Category: business

Maximizing What You Get from Your Travel

American Airlines Flagship First

I am by no means the world’s biggest authority on air travel, frequent flyer programs or airline credit cards. But I do think that I am on the savvier end of the regular flyer spectrum and maximize what I can get out of airline and hotel loyalty programs without resorting to extreme actions, like endless mileage runs and credit card churns.

I wanted to write about my approach because I get asked about how I get all my miles and status fairly often. I generally try to avoid these conversations, as most people assume that to achieve this, you have to full tilt and I don’t have the patience to convince them otherwise.

So, if you travel for work and pleasure and want to get more out of the money you spend on these trips, read on.

 

Decide What Matters the Most

Let’s start with the basics that I think everyone wants to get from airline and hotel loyalty programs, so that we can then talk about making informed decisions.

When it comes to airlines, major benefits of loyalty programs are free upgrades, lounge access, free checked bags, increased mileage earning, better redemption opportunities, priority customer service and priority boarding.

With hotels, it’s also upgrades, free breakfasts, increased points earned for each dollar spent, late check outs and executive lounge access, where available.

Clearly, things like upgrades and lounge access are considered to be top benefits and ones that most people would like to achieve. Though they don’t necessarily require top status to get, different airlines and hotels give you different options at each loyalty level, so it pays to read about how exactly these benefits are dished out.

Most U.S. carriers divide their loyalty programs into four tiers (five if you include the basic non-status tier). American Airlines, for example, has Gold, Platinum, Platinum Pro and Executive Platinum tiers. Delta Air Lines has Silver, Gold, Platinum and Diamond Elite. All of these are tiers that you can earn through a combination of miles or segments flown and dollars spent. There are also ultra-elite pseudo tiers that airlines selectively give out to their most valued customers, like American’s Concierge Key. I won’t talk about this, because it’s invitation-only.

Hotels usually have a simpler three-tier approach and you can achieve status with either nights, stays or points earned. Hilton’s loyalty program is divided into Silver, Gold and Diamond.

 

Let’s Look at Airlines First

American Airlines Business Class on Boeing 777-300ER (Credit: The Luxury Travel Expert)

So, how do you decide what you want? Well, let’s break down what you are actually capable of achieving and go from there.

Each airline tier is achieved after a certain amount of miles flown (not miles earned) and dollars spent. Take a look at your paid travel for the year to decide what’s realistic. Do you fly between 25 and 50,000 miles? Then you’re probably aiming at the first two tiers. If you fly between 50 and 75,000 miles, on some airlines you have an option to reach a third tier, while with others you have to fly more to get to that next level. Clearly, it’s at this level that you want to start thinking about who you do your business with.

With Delta, you have to fly 100k miles to achieve their Platinum status, while with American, you only need to clock 75k miles to do the same. With benefits like complimentary domestic upgrades for their Platinum Pro fliers, American is probably the winner here and if you live in a city where you have a certain amount of choice, it could make sense to go with them.

On the other hand, if you fly under 75k miles annually, you may want to consider Delta as they give out complimentary upgrades to their Gold flyers, while American forces you to either earn or buy upgrade certificates (you get four for every 12,500 miles flown) to redeem for upgrades. The upside is that American may have more award space, as fewer people are eligible to get bumped up on a given flight, but the downside is that you may have to shell out upward of $200 on a flight from LA to New York to move up one cabin.

 

What About the Spending Component?

Recently, airlines have introduced a spending component as well, in order to cull the ranks of their frequent flyers and ensure that people couldn’t reach top status by taking a few long but cheap flights. Whereas it took only 25,000 elite qualifying miles to reach Gold with American, it now also requires $3,000 of spend on airline tickets to hit the threshold. This amount goes up to $12,500 for Executive Platinum.

AAdvantage Aviator Silver MasterCard from Barclaycard

Enter credit cards. Each airline has a credit card partnership that allows members to off-set some or all of the elite qualifying dollar requirement (EQD or MQD). American has two card partners, but only one (Barclaycard) offers this feature with their Silver Aviator MasterCard. With a reasonable enough annual spend requirement, you can get 6,000 EQDs via the card, meaning that your actual spend needs to only be $6,500 to qualify for top-tier status. This card also gives you 10,000 EQMs meaning that you need to actually fly 90,000 miles to reach the 100k EQM threshold for top tier status. Not bad, as that’s a round-trip flight from LA to London.

