile, what would it be?

RC - Less than one cent.

TC - Hard to gauge. Value can be determined and assessed in many different forms. I believe the true price / value of the frequent flyer mile is in the extrinsic value of its use.

CH - $.01/mile.

DP - Not a lot. They are basically worth half of what they used to be. Delta never seems to have seats available for the SkySaver option, but for double the miles, SkyChoice rewards are available. A ticket used to be available for 25,000 miles, and now costs 50,000 miles. I would say a mile is worth a little less than a penny if the average ticket is $300.

GR - About ½ a cent a mile.

WW - About 10 cents.

HZ - Airline miles are about a penny a mile. I usually redeem for Business Class flights or upgrades which are worth 3–4 cents a mile.

If it Were Up to Me…..

4. Of today's U.S. airline and hotel programs, which ones stand out in your mind as particularly good or bad? Why?

TC - US Airways Dividend Miles. This program is customer-focused, strong benefit package and I have NEVER had an issue with using awards, getting upgrades or receiving credit for miles earned with the airline or its partners. Hilton Honors is a strong program from the perspective of point accumulation and the means of choice in that endeavor. However, they can be very light in number of room upgrades available, even to Diamond members. Hyatt on the other hand, has always had a superior room upgrade available for me each and every time I stay at one of their properties. Remember folks, it is not always about the points and miles. Sometimes the perks go the furthest in maintaining loyalty.

DD - Delta, Starwood and Hyatt are easy to use and 85 percent of the time there is availability for use of your points and miles.

WD - They are all bad because they are so diluted. You can get frequent flyer miles for hundreds of things besides flying. So the non-flyers are competing and taking frequent flyer tickets away from the real flyers like me who log well over 100,000 miles per year.

CF - Marriott—the choice of hotels (product), the ease of reserving and if planning ahead, the availability of rooms.

CH - AA and NW stand out as the best frequent flyer programs in my mind, but for different reasons. AA seems to have the best ability to redeem for awards, while NW/CO has the best upgrade policies. Also, while the ease of redemption on NW is not great, as a NW Platinum, I have a decent chance of getting a reward seat at Standard (“Perksaver”) award level.

Starwood far and away is the best hotel program. Ease of award usage, platinum upgrade program, bonus point/stay promotions are all far and away better than any other hotel chain.

DP - Hilton is great. You can book online and the availability is incredible. The Diamond desk is actually helpful and seems sincerely appreciative of our loyalty.

Delta has steadily decreased the value of the rewards program. They eliminated the old program. Then they came out last year and said old miles that were never to expire will convert to SkyMiles on 12/31/06 and potentially expire three years later. They have raised the mileage required for tickets. They have reduced the inventory of seats. They have created a new “benefit” of being able to redeem a reward regardless of availability for double the miles. They have eliminated the Crown Room membership for Platinum flyers as of 1/2007. Even remember several years ago, they tried to make the Crown Room a cash bar? In the letter sent to us, they said they were doing this because its customers were asking for this!! Who the heck in their right mind would ask for these types of changes?

GR - I like Northwest. I can fly my mom to visit family—no hassles, always a flight available, and the NW folks are always polite, courteous and competent. I also like Delta. I can swap miles for gift cards at Christmas.

HZ - Marriott is so vastly superior to all others, there is no #2. Between service levels, Rewards program and SERVICE, they are outstanding. To me, the measure is often when things go wrong. Marriott always responds quickly and fairly to “fix” problems, be it missing credits or issues at a hotel.

5. What are the programs you participate in doing right? Wrong?

RC - Most hotels do a good job but I limit my choices to mid-priced ones that include free Internet and self-serve breakfast.

DD - They remember me and treat me special. I appreciate the extra touches and the frequency of information from them.

CF - Marriott—I believe most everything. United—they have changed their company from a serviced-based company to a commodity. Service is to the point of non-existence and even to the point that the employee gets better service than the customer—need I say more?

