Who owns your loyalty points?

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Loyalty points are a great way for companies to make savings on corporate travel, but some may argue that they belong to the person travelling rather than the company who has paid for their travel.

Loyalty programmes are designed to reward frequent travellers for choosing a particular supplier every time they travel. So, a traveller will book and pay for a flight, hotel room, rental car, etc., and by doing so will earn points which can later be redeemed for further travel or at specific retail outlets. It seems like a fairly simple concept. However, it gets complicated when the person travelling is not paying to do so.

It goes without saying that a company covers the travel costs when sending an employee on a work trip. The traveller is expected to be away from home for any number of days for the company’s benefit, but the company makes the travel arrangements, so who should earn the loyalty points awarded by a particular loyalty programme? Ross Beatty, the president of Beatty Group International in the US, wrote in an article about corporate travel policies that employees should be allowed to keep their loyalty points. He said the points should belong to the employee and not the company because ‘business travel isn’t always fun’ and that business people would rather be home with their families than alone in a hotel room. He warned that the employee should not be allowed to abuse company policies to increase the rewards they receive.

According to Claude Vankeirsbilck, Chief Sales Officer for Tourvest Travel Services, suppliers in the travel industry such as airlines, hotel chains and car rental companies generally have a reward scheme for companies in place already which is used to incentivise the company for business placed with such supplier. Therefore, they would not be in favour of allowing the employee reward scheme such as Voyager, BA Executive Club, Lufthansa Miles & More programmes, to accrue to the company as this would be seen as the company double-dipping rewards, he explained.

“These suppliers use the employee reward programme to entice the employee to choose their particular product of choice. Unfortunately, this does, in many instances, conflict with the company’s travel policy which is designed to ensure the company’s travel spend is steered in the company’s best interest as they are ultimately spending the money.” Vankeirsbilck said understanding that the company travel policy is, or at least should be, designed not just around the rewards it will receive for supporting or steering to a particular preferred supplier, but also around the value such supplier will provide the company. These value-based items should include the service delivered to its travellers, flexibility, punctuality, capacity and, most importantly, pricing and reliability.

Ernst & Young’s policy, according to Niall Johnston, Consultant: Finance, is that the traveller owns the miles, but that they don’t get to choose which airline they travel on. Johnston explained that this is thought to be a means of recognition for excessive or weekend travel away from home. Similarly, employees at Transnet retain the miles, not the company, said Iqbal Khan, Commodity Manager. Khan said: “Travellers have the sense of entitlement as they fly for the company, leaving their families and comfort zones behind, and this is a form of appreciation and payment for the discomfort.” According to Khan, SAA’s Voyager programme is ‘not keen’ for the company to own the miles.

Sandy Badal, National Travel Manager of Anglo American, says the company does not retain any points. She said: “[Anglo] is not interested in how many programmes our travellers participate in. This is for travellers’ own management.” The reason for Anglo American’s take on loyalty programmes, explained Badal, is that the programmes are not a ‘one size fits all’ and can become quite cumbersome to manage.

It is widely acknowledged that the rewards employees receive by being members of loyalty programmes come at a huge cost to the company, Vankeirsbilck pointed out. This is due to the fact that the higher the value for the air ticket, as in the case of an airline, the more loyalty points are awarded to the traveller. This practice is usually commensurate with all suppliers of travel products.

“If the company travel policy is not absolutely clear on its policy around the use of suppliers and loyalty schemes, they then run a massive cost risk, costs that can be substantially reduced if managed effectively. Essentially, loyalty programmes should come as a bonus to employees rather than driving the process of spend management. Loyalty programmes do have a place in the managing of travel programmes in that they do add benefits to travellers such as preferential seating, increased baggage allowance, lounge access, priority waitlisting, priority boarding, as well as providing the individual traveller with travel benefits such as ‘free or reduced priced offers on products’. However, these benefits must be weighed against what is ultimately best for the company from a cost perspective,” he said.

Tourvest Travel Services who operate the American Express Travel Services, Seekers Travel, Cumming Travel and Maties Travel brands, uses its advisory services team to provide essential business case analysis in choosing a preferred supplier for its customers to ensure that both the company and the traveller’s needs are met, understanding the clear travel management objectives of a company as well as the traveller needs.

 

 Handling loyalty programmes

  • Ensure a company travel policy is in place and is clearly communicated to all employees.
  • Ensure the travel policy has a very clear policy around the use of loyalty programmes.
  • Travel loyalty programmes must never undermine the company-preferred supplier programme.
  • A good suggestion is to implement a ‘Best Fare of the Day’ or ‘Most logical Fare of the Day’ policy, even within preferred-supplier programme, as this will encourage travellers to use suppliers within a preferred-supplier programme with a cost implication considered.
  • Use the Management Information your TMC provides to monitor the suppliers being used. This will, immediately, highlight errant spend that might be driven by the need for a traveller to use his/her preferred loyalty programme rather that the company’s preferred supplier.
  • Encourage employees to use loyalty programmes that fall within the company’s preferred programme. This way, the employee will not work against the company’s preferred-supplier programme.
  • It might be a good idea to have employees who travel on the company’s account to declare their loyalty programme status for record purposes only. This should, again, give the company an idea of the potential risk they have to employees choosing non-company preferred airlines.