1. Unorthodox methods of luxury travel by
way of leveraging loyalty program
benefits, otherwise known as Travel
Hacking, is a consumer behavior whose
notoriety is increasing. By exploiting
the use of consumer credit cards and
other loyalty activities, consumers can
achieve arguably valuable benefits
while spending very little of their own
money to fund travel. However, the
loyalty industry is changing, and
consumers must hone their knowledge
and travel hacking strategy to continue
to sip Champagne at 40,000 feet on the
cheap. In this report, I reveal my
findings in an attempt to understand the
common threads and causes of
disjuncture that exist in the array of
loyalty program exploiters; among them
are the well-publicized jet-setter whose
life is luxury travel hacking and those
who mildly seek to extract value
through everyday personal commerce.
Travel
Hacking
Unorthodox Luxury Travel
BrandonLangford
2. Travel Hacking Brandon Langford
1
Introduction
The Travel Hacker
The consumer behavior of leveraging unorthodox methods to fund luxury travel expenses is an
increasingly popular consumer trend known as Travel Hacking. These extreme travel enthusiasts
are finding innovative ways, primarily by exploiting loyalty programs, to finance expensive
dream vacations, international rendezvouses, or simple trips to visit family and friends all while
using very little of their own money. The allure of saving thousands of dollars experiencing all
that the world has to offer while “in the lap of luxury” is an attractive proposition to almost
anyone.
The Loyalty Marketplace
The exploitation of loyalty programs makes travel hacking possible. Airline, hotel, and other
travel affiliates attempt to inspire customer purchases of their brands and/or their partners’
brands by promoting the use of credit cards, dining programs and shopping portals. In exchange
for customer purchases; miles, points, tier status or other forms of corporate currency are
awarded to the customer. Although the concept and system structure of loyalty programs is
nothing new to today’s modern economy, its sophistication and complexity continues to grow.
The advent of loyalty program partners, loyalty transferability, and shared sponsorship of perks
and benefits have created a multifaceted framework for the average consumer to traverse through
in order to achieve their end goals. While there has been a lot of industry innovation, the loyalty
providers (corporations) have conversely responded with decreased point valuations, restricted
award redemption windows and some have even blatantly discontinued elements of its loyalty
programs. System savviness is required to take advantage of a marketplace that places less and
less value on customer loyalty. The marketplace is ever-evolving.
Evolving Trends of Travel Hacking
To support the consumer in the navigation of this system; experts, travel hacking services and
other online “sources” of information are heavily relied upon. Popular expert blogs like “The
Points Guy” or forums such as “FlyerTalk.com” give the consumer the ability to search
resources, ask questions, and learn from other travel hackers about which programs to use for a
particular type of travel, or which programs offer the most flexibility to achieve a certain result.
Even if these online resources do not make the travel hacking roadmap clear enough, there are
subscription based, travel hacking expert services like PointsPros that do the travel hacking for
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consumers. In many of the online articles there are reviews of which card or partner to use in a
given scenario. Along with this information, there are linked advertiser disclosures whose
products / services are highlighted in the advice blog. To the astute consumer this looks and feels
like guerilla marketing and gives skepticism to the legitimacy of advice and expert service.
To fuel the popularity of this consumer behavior are well-publicized travel hackers who give
detailed accounts of their frequent luxury travel via trip reports, social media, and blogs. Pictures
and videos of the lay person enjoying champagne and caviar in a first class seat on their way to
Europe, Asia or Dubai help generate the buzz that keep everyday consumers clamoring for the
best ways to achieve this jet-setter lifestyle.
Coolness Problem
Despite the intricacies of the travel hacking movement, this report will serve as a guide to
understand the coolness problem with Travel Hacking. The reader will learn that the goal of
travel hacking is not to enhance performance or give the allure of unearned wealth. Rather, travel
hacking is about extracting the maximum value through the course of everyday personal
commerce. There are two supportive motives: (1) the desire to obtain system savviness (playing
the game at the most competitive level), and (2) the control of outcomes. The problem with
extracting value is the definition changes from one person to the next. Additionally, rapid
changes in the loyalty industry require a customer to have deep knowledge and experience to
change with it or be left behind, which makes loyalty very hard to come by.
ResearchMethods
Netnography
Ethnography is the study and systematic recording of human cultures. Netnography, my method
of research, is a slight variation of ethnography in that it studies human cultures and behaviors
through the lens of the internet and associated virtual networks. The reason for conducting
research in this way is that it allows the researcher to leverage the breadth and depth of virtual
interactions about a topic. Rather than conducting a simple interview or physically observing
culture, the marketing researcher is allowed the opportunity to observe consumer culture being
shaped in near real-time as it is embedded in the speech of these virtual interactions in an attempt
to understand the attitudes and values of a particular subset of people. While there are advantages
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to traditional ethnography and netnography, the aforementioned coolness problem of travel
hacking is best observed with a netnographic approach as the availability of data and the
prevalence of the consumer behavior is more readily accessible online
Research Tactics
The netnographic process was started by gathering a general sense of which key search terms or
phrases would yield the most unique and predominant themes related to Travel Hacking. Using
generic google search with terms like “Credit Card Points Forum”, “Luxury Travel Credit
Cards”, or “Reward Travel” returned various Blogs and Forums. The term “travel hacking” did
not return many favorable results because of its relative newness and the term “hacking” has a
fairly negative connotation. However, I was able to grasp the emerging trends, what was valued
most by travelers and insights as to how others viewed themselves and others “playing the
loyalty game”. Users of these loyalty programs would describe their personal successes and
failings in the consumer practice and if necessary ask for advice on how to achieve specific
goals.