CH - They are all doing a good job of recognizing who their best customers are and providing low marginal cost value-added benefits for them.

The frequent flyer programs are missing the boat by not being more transparent about their award inventory. This is what truly leads to anger and resentment among flyers, even more than raising redemption levels. If you look at all the complaints, it’s always that “there are no reward seats available.” They need to communicate to members why a “Standard” level award is not available. (Past sales patterns indicate the plane will be sold out, maybe average revenue for the flight is down)

Also, frequent flyer seats seem to be determined by market, not by plane. For example, I could not get a Standard award from PDX-MNL, but I COULD get two tickets at Standard level, PDX-NRT and NRT-MNL. This kind of thing also leads to confusion and the feeling that members are being taken advantage of.

GR - Hate blackout periods. I like to book by talking to a real person—the Web doesn’t always work for frequent flyer bookings. I like the flexibility of earning points or miles—e.g. Marriott. I can swap those points for lodging or for stays. I don’t like the expiration dates on frequent flyer miles—at least I think it is not out far enough. Some of the goodies offered seemed to cost a king’s ransom in points—I would have to literally live in hotels or fly for several years to earn enough. I really like that I can fly on NW/Continental, and book points to Delta—the code share system is great. If I can’t fly Delta, then NW/CO are my next choices.

WW - Every time they tweak a program now, you just have to wonder what’s in it for them, and how am I going to get a worse deal; they bring this mindset on themselves.

HZ - Airline programs, with so many ways to earn miles, have also made it impossible to redeem. I have NEVER been able to redeem for a Delta international fight. Recently I started with next January and went to the last possible booking day (in late September at the time) and there were no two days where I could go from Denver to Rome and stay six or seven days on regular miles. United, perhaps because I am a 1K, normally comes through. In hotel programs, Marriott is the most balanced where Starwood tends to put “award guests” in horrible rooms, perhaps because they cannot be sold.

6. What would your advice be to current loyalty program managers?

RC - Keep it simple, real simple.

TC - Reward loyalty generously and loyal customers will reward you with a customer for life.

DD - Annually chose about 25 people in each region to discuss what works and what doesn’t work for them. I personally was offended when Marriott and Westin changed their smoking policies without asking those of us who choose to smoke on occasion when they are out of town on a business trip. They took away a freedom that many casual smokers and smokers enjoy while out of town. I will not book any rooms at any Marriott or Westin properties within the United States.

WD - Restrict it to flyers—not to people who use their credit cards to buy gas or groceries.

CF - Try to attempt to service your customer, contact them, and at least appear to show some interest. Regarding airline programs, recognize who your customers are and if you only care about the top .5 percent (UGS), .75 percent (1K) or all premiers. It amazes me how a few thousand miles, regardless of the total dollars spent, make a huge difference in the treatment.

CH - More transparency, not less, is what you need to do to properly manage expectations among consumers.

DP - Be loyal and be fair. If you are, we will be also.

GR - Be accessible—ask us what we like, what’s working. Try not to change the rules every few months. I get bombarded with offers all the time—buy flowers, get points; stay here, get points; sign up for this credit card, get points; eat at Joe’s, get points. Who can keep up?

WW - To remember that it only takes a little bit of recognition to go a long way. Customers will remember getting “screwed” and will likewise remember the occasional perk that is given out of the blue. They should also make sure that enough free and upgrade seats are available.

HZ - 1) Rewards must be available on a reasonable basis, i.e., you should list on your Web site a six- or 12-month calendar where rewards are most apt to be booked. For instance, hotels in France have rooms in August. 2) If I can pay to get to a location or stay there, I should be able to redeem points for the same. Example: United said this week there are no award seats to Prague or Stockholm from May to October next year, although I am a 1K. 3) Don’t nickel and dime me to death, for instance, a $10 fee for booking an international award trip after I have spent thousands of dollars to “purchase” the miles. 4) Make me feel like a preferred customer, not someone who is running your bottom line.