Some airlines are getting less credit card friendly, with Delta, for instance, wildly increasing their Amex spend requirement in order to qualify for top-level MQD waiver.

 

Bottom Line with Airlines

If you know how much you will realistically fly and you live in a city that has several airlines, you can make an informed choice. I focus only on global carriers that are part of alliances and that can allow you to earn and redeem your miles on international trips.

I fly a lot for work – about 60,000 – 75,000 miles per year. My strategy was simple: have an airline card with EQD and EQM components and always fly with American. Between my work travel and the card, I can get within 15,000 – 30,000 miles of Executive Platinum. I could just settle for Platinum Pro, and get free domestic upgrades and lounge access on international flights, but at the top tier, American also gives 4 Systemwide Upgrades – certificates that enable me to buy an economy seat on a long-haul international flight and upgrade to business. Anyone who knows the price difference can make a quick calculation of what that value is and it can be huge. For instance, I was upgraded to Business from a $600 economy ticket on an Auckland to LA flight (14+ hours), where the price difference was $5,000. Considering that you can use these upgrades on your family or friends also, this becomes a serious consideration.

I choose to close the gap between what I naturally earn and the top tier by taking a couple of trips throughout the year that I both enjoy and that help me earn the missing miles. Sure, it may cost an extra $1,500 or so but I see this as an investment into my next year’s travel.

One credit card, one airline within an alliance, and maximizing your spend and travel around these two concepts will enable you to get maximum benefit from your air travel.

 

What About Hotels?

Waldorf Astoria Rome Cavalieri

Hotels are easier and frankly, you don’t even need to travel much to get the core benefits. Though there is a lot of consolidation in the hotel industry, you still have options. The main ones are Hilton and the combined Starwood/Marriott properties. The later (at least Starwood) was considered to be a better product vs. Hilton, but that is subjective and depends on where your travel takes you.

It’s worth noting that most of these hotel brands are significantly more upscale outside of North America and you get a lot more with your status there.

I picked Hilton and I don’t even need to spend a night there to get Gold Status, because it comes automatically with the Hilton Surpass Card from American Express. It’s a $95 annual fee that is very well worth it because you get room upgrades and free breakfast for you and a companion automatically. A breakfast in a Hilton Garden Inn in New York is $25/person + tip, so you pay for this fee with a two night stay if traveling with another person. If you manage to spend $40k or more on this card, you get bumped up to Diamond status, which gives you a better chance of an upgrade, but still the same breakfast.

I have this card and I use it just on my Hilton spend, so that I can earn 11 points per each dollar spent.

It’s worth noting that you don’t get free breakfast at Starwood unless you hit the top tier and their credit card, while good for other things, doesn’t give you this benefit either.

Bottom Line with Hotels

Get yourself the Hilton credit card and get most of the benefits immediately. If you do at least a little bit of personal travel throughout the year, your wallet will thank you. Hilton also does a lot of points promotions, so it’s possible to earn a free night after just two or three paid nights, depending on certain factors.

 

After about 170,000 miles flown in the last 19 months, and a total of 50 or so stays in various Hiltons, I was able to earn enough miles and points to take two big trips that included:

2 business class tickets from LA to Tokyo on American Airlines ($7,000 value)

2 business class tickets from Tokyo to Auckland via Hong Kong on Cathay Pacific ($6,000 value)

2 business class tickets from LA to Dusseldorf on Air Berlin ($4,500 value)

1 business class ticket (via an upgrade) from Auckland to LA on American ($5,000 value)

At least another 10 domestic flights in either economy or upgraded to business for myself and my wife, with a total value of $3,000+.

And a total of 12 nights in various Hiltons, Conrads, Waldorf Astorias and other Hilton brands internationally, as well as another 15 or so free nights domestically. That’s almost a month of free hotel stays with free breakfasts and upgraded rooms, with a value of at least $7,500.

