Top Three Airlines/Hotels Due for a Devaluation

While American Airline's scare yesterday – in which fuel surcharges were briefly being applied to award tickets – turned out to be merely a technical error, it highlights the importance of "earning and burning" your airline miles and hotel points. Devaluation of these currencies can happen at any time, often without warning. While it may seem tempting to acquire these miles and then treat them like a miles savings account, this will only lead to both sadness and your precious points not being used to their potential. In today's points world, it makes the most sense to earn them fast, and burn them just as quickly. This isn't to say you should use them frivolously, but just keep in mind that one day that transatlantic flight you've been saving up for might suddenly be charging $600 in fuel surcharges (I'm looking at you, British Airways!)

Given this urge to earn and burn, let's take a look at the top three programs that I believe are due for an impending devaluation.

#1: United Airlines

United's MileagePlus program is one of the top programs around, with amazing availability for discount award tickets combined with the broad reach of the Star Alliance network. Personally, I value their miles highest out of any domestic carrier simply because of their ease of use, versatility, and the fact that their website is actually functional unlike a certain domestic carrier *coughDeltacough*. Unfortunately, it seems quite likely that this program is due for some sort of devaluation within the next year. The last time United made a major change to their award chart was 2011, and in many aspects the award chart actually improved! You could argue the chart is "due" for a change in the near future. The flight economy has also improved since 2011, and with more revenue passengers flying it seems unlikely that United desires to have award tickets taking those seats. Finally, greater credit card miles being given out from Chase. United currently has a 55,000 mile bonus for signing up and hitting the minimum spend for their personal and business MileagePlus Explorer credit cards. All of this leads me to believe that United will either limit availability, raise the cost of miles used for tickets by ~20-25%, or in the worst case scenario, both.

#2: American Airlines / US Airways

While the fate of the AA/US merger is still up in the air, my full expectation is that it will eventually be cleared and the two airlines will merge sometime in 2014. When it does, I expect the result for their new award chart to be quite a mess. Given that it's extremely likely that AA will allow the transfer of US miles into their program, the result will be a sudden influx of both more miles and more passengers wanting to redeem awards on Oneworld flights. This screams devaluation for the sweet spots on the current charts for both airlines. No longer will the 90,000 miles for a Business class ticket from North America to Asia (via Europe!) be possible, nor will their off-peak awards to Europe for 35,000 miles round trip. In a merge with such large airlines, it seems unlikely that these great offers will survive. From the current AA award chart, I would expect their 40,000 mile off-peak award to Europe to be cut, as well as their very generous Explorer rewards (http://www.aa.com/i18n/disclaimers/oneworld_awards.jsp). In addition to these cuts, I would anticipate all award prices being increased by 25% or more, with availability dropping. The good part of this all is that any sort of change is likely to be announced, thus giving those with miles the opportunity to spend them at the old rate before any such devaluation happens.

#3: Club Carlson

Switching gears from airlines, we'll take a look at the Club Carlson hotel program. Encompassing properties such as Radisson, Park Inn, and more, the program didn't receive much attention in the travel universe until they unveiled their U.S. Bank issued Club Carlson credit card (http://www.clubcarlsonvisa.com/credit/visaPremierCard.do) at the end of last year. This card gives a huge bonus of 85,000 gold points upon hitting the minimum spend, and 40,000 just for renewing the card each year. But the big bonus is that the card allows you to get 2-for-1 hotel award nights, meaning every time you book a room for two days with points, you only pay the price of one day. This essentially doubles the value of gold points for cardholders. While this is great news for consumers, it's bad news for the future, since more value in a program often leads to a future devaluation. While the fact that U.S. bank is more stingy than other banks in approving the card may keep this devaluation away for a little bit, I fully expect devaluation similar to Starwood's earlier in the year. My guess is that new categories will be created, with the top tier being 75,000 points a night (up from 50,000) and most hotels moving up a category or two, resulting in an increase of point prices by 25-30%. This devaluation also might happen without notice, as Club Carlson recently devalued their point transfer ratios to airlines with no notice by 50%. I would bet on a future devaluation happening within the next six months.

While the intent of this article is not to scare you about collecting miles and points, it should serve as a reminder that they are inherently a devaluing currency. What you don't start planning now may not be an option in the future. And with all the great offers to earn miles out there, it's easy to replenish your cache anyway. That is, after all, why the number one rule of miles is earn and burn! So get out there, earn them, burn them, and travel the world!