Based on My Experience

7. What strategies would you recommend to future road warriors for maximizing the value of their frequent flyer miles, both on the earning and redemption sides of the programs?

RC - Lower your expectations (please don’t shoot the messenger) and be nice to the employees. They rarely hear good news and work in an industry that cannot be much fun. A positive comment and friendly banter is appreciated and a good way to be remembered and accommodated.

TC - Take advantage of every offer. Regularly review program Web sites for special earning opportunities and promotions. I have gotten a lot of miles, points and preferred status upgrades on this simple aspect. Second, talk to the program owners. Provide feedback. Do not be afraid to call or e-mail them and ask to match status against a competitor.

DD - Choose one or two programs to focus all of your travels; review all of them for upgrade opportunities and elite qualifications. In my experience the ticket prices between carriers is relatively small. As for redeeming points, I also contact the reservations department on the phone and treat these individuals with respect and use lines like: “I know you are very busy and this is a non-rev call and I wish I could do it online; however, a nice cheerful person like you makes the difference to me.” I have not once found an agent at Delta unable to find me a free Business Class or First Class ticket on Delta or its partners for international destinations. Treat them kindly and they will work every possible angle to find you two seats. I have had associates call without any luck and then I pick up the phone and treat the agent well and magically I am able to get them seats.

CF - Forget it. Save the money it will cost to participate, put it in the bank, and you will find that you can buy the ticket for much less than via miles and you WILL get the flight, seat and time you want without speaking to Henry or Joe in India.

CH - Decide what value you place on the miles and benefits you receive and don’t be afraid to walk away when the value proposition doesn’t work for you.

In most cases, if you will be close to an elite tier, it is worth spending an incremental night or two in a hotel or taking an extra roundtrip flight just for accruing miles. With that in mind, try to get a sense of where you will be at year end in the beginning of the elite year. This is because flights are very empty (and therefore very cheap) between January 10–Feb 10 and EQMs (elite-qualifying miles) can be had cheaply.

With redemption, I always keep 100,000 banked miles spread evenly between two programs for one or two domestic flights to be used in emergencies or sudden trips. Above this, I earn and burn, usually on International Business Class upgrades or free tickets.

For hotel programs, I use the points for a room I am booking at the last minute, when rates tend to be the highest. Also, I use them for extra nights on a multi-night stay, by paying for the first night and using points for the remaining nights. This way you save money and also get a stay credit.

GR - You tend to get what you pay for. Book nonrefundable fares, and you’ll get fewer miles. Stay at lower end hotels, you earn fewer points. That’s OK, it’s either your money or your company's—got to be a good steward of it. The key is consistency. Try to stay with one group of airlines, whether it be Star Alliance, SkyTeam or whomever. Consolidate miles in one airline's program using partner airlines when possible—you’ll earn free flights a lot quicker, and you are more likely to be upgraded.

If you are a certified road warrior, share those miles. I give away miles every year. Lots of choices—Make-A-Wish, Care, American Red Cross (Delta has a good list of charities). After flying all year long, how many of us want to spend a lot of time in the air on vacation? So, do some good with those miles, especially if they are going to expire!

WW - On earning, maximize the use of alliances. On redemption, never go for a free ticket for yourself; you don’t earn any miles on that. Use free tickets for others, and only use miles for upgrades for yourself.

HZ - 1) Concentrate on one airline and one frequent stay program to maximize your importance to them. 2) Remember that the programs are designed to help the hotel or airline, not you. They will do everything they can to prevent you from getting awards. 3) Be persistent. Check availability at least once a week for “preferred” destinations such as Paris. Seat availability changes daily.

8. Of all the awards you've redeemed miles and points for, which ones were the most memorable?

TC - Two Envoy Tickets to Europe on US Airways. A one-week stay in NYC with Hilton in a suite.

DD - Two First Class seats on Air France from Miami to CDG (Paris). I felt like royalty and was treated magnificently by all inflight personnel. I also loved the sleep suits. It was a truly luxurious experience for me.

