The surprising effect inflation is having on your points and miles

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This Article Reprinted with permission of NerdWallet,

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Travel prices are set to soar in 2022, following unusually low prices on airfares and vacation rentals during the pandemic. And while travel price inflation has cooled down with slower demand and falling fuel prices, it continues to impact travelers’ plans and budgets.

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So with travel prices still well above their pre-pandemic levels, what does this mean for travelers’ hotel points and airline miles? Rewards programs regularly increase the prices of rewards, which are the number of points or miles required to book a hotel night or flight. This practice devalues ​​these currencies over time and makes the collection of customers’ points and miles less useful. Yet, interestingly, the opposite effect is happening this year.

See alsoHow to choose the best seat on the plane

The prizes are worth more this year
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NerdWallet just did its annual refresh Analyzing Points and Miles Programs And found something unexpected in a sea of ​​bad inflation news: Points from many rewards programs have become more valuable this year than last year.

American Airlines’ AAL,
Mile pricing increased, from 1.2 cents per mile in 2021 to 1.5 cents in 2022. UAL of United Airlines,
Mileage increased from 1 cent per mile to 1.2 cents per mile. In fact, nearly every domestic airline mile either increases in value or stays the same from year to year. This bucks the conventional wisdom among points and miles enthusiasts, who expect to see those values ​​increase over time.

“Miles and points aren’t really a hedge against inflation, as various programs and loyalty currencies are always devaluing based on business and economic trends,” said Tiffany Funk by email. Funk co-founded, a service that helps customers redeem their travel rewards. “But in the short term the points can be a buffer against inflationary pressures.”

Simply put: Cash values ​​went up this year and rewards values ​​(eg, the number of miles needed to book a flight) went up as well, but not as much. According to the September Consumer Price Index report, airfares in September 2022 were 33% higher than in the same month last year. Meanwhile, the value of airline miles is only 8.7% higher on average than last year, according to NerdWallet’s analysis.

If cash prices drop again, this effect of increased points and miles values ​​may be lost. but as long as prices stay highTravelers can reap the value from their points and miles—assuming they use them for high-value redemptions.

relatedWhich hotel rewards programs have the best value?

Fixed vs Dynamic Award Value

In the old days of frequent flyer programs, a route cost a set number of miles regardless of cash value. So a flight from Los Angeles to San Francisco will always cost 5,000 miles. Yet the industry has moved away from the prize chart approach toward dynamic prize prices, which fluctuate to match the cash value. These programs typically offer less value while the cash value is higher.

“The best redemption when cash prices are high will be through programs that do not tie their currency to the dollar,” Funk said.

Travelers should target programs such as Hyatt H,
Wyndham WH,
or Alaska Airlines ALK,
Those that still use an rewards chart determine the cost of using points and miles. In contrast, Funk cited the Southwest Airlines LUV,
and JetBlue Airways JBLU,
As an example of programs that tie their award point values ​​closely to the cash value of the flight.

“Instead, a program where prize prices are either set in advance (with published charts) or are flexible/dynamic based on circumstances (weighting factors, revenue data, etc.) would be a better bet,” he said. Told.

Hyatt, for example, still maintains an award chart and has seen its points increase from 1.9 cents to 2.8 cents from 2021 to 2022, according to NerdWallet analysis. Marriott Bonvoy March,
which rocketed off its rewards chart earlier this year, holding steady at 0.7 per cent point.

be sure to These are the airlines with the most delays and cancellations

Rewards space can be hard to find

Despite continued high demand, airlines continue to struggle with staffing difficulties and canceled flights. This means planes are full, and seats booked with miles are hard to come by.

“Historically, we have advised that additional award space often opens up to a week prior to departure,” Funk said. “But right now, we’re seeing seats booked up to two to three hours before departure.”

ReadingDon’t let a one-week vacation trip turn into six months of credit card payments. Here are 3 tips for keeping travel costs down.

Hotel rates buoyed by strong demand and lack of staff, has also put pressure on prize redemption. Most hotel programs use dynamic award prices that keep pace with cash prices, so finding bargain rates will continue to be a challenge.

In other words, hotel points and airline miles can be relatively valuable, but they can be harder to use. Hence, travelers should remain flexible while planning.

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Sam Kemis writes for NerdWallet. Email: [email protected] Twitter: @samsambutdif.

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