Clearly, I wouldn’t have been able to earn all these miles and points without my work travel, which contributes to the vast majority of what I earn, but many people travel a lot for work and never even think about the right ways to collect their points and miles, which is akin to throwing money away.

I hope this is helpful to those who are interested in doing something to off-set the grind of work travel.

Why do we still tip?

*warning: this is a bit of a rambling blog and I don’t intend to have a definitive answer to the problem I discuss.

Tipping in America has reached a weird level. Perhaps, when you know no other setup, it seems normal to tip regardless of the level of service or to start tipping for things that weren’t normally meant to be tipped for (like hailing an Uber). From time to time, mainstream news publications rally behind a service industry worker who was apparently slighted by a jerk-off customer. The most recent example – the “LOL” tip – is gathering the scorn of the Twitteratti.

Obviously, the big difference in the tipping culture between the U.S. and the rest of the world is that here, waiters and waitresses do not make a minimum wage salary. Instead, the majority of their income is derived from tips. It is strange, though, that for as much noise and complaining that this setup seems to create, that nothing has been done in decades to change this. At the end of the day, what difference do I, the customer, experience, if I pay a tip or the salary is baked into my final bill?

It stands to reason that the upside of being tipped more than 15% is much more attractive and commonplace than the occasional downside of receiving a LOL. The inherent risk of a small tip is definitely there and puts more of an onus on the wait staff to do a good job, however it should not come as totally unexpected that sometimes you will fail at delivering a good service and your tip might be reduced or zeroed out.

Tips are meant to reward good service, really. Giving someone something on top of the bill is meant as a recognition of a job well done, of going above and beyond, and of knowing that even a small amount of money will make a difference. But in the States, this is not how we behave. Instead, sub-mediocre service is, somehow, still entitled to at least a 15% tip. And that number has been creeping up. Now you routinely see automated tipping options of 18 and even 20% as the lowest amount. This culture of tipping, and tipping more, is weirdly bemusing and infuriating. No longer can you reward good service with a tip of 20% – a fifth of the total bill. You now have to strive for 25 or 30% in order to show gratitude, and that is a lot of money.

There is also an accepted practice of tipping in advance to buy good service (mostly at bars and clubs), which is really akin to bribing. It basically asks for service that you should expect to receive normally, but your extra $20 up front ensures that you get to skip an invisible line and to feel special. And this is not a substitute for tipping in the end either.

Why are we so addicted to tipping and why do we constantly try to find new ways to tip? Is it because of the growing schism in our society? Is it because so many of us have gone through the service industry ourselves on the way to starting our careers elsewhere? We seem to be painfully aware of how little the food and beverage industry pays and we try to compensate on individual basis by tipping and over-tipping. Does it make us feel good about ourselves?

In Europe, where restaurant and bar staff are paid a living wage, tipping is in place to reward truly good service. By my observation, the service levels on average are worse there than they are in the US, but not to the point where it’s worth paying 20-30% of the bill to improve. It makes it very easy to decide how to tip: if the service exceeded your expectations, you tip. If it exceeded your expectations by a lot, you tip more. But you don’t have to face the moral quandary of feeling like you need to tip even when the staff or the restaurant didn’t meet the basic expectations.

Maybe a better way to handle issues is to ask the manager to come over and complain to them that you had a crappy experience and to seek the reduction of the overall bill. In this case, the customer needs to separate the server and the restaurant as two different entities who provide two very different and unrelated services. If the food was great, but the service so-so, then the waiter gets a small tip (or not one at all). But if the waiter tried his or her best to manage your expectations while the kitchen struggled to get your order right, you as a customer should seek a reduced bill while leaving the server’s tip intact.

Usually, as has been my experience, the two services are tightly interlinked and when one fails, the other does too. It becomes easy for the customer to exact revenge through a small tip, but it doesn’t spread the punishment around equally. Again, this is the flaw in the U.S.-style tipping system that, more often than not, provides a greater upside to the workers than a salaried structure would.

Amazon’s Prime Day – a lesson in retail

Checking out the Twitter feed, one could think that Amazon has dramatically failed. People are complaining about the mostly lack-luster items that Amazon is featuring as part of the sale. Leaf blowers, knee braces, vitamins – the scourge of the arm-chair consumer will leave no esoteric item unloved.

