Why Don’t Companies Reward Policy-Compliant Travelers With Loyalty Points?

By | July 7, 2017

Efforts encouraging corporate travelers to do the right thing run the gamut. Punitive measures for policy noncompliance range from informing managers to withholding reimbursement. Short of requiring pre-trip approval, other strategies use incentives like gift cards, cash or simple positive reinforcement. Why not reward travelers with loyalty program points?

Frequent flyer, guest and renter programs are the lifeblood for some business travelers. They are also often the enemy of managed corporate travel. The lure of earning elite status or accruing points for a vacation can outweigh the motivation to follow company rules. Carlson Wagonlit Travel is working to help companies find middle ground. Its new program aims to keep client travelers in line with hotel booking policies by rewarding them with points.

Given the attraction of loyalty points for business travelers, it’s a bit surprising that more travel departments and corporate agencies haven’t taken a similar approach.

“Companies don’t typically buy points that we know about,” according to a Hilton Hotels official who noted that nothing stops them from doing so.

“We really don’t see many companies using loyalty programs to influence compliance,” added a Wyndham Hotel Group spokesperson. “There are occasional cases when a travel management company might offer points as a reward or incentive, but it’s not a regular practice in our experience. It’s more common we receive requests to donate points for a company’s charitable efforts.”

How about corporate travel departments or TMCs buying points from airlines? Officials from American, Delta and United said it doesn’t happen.

points for policyTravel management sources said the chief reason is conceptual. Many organizations feel they should not reward employees for doing what they’re supposed to do.

“I give CWT credit for coming up with the idea,” said Partnership Travel Consulting’s Andy Menkes, “but for a company to give rewards for compliance leaves room to interpretation that ‘I don’t have to comply, and all I lose is a few points.’ ”

It’s a question of corporate culture. “Anything that encourages compliance is a good thing,” according to Corporate Travel Partners co-founder and managing consultant Robert Daykin. “Whether or not you need ‘bribery’ for compliance is another issue. In a control-and-command environment it should not be necessary. But in a more relaxed environment it might prove useful.”

GoldSpring Consulting partner Will Tate offered this take: “We find many travel programs being in between mandate and incentive — that is, they cannot do either. That forces programs to create and manage influence, making persuasion the most important consideration. That requires a balance of a very good traveler experience against procurement strategies. Without the ability to use the stick (non-reimbursement), it seems contradictory to not allow the carrot either.”

There are other reasons companies don’t buy points. For one, they often negotiate elite-level program status with suppliers for some number of their travelers. Moreover, thanks to waivers and favors from airlines, client organizations often get things that normally require lots of frequent flyer points — notably upgrades.

Also, unlike sharing the savings when a traveler flies coach rather than permissible business class, buying points requires an upfront investment.

“Good luck going to the CFO” with that proposal, Menkes said.

He raised a few other complications, like how to manage the points distribution and establish defensible justification. “I would have to prove to internal audit why I gave them to who I did,” Menkes said.

Travel Consulted’s Grant Caplan “almost never” recommends to clients that they “bribe” travelers and mentioned a few more challenges to the points-for-compliance idea. “It becomes a bookkeeping issue. To transfer points I need access to traveler profiles,” he said. “Also, if I give you points, that’s income. How do I tax it?”

These are among the questions Rocketrip has heard many times. The corporate travel budgeting and incentive platform’s thesis, as explained by founder and CEO Dan Ruch, is that “incentives, when implemented properly, can be a powerful motivator of behavior.”

“But here’s the rub,” Ruch added. “The reward must be greater than the perceived cost to the employee in terms of what they are sacrificing (sacrifice = giving up status quo behavior).” The equation differs for each person, based on his or her own perceptions, wants and needs.

“So, hotel points can work, airline points can work, Visa cash cards and Amazon gift cards and trips to Tahiti can work, but at the end of the day, what matters most is, does the employee value the reward [more than] their perceived sacrifice,” Ruch said. “If yes, success. If no, failure. Flexibility is key.”

Rocketrip’s platform lets users select various rewards for cost-saving behaviors, including points from Delta, Virgin America and others. Ruch wouldn’t say how often clients pick points as rewards. “We work with our providers to procure the rewards, then provide them to users,” he explained. “In some cases it’s gift cards that can be redeemed with a specific vendor. With others, Rocketrip points can be converted to miles and points.”

Some organizations go in the other direction. They keep the points employees accrue when traveling on the company dime and redeem them to cover future business travel. (Somewhat related, companies enrolled in airline small business programs earn points from flights by employees, who continue earning their own personal mileage.)

Tower Travel president John Smith explained the spin taken by one of his company’s clients: It retains employees’ points but pays them back. In that way, the client can apply that loyalty currency at the point of sale to cover costlier tickets. Smith said the client preferred not to be identified.

A savings measure that has been around for decades, retaining employees’ points generally is not something most companies do. The effort may put off employees and produce diminishing returns. A proposed State of Oregon bill aims to remove the requirement that state agencies collect and manage employees’ travel points, thereby reducing administrative burden.

In an early 2017 Society for Human Resource Management survey, 65 percent of more than 2,700 HR pros said their organizations let employees keep frequent flyer miles. Sixty-six percent said the same for hotel points.

Caplan said that if companies want to consider buying more points to distribute as bonuses, they should dish them out only to those who are always or almost always compliant.

Menkes had a similar thought. “Maybe the reward is for extraordinary value and savings,” he suggested, like when the traveler selects a connecting itinerary when not required and saves hundreds. “Maybe you look at which department has saved the most money. Then you give [the miles] to the department head to distribute as they see fit. This way it’s managed.”

Though it hasn’t had client requests, United Airlines is open to the idea, said managing director of sales resources Karen Catlin.

A corporate sales executive at another U.S. carrier would “leap all over this” concept if not for client red tape. Speaking on the condition of anonymity due to the company’s media policy, he said, “The truth is that many good ideas on how to save a company money or improve the traveler experience die at the door of corporate bureaucracy.”

Additional info: How much is a mile or hotel point worth? Less than the cost to buy. Assuming you aren’t a credit card company or some other big loyalty program partner, AAdvantage miles sold by the airline start at 2.95 cents per mile for 1,000 miles and range down to 1.59 cents per mile when buying (or gifting) 250,000 (150,000-mile max purchase with 100,000 bonus miles). Delta SkyMiles cost 3.5 cents per mile, whether purchasing the 2,000-mile minimum or the 60,000-mile max. United MileagePlus miles also cost 3.5 cents per mile for the minimum (2,000 miles) or maximum (150,000 miles) purchase. Third-party mileage purchasing platforms — like this one and this one — advertise lower prices.

And their actual value? “Everybody values points and miles differently,” according to The Points Guy editor-in-chief Zach Honig. “The figure we choose generally reflects the minimum value you can reasonably expect to get from your points and miles, or the most we’d consider spending for points or miles in a given program.”

The Points Guy calculates monthly values for currency in about 40 loyalty programs associated with airlines, hotel chains and credit cards. For June 2017, its calculation for the AAdvantage program was 1.4 cents per mile. For SkyMiles, it was 1.2 cents per mile and for Mileage Plus, 1.5 cents per mile. The highest value on the list is 2.7 cents per point for Starwood Starpoints. The lowest is 0.4 cents for both a Spirit Airlines Free mile and a Club Carlson point.

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