I have to admit, I find it really confusing when people are upset about loyalty programs devaluing. It really makes no sense to me, but I guess that comes from my position being different from theirs. As a small business owner I have booked travel for myself and my employees both domestically and internationally. We would decide to travel based upon perceived return on investment, and there have been times when I have dropped everything and flown to Asia for the opportunity to have 20 minutes of face time with a client.
Every single trip we made was a value decision – do we really need to fly to Vegas for the latest tradeshow or are they coming to New York 3 months from now? Would our current pipelines suffer from the delay? When you are running a business every dollar matters. When the decision was made to invest in a trip our plan of action was always the same:
What is the cheapest way I can get there and function effectively?
That meant that sometimes I would value a Business Class seat, but frankly, when you are young and hungry enough you can fly 13hrs in economy and you are fired up and ready to work. In fact I would argue that complacency and entitlement to nicer forms of transport can dull your edge, there is nothing more exciting than flying half way around the world to close a deal. Later on, as my belly started to grow and I had developed a taste for Business Class travel I would never pay for a ticket, I would use my own personal miles to get me there. Sure, it means that I lose a deduction, but it also means I keep $4,000 in my business that I can use to invest in growth, and there are plenty of other deductions I can structure to offset the taxes.
When paying cash, there would never be an airline of choice for us, it was always cheapest, easiest options to get there. I would be willing to squeeze the budget for a non-stop over an indirect flight, but that had limits. Likewise, there was never a favored brand of hotel. In dozens of trips to Japan for business I not once stayed in the same hotel twice.
Business losing touch with reality
After a while, many business owners opt to offload travel to HR, and in time that is further offloaded to a special division. Some firms I have worked with over the years have internal travel portals that allow the employee to lock in their own travel, and it bills to the employer. This is one of those times where a business needs to re-evaluate, and look after those pennies. If you allow people to book their own travel, or have a team that isn’t focused on the bottom line, people gravitate to loyalty programs and use them to rebate themselves from the company coin.
Employees abusing the system
I get quite angry when I look at the attitudes of many employees. I have seen comments on sites like Flyertalk where they are happy to book the most expensive class of service so that they earn frequent flyer miles at an accelerated rate. They are happy to waste thousands of dollars in company money in order to capture a relatively tiny amount of ‘loyalty’ from the Airlines and Hotels. With no ‘skin in the game’ they have nothing to lose and everything to gain to spend company money on the most lucrative rebate for themselves.
Ask yourself how honest you are
If you had a credit card that paid 5% cash back at a gas station and you were filling up your car with your own money, would you pay 10% over the fair market value to capture the 5% cash back? What about if you knew you could submit a receipt for reimbursement, would you still have qualms about paying over the odds?
Loyalty programs were developed fairly recently in the travel industry, and they are so cleverly designed that casual travelers will find it very hard to ever make an award redemption from revenue spent. As such, they are supported by corporations, and willful overspending by employees at a massive loss to the company, and a massive profit to the Airline or Hotel. It might seem like a lot of fun for the employee to have this perk, but business expenses are always a zero sum game, and intentionally flowing money from your employer to the operator in order to capture a marginal rebate for your own personal benefit is selfish and detrimental to the firm you are supposedly representing. Personally I would find it grounds for dismissal.
I’m all for traveling for free using these loyalty programs, but I think leaning heavily on your employer to fund your rebates is very bad practice indeed.
Is it a fair exchange?
I can see the argument already for someone who suggests they should focus on one Airline, even at a higher price, in order to attain status. These road warriors spend a lot of time out there making good money for their companies and if they firm isn’t willing to put them into Business/First class seats perhaps the complimentary domestic upgrades will help make life easier.
I can see where these people are coming from, and if there isn’t a lot of range between flying say American or Delta I think it could be ok to pay a minimal amount more for the airline of choice. However I think the problem arises when people disconnect the cost of travel from the rewards, and the spread between prices becomes less relevant to them. Also, while I am sure living out of a suitcase and hotels is a real drag, I don’t think when you agreed to sign up for the job and it had that much travel attached there was a stipulation that you could squeeze as many perks as possible out of your employer to make it better.
Or maybe I am just wrong, and the culture of ‘taking back’ and entitlement doesn’t pervade the corporate world?
Matt,
I used to be one of those people who flew all the time. But, as I was NOT sales–as an RN, I first worked with claims processors, then was a trainer–the companies I worked for were more than happy to put me on whatever airline was cheapest, even at the cost of efficiency.
When I started booking my own travel, I set a rule. I would pay up to $50 more for a ticket on my “preferred” airline–at the time, NWA–or one of its code partners. And, really, because there were a lot of code partners at the time, I rarely spent more than an extra $20 for a round trip ticket. And, to the benefit of my company, I usually spent much less time in the air or hanging around at airports traveling, because of that. Given that, as a non-sales person, the best I could hope for in a hotel room was a third tier room, like a Hampton Inn or a Holiday Inn Express, I certainly wasn’t breaking the bank on accommodations. Whereas the sales people, for whatever reason, felt entitled to staying at the Hiltons and Marriotts.