CF - Two trips I took with my wife and two children to Hawaii back in the ’90s.

CH - Back in the old, old, OLD days, free tickets used to come with two free stopovers. In April 1984, I cashed in 75,000 miles for two free UA First Class tickets in the U.S. 50. My girlfriend and I took a seven-day Cunard Line Alaskan cruise for two (on a 2-1 coupon), followed by a ticket routing of ANC-HNL-PDX-BOS-ANC. All First Class, all for free. The ticket was technically booked as ANC-BOS roundtrip, with stopovers in HNL and PDX.

Equally great was the 2 x 50,000 TW miles I cashed in (two free system wide First + two free system wide First class upgrades) for a great trip in the summer of 1987, the routing being PDX-BOM (now Mumbai), with stopovers in Paris and Cairo. We took three months off and were able to spend one month in Europe, one month in Egypt and Kenya, and one month in India and Nepal.

DP - Probably family vacations at a Hilton Resort a few hours away. It is always great to spend time with the kids at the beach. Also, I can drive there and not have to get on the airplane!

GR - I took my daughter and her best friend to Daytona Beach. We got a couple of rooms at a Courtyard Marriott, stayed about a week, and only had to pay for one movie, period. We had a blast! Of course it used up all my points, but hey, that’s what they are for.

WW - The best was not even a redemption. One day, on United, I was a 1K, but flying in the very back of Coach. The purser came back from the front of the plane, said. “Mr. Wilcox, we appreciate your business, and I hope you have a comfortable flight.” She then told the flight attendant in my cabin to make sure that I did not pay for drinks or a headset. I remember that, and it made me feel appreciated.

HZ - We flew First Class from Denver to Frankfurt on Lufthansa. The service was fabulous. Singapore (from SIN-Bali) was perfect. Its staff makes you feel like a King and Queen. The JW (Marriott) in Phuket was perhaps the best hotel vacation we have ever enjoyed.

And...

9. Anything else you'd like to add about your experiences as a frequent traveler?

RC - It’s changed (for the worse) and it’s not going to get any better. High-status flyers should get used to traveling like the rest of the folks. However, a positive attitude helps and goes a long way.

DD - If you travel often remember to treat the airline and hotel personnel with kindness. They remember you and return that kindness with out-of-nowhere upgrades, bottles of wine in your room, etc. You have to remember they deal more often with angry people than they do happy people on the frontline.

WD - I always fly Business or First Class. The level of premium service has gone down dramatically over the last 10 years. I flew to Europe last week on United. I took a commuter to IAD—no food and one free drink in the Red Carpet club. Stewardess gave me a hard time when I asked her to fix soap dispenser in the lavatory. Dinner was served and the cabin crew basically disappeared until one and a half hours before arrival, then they served breakfast.

CF - I am waiting for one of the majors, or a startup, to recognize that the programs can be valuable if coupled with service and availability. I also would like to see United add a flight on the Ted routes that are mainline. I will pay $100–200 more.

CH - Everyone loves to bitch about them, but the fact is that they (along with deregulation) have allowed me to see the world in far greater comfort at far lower cost than would have ever been possible without them.

DP - Travel, especially air travel, has declined significantly over the last 15 years. The worst part is the customer service. The airline employees seem to not care. Maybe after dealing with problems on a daily basis, they become apathetic toward our issues.

WW - I fly a lot of foreign carriers, and most of my work colleagues are non-U.S. U.S. carriers have a deserved reputation for having surly flight attendants, and many foreign carriers (Thai, ANA, Singapore) have fantastic, attentive service. Many of my work colleagues do anything they can to avoid flying a U.S. carrier.

HZ - It is extremely frustrating to try to do business with the airlines. I was on hold with Delta 43 minutes several weeks ago before reaching an agent who was totally unhelpful. Service counts. Marriott understands this; they are an exception. I speak (only) English and want an agent whom I can understand.