In response to the COVID-19 pandemic, elite status has been extended by airline and hotel loyalty programs over the past few years. This will all change in 2023. Because pandemic-era offers expire and loyalty programs are increasing the qualifications, some elite travelers will be wiped out by a tsunami of downgrades.
Phil Gunter, co-founder of Status Match, a website that allows people to apply for elite status and other loyalty programs, says “The Cliff is Coming.” “This is an unavoidable industry event .”
According to Status Match data, approximately 1 million Americans could lose their airline status by 2023. This represents an estimated 30% to 50% reduction in airline status.
It’s not all bad news. This year may bring more opportunities to earn elite status and bonus points than ever.
Why is the elite status of loyalty programs being eroded in 2023?
The majority of 2019’s elites have had their status extended in the last few years. The pipeline is constantly being filled with new elite status-eligible individuals. This combination has resulted in an unsustainablely high number of elites.
“Whereas in the past, a certain percentage of people would naturally get downgraded each year, that has not happened,” Mark Ross-Smith CEO of Status Match. “Some people earned status, while others kept it,” says Mark Ross-Smith, CEO of Status Match. This is what has created today’s hyperinflated .”
This has caused problems for travelers, hotels, and airlines. Hotels and airlines have to fulfill their promises and tighten restrictions on any policies that could have extended the exclusivity.
Delta Air Lines was forced to change its policies in order to decrease crowds at Sky Club lounges. This included raising elite membership dues. Delta’s November 2022 statement cited “record numbers of visitors” and “frustration among some customers who find themselves waiting at lines or searching for seats once inside” as reasons for the changes.
Travelers face greater competition for hotel rooms or seats. Benefits that claim to offer expedited service, such as VIP check-in lanes for elites, can become clogged if there are too many of them.
Some can downgrade.
Loyalty programs will be ending their status-free membership, but they’ll continue to seek out new customers who are willing to pay for them with attractive offers.
Loyalty Benefits for Infrequent Travellers before achieving elite status
Loyalty programs for travelers are becoming more popular than ever.
JetBlue, for example, now offers “Perks You Pick” rewards. These are small treats like early boarding after you have spent $1,000. American Airlines offers travelers similar benefits, but with a nominal cost after they have earned 15,000 loyalty points.
These little treats might encourage someone to strive for elite status or to encourage less-frequent travelers not to travel with a competitor to continue flying with the airline.
For existing elite status holders: Even more rewards
Elite status holders account for at least 30% of airline cabin revenues, according to Status Match data.
Ross-Smith states that if you remove these people from the equation, financials for an airline can quickly become catastrophic.
Airlines offer more benefits to the highest spenders. American, for example, added additional benefits to differentiate even larger spenders. It will begin rewarding high-end electronics such as Bang & Olufsen’s Bang & Olufsen customers who earn up to 5,000,000 points in 2023. This is well beyond the previous rewards ceiling of just 200,000.
How to deal with downgrades
Ross-Smith suggests looking for promotions that will help you keep your status. Alaska Airlines offers a 2023 Fast Track, where elite status holders who have been downgraded can regain their status by achieving a certain mileage earning threshold before April 13, 2023.
Hotel and airline-branded credit card can be a great option for those who travel less. Some offer elite status, while others have no annual fees. These credit cards usually have an annual fee, but they are often a fraction of what it takes to earn elite status by traveling.
NerdWallet estimates that it would cost $5,840 on average to achieve Hilton Honors Gold status by the traditional route of paying nightly at Hilton hotels. However, a few credit cards including those from Hilton offer elite status as an added benefit.
Ross-Smith states that “Keeping people engaged in the game” is the most important thing. “The last thing Delta, AmEx, or anyone wants is that a customer disconnects from loyalty. Get a cash-back credit card and book travel based upon the cheapest flight or the best timing span>
This article is by NerdWallet. It was originally published in The Associated Press.
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