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The travel industry is in deep financial trouble, and many award travel enthusiasts fear their points and miles will disappear as their favorite brands may be shut down. There are already several major airlines that are no longer operating and may not return.
If you’re worried about the future of your airline miles, consider earning hotel points instead. There are several reasons why hotel points are safer and more secure than airline miles.
1. Airlines are more vulnerable in this crisis.
While many airlines have ceased operations and may face bankruptcy, hotel loyalty programs are much more secure. That’s because a hotel company and its loyalty program don’t actually operate most of the hotels under their brand. In 2019, 80% of branded hotels were actually franchises owned and operated by a third party — not the company that runs its loyalty program. Chances are that when you stayed at a Hilton, Hyatt, Marriott or another major chain, the property wasn’t owned or operated by that company. Instead, the property owners subscribe to a brand and its loyalty program, which offers points to guests, allows guests to redeem their points for award stays and enforces brand standards. And you may have noticed that some properties change brands from time to time, a process known within the industry as “reflagging.”
As a result, the crisis in the travel industry will have the greatest effect on the property owners rather than the brands or loyalty programs. So while your favorite airline may file for bankruptcy or cease operations, your preferred hotel chain is much less likely to, even if some individual properties fail.
2. Hotel economics are very different from airlines’.
Every time an airplane takes to the skies, the airline must pay for fuel, maintenance, flight crews and ground staff. And when it’s not profitable to do so, an airline may park its planes, as has happened to thousands of commercial airliners around the world.
Though some hotels have temporarily closed, many remain open (even if there are very few guests). Industry experts estimate that only 2% of the global hotel supply will be permanently closed as a result of this crisis. Unlike an airplane, you can potentially make an operating profit on a hotel with just a small portion of it occupied. Hotel staff can be reduced, and a room only needs to be cleaned when it’s been used. That makes it easier for a hotel to ride out a travel downturn than for an airline.
3. Hotels make more sense for post-COVID vacations.
With international destinations limiting foreign visitors, and with passengers fearful of even domestic air travel, road trips are likely to be more popular than air travel when Americans start vacationing again. Not only does this mean that the hotel industry could recover before the airlines, it means you may find your hotel rewards more useful in the short term.
» Learn More: Find the best hotel credit card for you
4. Hotel programs were more flexible, even before the current crisis.
Airlines attract travelers to their frequent flyer programs with the promise of a free flight, but many customers find those perks elusive. Airlines vastly restrict award availability at the lowest mileage levels, and often impose costly fuel surcharges (even as we see record low oil costs).
Hotel programs have fewer restrictions, even if they sometimes fall short of their marketing claims. Hotel loyalty program members can, in most cases, redeem points for free nights at any unsold standard room, which should work quite well for travelers when occupancy rates are at historic lows.
Most hotel loyalty programs allow you to cancel your stay for any reason, which has become an extremely valuable option in today’s age of uncertainty. Airlines are offering some change fee waivers for their award flights, but most of these expire at some point, and passengers may have to pay fees if they have to cancel a future flight.
The bottom line
It’s always been a difficult call whether to earn airline miles or hotel points, but the choice is very different during the current crisis. Because hotel rewards are more useful and flexible, and because the hotel industry has a brighter future than the airlines, you may wish to change your travel rewards strategy (at least for the moment).
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card