Frequent travelers redeem more miles as recession rages

— -- Not so long ago, Art Manask would sit on his hotel points, letting them stack up like jets on a crowded runway.

But in the past 12 months, with business lagging at his hospitality consulting company, Manask has used his Hilton HHonors points at least half a dozen times to get free rooms. He even plans some of his trips around whether there's a Hilton property nearby with a room he can snag as a reward.

"I'm more concerned about costs now than I was," says Manask, president of the Burbank-based company Manask & Associates. "Our firm's billings are down like everybody else's ... so you learn to cut corners."

Many travelers, particularly business people who amass tens of thousands of reward points and miles because of hotel stays and frequent flights, are cashing them in more often in the midst of a deep, national recession that is straining corporate and personal budgets.

They're using them for seat upgrades that their businesses will no longer pay for, free flights or hotel stays for their family's vacation, shopping trips to Target, or just because they don't want to get stuck with the points if airlines change their rewards programs to bolster their bottom lines.

United Airlines saw its number of reward program members who cashed in their miles go up 12% in 2008 over the previous year. And hotel groups such as InterContinental and Best Western have also seen significant increases in the number of travelers cashing in points.

"Business travelers are using their miles to upgrade to business class, especially on overseas flights, as a result of travel policy changes within their companies," says Robin Urbanski, a spokeswoman for United Airlines.

Fliers redeeming the lowest amount of miles are also taking advantage of more seats being freed up for them by United, Urbanski says. And they're using them for shorter trips rather than grand getaways.

"Customers are using their miles for family visits, summer vacations, or for a short, weekend getaway in lieu of the traditional two week trip to Europe," she says.

Economy drives activity

Redemptions by members of InterContinental's Priority Club Reward program were up 15% the first quarter of this year over the same period last year.

"The economy certainly would help drive it," says Stephen Boggs, spokesman for InterContinental Hotels Group, who added that while a free room remains the most popular reward, more members have used points to buy merchandise since the economic downturn.

"Your 401k is going down but the points never expire and can be utilized in different ways including for life's necessities," Boggs says. "If you need to do shopping for household goods at Target you can get a gift card and go make that purchase without having to pay cash for it."

Redemptions in the Best Western Rewards program are up 30% so far this year over the same period in 2008, also partly due to the economy.

"We've never seen this kind of redemption activity in the past," says Dorothy Dowling, senior vice president marketing and sales for Best Western International. "Consumers today want a vacation. They want to do it closer to home to save on expenses. They're looking at harnessing every way they can to make that vacation happen."

But Dowling also sees other factors at work, including improvements the hotel chain has made to its program and the relative ease with which travelers can redeem hotel points versus frequent flier miles.

"I think the economy is a piece of the equation," says Dowling, but travelers are also "recognizing that hotel programs offer so much more value than airline programs. They ... realize how difficult it is to redeem for airline trips."

Points are 'a safety valve'

Redemptions aren't up across the board in the travel industry. Inside Flyer magazine, which monitors airline miles redemptions, has numbers that show redemptions of airline points are even down at a time when few people are traveling at all.

Bence Boelcskevy of Columbus, Ohio, who works in pharmaceutical development and flies over 100,000 miles a year, has already seen some airlines increase the number of miles required for some free flights. Worried that they may continue to alter their programs, he's planning to use his miles for more than the once-a-year vacation he and his wife would take in the past.

"The airlines continue to be in trouble," says Boelcskevy, 64, now a widower, who's planning to use his miles to visit friends in Florida and perhaps fly to Europe this year. "I'm going to take these points and blow them ... Otherwise, I think it's going to take twice as many."

Betsy Olwine, 40, says in the past she held onto her frequent flier miles up to a year or longer before using any.

But now that she's trying to save and pay down credit card debt, she's more quickly tapping into her miles for free vacations and trips from her home in Denver to visit family.

"I'm redeeming my miles more often now than in the past," says Olwine, director of sales recruitment for Hyatt Hotels Corp., who is using 40,000 miles she's accrued in the United reward program to fly to Hawaii with a friend in September.

At the same time, she sees her miles as a safety valve for when she needs to fly because of a family emergency, such as in February when her father had surgery.

"Instead of spending $250 on a round-trip ticket to Baltimore, I just turned in 25,000 miles," Olwine says. "I used the miles instead of putting it on my Visa card."