Disappointed Twitterati

Disappointed Twitterati

I am no retail expert, but I think Amazon has scored a bit of a coup here at the expense of some minor lack-of-love from the digital peanut gallery.

Let’s take a quick look at how the company likely benefited from its Prime Day:

1. A ton of exposure for Amazon Prime via earned media.

These are the dog days of summer. Nothing interesting is happening in the world (unless your world somehow includes areas outside of the U.S. or thoughts that don’t have to do with conspicuous consumption – then there is a lot happening).

Amazon basically created an event out of nothing, which generated a ton of press and forced other major retailers, like Walmart, to react, further validating Prime Day.

At the very least, Amazon’s Prime service entered the general consumer’s lexicon. The anticipation that this was going to be a bigger event than the company’s Black Friday sale was also likely to cause…

2. Incremental trial subscriptions to the service

At $99, Prime is neither very expensive nor very cheap. It certainly forces one to think whether they shop enough online (and on Amazon, specifically) to justify having 2-day shipping given to them on every purchase.

Amazon wanted to have more people give Prime a go, and what better way to do it, then to sweeten the deal with a “massive” sales-palooza for Prime members. Despite what Walmart may say, one doesn’t have to shell out a penny to take advantage of the sale, as they could simply sign up for a 30-day Prime trial and then cancel. Amazon, unlike other companies, makes it easy to pull the plug and will even remind you via email.

So, they very likely succeeded in getting quite a few folks to take the plunge and try the product for free.

3. New Prime customers

I am sure that a percentage of these trial customers will convert to Prime subscribers. Some out of laziness or forgetfulness, others because they finally overcame whatever internal barriers they had for not signing up before and actually willingly committed. Prime does make sense for some folks. For instance, in our family, it makes a lot of sense. We just moved to a new city and need to stock up on a lot of things. Being able to order things ad hoc and have them arrive in a day or two makes more sense than driving to Target at the end of the week to do a massive shop for them. Plus we usually benefit from lower prices on Amazon.

4. Clearing out inventory

The funny thing about the angry Tweets is that they aren’t taking into account what Amazon (and other retailers) usually put up for sale on Black Friday and Cyber Monday. It is largely crap too. They are trying to move items that haven’t sold well on price alone. Sure, there are a few loss leaders to generate additional publicity. Amazon had a 40″ 1080p HDTV for under $200 for Prime Day. It sold out. People were pissed. That happens every November and yet nobody stops shopping at Target because of it.

Oodles of items that probably don't sell well

Oodles of items that probably don’t sell well

Amazon decided that it has a lot of crap it needs to clear. MacBooks and Jimmy Choos don’t fall into that category. Not now, not on Black Friday, not really ever. At the end of the day, they may sell a few more things that otherwise would not have sold. But even if they didn’t, they would reap the benefit of one of the aforementioned actions and…

5. Get more data along the way

Amazon is a digital store. They are masters of big data and what they do with it is the envy of most retailers. By driving incremental traffic to its store (people who usually wouldn’t come to the site), Amazon is profiling a new pool of potential customers who they can message with more tailored product and deal offerings via media channels like display advertising and email.

They probably also got a few Amazon app downloads along the way, and with people logging in, they are building more bridges between the desktop and mobile ecosystems, which are notoriously hard to bridge.

Remember, Amazon has a media business as well. Knowing more about you gives them the ability to earn money on that knowledge in other ways.

So all in all, Amazon pulled nothing short of a coup. They capitalized on a lull in the retail world and got a lot in return. And you know what, the consumer probably got something out of it too. There were some decent deals, especially on Kindle products. For those looking to grab a book on a beach vacation, getting Kindle Unlimited for 40% off is a good deal. Ditto with the actual reader, and a bunch of other things.

And just because the majority of the people might not be interested in leaf blowers, it does not mean that a sizable minority were excited to save some money on something they were going to buy anyway.

