The life of a corporate traveller can be tough. Frequent separation from family and friends, second-, third- or fourth-rate food, generic hotel rooms that prompt the “Where am I?” response not only when you wake up, but when you're walking down a hall to a meeting room. But for decades, there's been one significant perk: Sure you're away 200 days a year, but you can make it all up to the family by flying them to Nepal on points.
But amid recessionary belt-tightening, there has been a quiet revolution in the way employers are handling those all-important, but very costly, loyalty programs.
It's a complicated industry, and there are a hundred different ways this is playing out in businesses across the continent, but the wind is tacking in two general directions: more expensive points and fewer points.
The Bank of Montreal, which issues its own MasterCard with Air Miles, as well as Diners Club with Club Rewards, says that over the past 18 months, 15 to 20 per cent of its clients have gone from what is called “corporate pay” to “individual pay” systems. This means that if those business travellers want to keep the points flowing, they will have to pay to belong to the loyalty programs themselves. (The Bank of Nova Scotia, TD Canada Trust and CIBC didn't respond to requests for interviews.) For some, this will mean the extra freedom to switch to their own personal cards and choose the points program that best suits them. For others, it will mean either losing their points, or spending as much as an extra $100 a year to get the benefits they have been used to.
But that's not the only way things are changing. Companies are also starting to keep points spent on the company dime for themselves, or simply killing loyalty programs altogether.
iView Systems, an Oakville, Ont., security and surveillance company, changed its system last year.
It went from American Express to RBC’s Avion Visa cards, which collect points usable on any airline. But the points don’t go to the employees. “We spent too much money on travel and customer relations,” vice-president James Moore says, explaining that the points the company accrues help fly employees to clients, and clients to head office.
“We allow employees to keep the hotel, airline and car-rental points as personal perks,” he says. But the points they would have received paying for that hotel, flight and car rental on the company credit card now go to the company.
For iView employees, this wasn’t too traumatic – their old AmEx cards didn’t have a loyalty program either – but the spreading practice of corporate point collecting is robbing many travellers of what’s known in the industry as double dipping – getting Aeroplan points, for example, not only for flying Air Canada, but for paying for the ticket on an Aeroplan points-gathering credit card.
“You end up being more fragmented in the way you’re earning points,” says Bill Hanifin, president of Hanifin Loyalty LLC, a Florida-based loyalty research and marketing company. “If you’re a pretty frequent business traveller, if you have a $5,000-a-month budget, you earn 60,000 points on your payment card, and typically you’re earning something nearly equivalent through your hotel program or frequent-flier membership. If you lose the benefit from the card, it would cut the [point] equity you’d build in half.”
Another downside, he says, is that without a central loyalty program, the points you earn come in bits and pieces. “My $5,000 a month would be apportioned across hotels, rental cars, restaurants, so I wouldn’t have one place that I’d be accumulating my rewards equity,” he says. “I don’t only lose my earning power but I’d lose some utility as well. Larger corporations are all tending toward this right now.”
All this Scrooginess may seem a mystery to those who think loyalty programs are just about loyalty. That’s part of it, sure, but there’s more. Loyalty programs also cost money. Credit-card companies pay for the affiliation, and corporate clients pay to use the affiliated cards. When a charge is made on a corporate card, a 2-per-cent or higher fee is split between the vendor, like Air Canada or Hilton, and the credit-card issuer (BMO, for example). Depending on what sort of a deal has been worked out, the issuer will offer corporate clients a rebate on part of their share of that fee. With loyalty programs, that rebate goes down. And for large companies that spend millions on travel each year, that really adds up.
“When corporations are sending out requests for proposals from [credit-card] issuers, that is one of they key things they will look at,” says BMO senior manager of business development Kevin Tait. “That financial rebate is very, very important for corporations.”
Hence the shift, a shift that may be permanent. “The loyalty scenario is really due for a really good shake-up,” says the travel manager at a large accounting firm, who did not want to be identified. “Right now, it is there to promote consumer business, but I don’t see anything sustainable for a corporate client.”
First, it was the downgrades – from business to economy, four-star to three-star, full-size to mid-size. Now, employers are coming for the points. Business travel is looking more and more like work all the time.
Special to The Globe and Mail
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