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The Death Of Travel Industry Loyalty

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You're probably doing something wrong if you can't give your product away.

An authoritative new report from global consulting firm Deloitte has put the travel industry on alert, declaring the death of brand loyalty. Of the 4,000 frequent travelers surveyed, only two in five people said they "always" want reward points, miles or upgrades.

One in 10 said they couldn't care less about rewards regardless of the circumstances.

"Hotel loyalty programs as they are constituted today have either little or no impact on travelers' purchase decisions," Deloitte rather ominously concluded.

While at least one industry watcher says the root cause of travelers' disloyalty is new tools that allow us all to "become promiscuous comparison shoppers," I place the blame on the travel companies themselves, who have, at every turn, made these programs impenetrably complex. The confusion has even spawned a cottage industry of mileage consultants -- with names like The Points Guy -- to help parse the small print of each program.

In other words, you now need an accountant to manage your miles. That could be why at least one-third of the $48 billion global slush fund of reward points go unclaimed every year.

That wasn't the case in the beginning, when American Airlines introduced what would become the model for future travel loyalty programs in 1981, on the heels of airline deregulation. Back then, you could get a first-class upgrade for 12,000 miles or two first-class round-trip tickets for 75,000 miles, mileage expert Randy Petersen writes in his authoritative history of the AAdvantage program. Today, it takes at least 65,000 miles to get a single first-class seat on American, depending on the type of miles you're earning and airline availability.

A recent New York Times article about the difficulty of cashing in miles described one airline agent laughing out loud at the idea of the author securing a reward seat. Even a mileage expert said getting these so-called rewards -- that the airlines promise and then fail to deliver -- can be "very frustrating."

"There's a small minority of flyers who are brand loyal," says George Hobica, the founder of Airfarewatchdog.com, "The ones who fly a lot and think they'll get free upgrades and other perks. But it's harder to get those upgrades because airlines are selling business and first class seats at the last minute for relatively small amounts. They'd rather sell these seats for any amount rather than give them away."

It's not that the travelers are disloyal to the hotels and airlines; brands are trying to purchase loyalty with Monopoly money. It should come as little surprise that no one wants to play the game.