Prime Day was not a brand building exercise for Amazon’s master brand. It was a customer and data acquisition push for Prime and a suite of related and unrelated products that exist under the umbrella. I don’t know if Amazon will reveal the success of this initiative, but my sense is that it worked very well for them.

The anatomy of a (business) class

Though it feels like a series of rants, I don’t mean to rant, nor make a series out of it. However, I can’t help but express my frustration with another class I took this week, this time centered on helping people start a side business.

 

General Assembly

It was a class offered by General Assembly and it sounded cool – How to Start a Side Business. It was taught by someone who is a serial entrepreneur and claims to have started or help launch quite a few companies.

The class basically went off of a handout that provided 10 steps for launching a company. Over two hours, we basically just flipped through pages, did a few exercises (one of which included meditation that, for me at least, had no tangible connection to anything we were doing), and listened to the instructor talk.

The talk is what was least impressive. The instructor failed to impress me with any of her theory or examples from her own past. She could not remember names of companies, the things they did, the tools she pitched, or explain in depth the resources she was recommending. A brief conversation about SEO went nowhere, for example.

And she, on purpose, excluded one major topic – money! We were meant to have it figured out by then, she said. But that’s often the biggest reason people cannot start or scale their business – they don’t have the cash. It’s one thing to build a proof of concept, or to launch a business where you are making something by hand on a small scale. But when you want to aim for something a bit more capital intensive, you need to know where to gain financing, so that you can pay for technology, tools and, most importantly, people.

When I asked her about how one gets developers, she told me that you either learn to code or hire one, which aren’t really useful answers, unless you’re talking to someone who has done literally zero research before. Given that every single person paid $50 for this two hour class, chances are, they all invested a lot of time into thinking about their idea and felt that they now needed to commit some financial resources to take their thinking to the next level.

This is where the class failed.

If it was a free class that was meant to give you some general direction about how to start thinking about your business, it would be fine. Or if it was described in a way that made it obvious to folks who have been pursuing their ideas for some time that this was too entry-level, that would be fair as well. Instead, it was a relatively pricey class that sold itself as something more advanced than it actually was, and this is what I take issue with.

Under-promise and over-deliver. That’s a business mantra that GA should have stuck to.

The anatomy of a (crappy) dance lesson

One of the promises in my wedding vows was that I would finally learn how to dance salsa. I knew that this would make my wife very happy and, given that this was a vow, I have to make good on it.

So, a month and a half after moving from London to Los Angeles, I found myself in a Santa Monica dance studio in a “salsa for beginners” group class.

There was nothing “beginners” about it, though. The class, an hour long, was divided into roughly two halves – beginner and intermediate. With about 20 students, the instructor, a fiery/feisty character named Jose, told us that he wasn’t going to dwell on the basics for any amount of time. His goal was to make us reach for higher levels, which we were somehow expected to do without knowing where to start.

salsa

Jose showing us salsa steps

He started off with showing us the basic steps – first for the ladies, then for the guys. While simple in principle, this is something that I need practice in and can’t just pick up on the fly. But time and patience was a luxury he wasn’t going to spare and soon we were doing more complex moves and dance patterns, involving hands, slides, and walk-arounds. I can’t even comment on how the others were doing (better than me, I’m sure), because I was just trying not to step on my wife’s feet. Needless to say, I didn’t remember any of the basics, nor was I able to pick up any of the more advanced stuff because I was getting frustrated with myself, the pace and his (lack of) instruction.

After the class, my wife and I chatted about the logic of these types of classes. In her opinion, they are designed to make beginners realize that they are worse than they think they are (and that this is harder than they thought) and to splurge for the more expensive private lessons.

Perhaps. Though I didn’t think that parting with $18 per person was a particularly cheap affair, given that I got nothing out of it.

I actually think that this is a crappy way of going about soliciting more expensive business. If I were the instructor, I’d identify prospects for private dance lessons during these group engagements and give them a bit extra attention to show them that I am a good and capable instructor. Afterwards, I would have a chat about what the students were hoping to achieve and offer them some private dance options. Instead of feeling deflated and defeated, the encouragement would secure some higher margin business for him/studio as well as group-class patrons for down the road.

As things stand, I think that the class, as well as the studio, was a bit of a joke.