You bring up a good question for those who are not travel hackers, but simply buy the miles with OPM by business travel–what is the moral and ethical way to do that?
You restore my faith in humanity 🙂 Yes, there clearly are good people out there too who think about the things the right way.
If an employee knowingly books a ticket at a materially higher rate than a similar alternative (sorry a few minutes different in arrival time doesn’t matter, but direct vs. connection could be argued depending on circumstance) that is similar it is pure and simple fraud. You are stealing money from the company for your own benefit. In my book you get a warning (unless it is egregious), and loss some professional trust. If it happens again you get let go.
That’s exactly how I would deal with it too.
All well and good, Shane. Now. Define “materially higher rate.” See the issue? I deliberately picked a fairly low dollar amount, and applied it, across the board.
But here’s what’s interesting. At one of my employers, our new manager decided that my coworker and I, who had been staying at B & Bs for, usually, under $100 a night, were spending too much time booking our own travel, and gave the job to the admin asst in our area. We had a training trip to VA, and she took two days to find us a place, right across the Potomac from DC, that was an hour from our destination by car. AND, for extra bonus points, it was the kind of hotel where, for $150/night, you sleep in your clothes on top of the covers, just in case there are critters in the bed.
One of the reasons Fortune 500 firms (I work at one) have their own travel dept or agency is the flexibility to rebook or reroute that you can’t get in personal accounts. We use United/American/Southwest for airlines and Hertz for car rentals. If you use anything else, you wont be reimbursed. This avoid a lot of hassle and reduces time spent searching for the best deal. There is a money value of time here. If I were earning $100 per hr, would it make sense spending 30 mins to save 20 bucks ?
Well let me ask you this – if you make $100 per hr, do you book your own vacation travel with the same mindset?
I’m not an employer myself but I agree with you wholeheartedly. It’s selfish and manipulative. Unethical, even.
That said we should take a step back and chuckle at the irony here. This blog is dedicated to promoting strategic behavior. We discuss Lifemiles trick routings and purchasing cash equivalents to maximize credit card programs. We know that these methods violate the programs’ intended spirit. We know that our behavior hurts the companies’ bottom line, no matter how negligible. We know that some of these tricks raise ethical concerns. Yet we take advantage anyway. But now that one of these practices could occur at your expense, you invoke a moral high ground? Come on.
Matt, I respect the content that you put out and I appreciate your financial insight. But this post is hypocritical, through and through. More appropriately, you should be talking about how to avoid getting suckered by employees who would do this, not whining about injustice and greed. At least this way, we have no delusions about what we do here.
As Omar Little would say, “all in the game, yo.”
By that logic, anything that isn’t manipulative is hypocritical, simply because I enjoy exploiting loopholes in certain areas doesn’t mean there can’t be lines drawn. Would you think it hypocritical of me if I suggested not ripping off your own spouse?
Matt, feel free to draw all the lines you want. I don’t deny that there are degrees of reprehensibility when it comes to exploitative behavior. Let me be clear. I’m saying that the kind of loopholes you promote and the kind you revile are similar to one another. So much so that I’m inclined to think that you only discourage this particular loophole because you are in a position to be a victim. I find that hypocritical.
Ripping off my wife? No, I wouldn’t think you were being hypocritical if you suggested that. But then you never wrote a post telling me to rob my grandfather’s grave.
Well, the thing is… I am not really in a position to be a victim because in my business I don’t lose sight of things like this. It is more shining a light on people who seek to travel on other peoples money.
They closest thing I can think to share is the concept of honor among thieves… my philosophy is that you have a sphere of influence that protects those around you, and should include family, friends and employers, but I do see business as war, and I will do things that seem to exploit an enemy.
Hope you can see the difference.
I see this every day… I am the travel manager for my corporation. I get all the reports that show which of our travelers are choosing loyalty over price. Makes for a very fun conversation later.
When I say that you are in a position to be a victim, I’m saying that the risks are real for you. You don’t have to empathize at all because you have to handle these risks yourself. You say you’ve disarmed these risks? Great. Maybe you can write about that.
What I’m calling you out on is the hypocrisy. You have a vested interest in disparaging employees who maximize travel rewards on their employer’s dime. That’s fine, but you start citing ethics to justify your reasoning and I personally find that bizarre. In the past this blog flirted with ethical issues and disregarded them casually. So why, all of a sudden, does this go under the microscope for thorough scrutiny? Because we owe a duty to our boss the same way we do for our close friends and family? Sorry, Matt. That’s not compelling.
Look, I’m sure you can understand an employer’s frustration as he grapples with an employee’s leech-like travel booking practices. But please speak on it from a business/fiscal standpoint, an area where you still command expertise and authority. As for “abuse” and “honesty,” you just don’t have the moral authority to talk about them because you’ve already discredited yourself with numerous posts promoting ethical ambivalence.
Hope you can see my point.
David,
You said “because you are in a position to be a victim.” in your quote at 8:16pm. I was just replying to you. (edit – oops, I thought you said ‘when did I say that’… sorry!)
Now, let’s go down the rabbit hole. Where have I ever “blog flirted with ethical issues and disregarded them casually” I am not a casual type of guy David, I give things very careful consideration, and I love talking about ethics. That doesn’t mean that my ethics are the same as yours, because I developed my own set from life experience.
Now – go ahead and tell me why I can’t speak about anything I like because I have discredited myself please, examples of my discredit would be welcomed.
I pointed out Lifemiles and MS in my first comment to show that you face ethical problems and disregard them. I challenged you to reconcile that with the ethical problems in this post which you feel so entitled to talk about with authority and conviction. And your best response to that is “I have my own ethics”? Matt, that is just a different way of saying “I’m entitled to my opinion,” which is nothing but a red herring.
Sure, we can talk about how casual you can be. Let’s look at the AMEX Statement Credit post. In that post you say that you “complain effectively” and “deploy Jedi mind tricks” to receive credit that you weren’t meant to have. The euphemisms are pretty humorous, I admit. But essentially, you deceive a phone rep by withholding information and telling technical truths to get undeserved money from AMEX. What was your rigorous ethical analysis there? Because all I’m seeing in that post is, “I feel a little guilt I suppose, but also I think that if I didn’t get these it would have been unfair.” No matter how idiosyncratic your ethics may be, the ethical subtexts in the two posts are mutually exclusive to one another. That’s not apparent to you?
In that post, reader “Amy” posts a comment that nails it right on the head. It’s all a justification for you. Don’t get me wrong, I’m not deleting my bookmark, I actually enjoyed that post. But I think it’s important for us to be honest with ourselves here. Because you can disagree with me as vehemently as you’d like, but the hypocrisy is plain to me.
In any case, I’m moving on from this post. Got a job to do and all lol. Looking forward to your next post!
David,
I appreciate your comments, and while I am arguing I am also considering what you say. I recall that comment from Amy and didn’t really bite because I don’t want to change her mind towards me, if that is what she thinks so be it. I actually thought of her reaction as you wrote your first comments and wondered if it was time for another post on ethics.
As for Lifemiles, I don’t see any post about it, so not sure what you are referring to. What I did write about it was purely informational, and I pulled it down by request of one of the ‘trick’ community. Here is my view on mistake fares: https://saverocity.com/travel/wrong-try-force-airline-honor-mistake-fare/ that gives some insights on to my ethical system.
Now, ethics are a very difficult thing indeed, but to be guided by a set of ethics that was taught to you is the first level of understanding, it is akin to following a religion, a great way to distribute a certain base level of generic ethics to the masses. However, with sufficient life experience you are capable of finding your own rules and regulations.
It isn’t a simple thing, but I have to tell you that your argument here is to say I cannot talk about things of ethical nature because you question my own ethics. And that won’t fly.
I don’t think you really understand my ethical rules, but more importantly, even if you did you cannot seek to challenge a valid post based upon an ad hominem position, it’s not going to cut it for me. My next post might well be on this subject, so I hope you do stick around so we can discuss more.
The company sets the travel policy.
Why then, do you judge the worker so harshly for working within those constraints to achieve the best balance for him/herself? That balance may be more points & miles but it may also be forgoing miles for the sake of flying nonstop and getting home sooner.
Moreover, there is rarely any benefit or even acknowledgement for a worker to reduce travel costs. Yet these discussions always seek to lay at the feet of the traveler for “ripping off” the company when they are working within the terms of the given policy.
The wrongdoer in these discussions should be the company that is so penny wise & pound foolish as to require their workers to stay at inconvenient hotels & take time consuming cheap flights that only serve to decrease productivity & worker satisfaction.
Luckily, not all companies operate that way!
My old boss, a regular lower- middle class guy, believed that if the worker had to travel for work, then they are sacrifing being away from home & family. Consequently, the worker should be kept as comfortable as possible within policy and let the worker decide whether to stay at the Ritz or a Hampton Inn.
I think you raise a point about lack of acknowledgement – that is a fault of the company and I did state that ‘businesses are losing touch with reality’ so if they don’t know/care then they cannot commend good practices either.
Again though, if it was my firm and I dropped in to audit decisions like this it would make difference to me, as per Shane’s comment it would put money back in the professional trust column, and it may well be rewarded.
Also, there is something to be said for not picking the absolutely cheapest solution, but that raises the same ethical question, just framed differently: are you spending more of the company coin to create a rebate for yourself in the airline/hotel you choose?
I could see an argument for ‘closer to the client’, ‘more direct route’ even ‘better conditions’ but when all that is swept away for ‘most rewards I earn for my personal use… that is an issue.