These forums and blogs also led me to related news articles and videos posted online. Reviewing
recent news publications related to Travel Hacking allowed me to observe the article’s claim
regarding Travel Hacking and then subsequently the open public’s reaction to that viewpoint.
This was very helpful in confirming or disproving my previous theories. Additionally, I reviewed
social media aggregators like Ice Rocket and YouTube to gain visual cues to the elements of the
travel hacking lifestyle. Video and images online gave the previous research much more context.
Finally, I compiled all of my research and leveraged the qualitative research software, Atlas.
This allowed for the organization and codification of common travel hacking themes for
contextual and emic analysis.
Findings
General Insights
Spending a month in London, Paris, and Rome while staying in high end hotels and flying first
class would be a travel aspiration for many people. Luxury Travel was once reserved for those
with superior financial means or those in the middle class with great self-discipline and
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determination to save over many years of employment until one day they would splurge on
themselves to upgrade to a coveted first-class seat. The barrier to experiencing luxury travel
exists no longer with the introduction of the loyalty program.
For many years, the failed (habitually bankrupt) airline industry has resorted to loyalty programs
in an attempt to increase customer brand loyalty, boost bookings and hopefully profits. Airline
partners like American Airlines and Delta have partnered with major credit card providers like
American Express, Chase, or Citi, provide consumer credit cards that provide large sign-up
bonuses in the form of miles and other air travel benefits. Depending on the partnering airline’s
redemption favorability or availability, these credit cards require an annual fee to keep the card
and ability to accrue reward miles via purchases. To enhance card availability, some loyalty
programs entice customers by offering cardholders the ability to transfer “points” for a multitude
of different redemption uses (airfare, hotel accommodations, cash back, etc.), thereby providing
flexibility of choice. Although there are economic implications to luxury travel there are even
greater culture capital requirements.
The Influence of Culture Capital on Travel Hacking Lifestyles
To adopt a concept from (Bernthal, Crockett, and Rose 2005), consumers that compete in areas
of their life to attain a level of status are concerned with fostering high culture capital. In the
report mentioned, consumers with high culture capital rely on the availability of credit cards, due
to limited economic resources, to purchase only items that symbolize they have attained a certain
level of status or lifestyle. It is the acquisition of these consumption markers that makes the
expression of high culture capital possible. Credit cards are simply the method by which they
facilitate this expression. Contrary to economic capital (attainment of financial resources) or
social capital (attainment of relationships and networks), high culture capital fulfillment is
recognized when an individual competes to express with their knowledge, skills and tastes that
they know how to “live the good life”.
Exotic Jetsetter
Sitting comfortably in a private, spacious first-class seat, receiving warm, personalized service
while en route to an international bucket-list destination are components of a lifestyle marker that
signal wealth and sophistication. Only the “rich and famous” are able to achieve this type of
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lifestyle and travel this way. In a travel hacking example, a luxury travel blogger describes his
first Emirates in-flight shower, something unheard of years ago and limited to a privileged few.
So how was it? It was like unlocking a new treasure that you never knew existed. I couldn't stop laughing at
how insane it was. Three years ago,I was stuck in coach hating flying,and now I was taking a shower in
the sky at 40,000 feet for almost nothing.
In this blogger’s mind he has reached this lifestyle now and feels compelled to explain in
elaborate detail the opportunities afforded to him by his this unorthodox method of luxury travel.
Under normal circumstances for the travel blogger, access to this type of luxury on a flight
would not have been possible, but now his travel life has been improved as a result of travel
hacking, which he explains in monetary terms in his trip report:
Tickets can reach up to $20,000 round trip – an astronomical amount that I wouldn't even dream of paying for
a flight. But in the spring of 2015, the aviation gods have smiled upon me and granted me the most insane
round-the-world ticket ever: a $60,000 ticket in Emirates First Class that would take me to 11 cities, 7 countries
and 5 continents… all for $300
Elements of exclusivity and feelings of personalized service are essential to building the lifestyle
and signaling to others that consumption markers linked with a high culture capital lifestyle can
and has been achieved:
The VIP treatment started the moment I stepped into the Melbourne airport.I headed straight to the
Emirates First counter.I then proceeded to the First Class lounge,which was completely empty.
Meanwhile,there was a sea of people in the Economy counter. ... The agent scanned my ticket,looked at
me, and said "Welcome, Mr. *****" with a big Australian smile. The first thing I noticed was the decadent
marble entrance,plastered with greenery to give an illusion that you're not in an airport, but a sanctuary
Something as mundane and chaotic as an airport terminal can seem heavenly, peaceful, and
hassle-free when experiencing luxury travel. He describes the VIP treatment and all that goes
with it: a personalized greeting by name, and beautiful, spacious surroundings relative to the sea
of other airline patrons at a lower status ticket counter. In summary, the travel blogger’s intent
was to capture the readers’ attention and signal that travel hacking can build the lifestyle that
many have only dreamed of.
The Value Maximizer
A far more prevalent consumer group in the travel hacking community has interest in
maximizing the value they receive through their card usage. These users choose to distance
themselves from those that boast to the world they are sipping Dom Perignon on the way to the
Maldives on the cheap. Instead they express their savvy by explaining that despite changes in the
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loyalty marketplace they are able to discern which loyalty programs have the best deals (value)
for consumers and by remaining flexible they are able to power through any roadblock that
comes their way.
(Bernthal, Crockett, and Rose 2005) describe this behavior as Low Culture Capital. In the
credit card comparison, the low culture capital consumer uses credit cards to prevent an
unforeseen future crisis, which eliminates material constraint. The Value Maximizer is also
concerned with removing material constraint, like not having access to the full benefits earned
through committed loyalty. The main focus for Low Culture Capital (LCC) consumers in the
travel hacking community is value extraction and the best methods to do this are shared online.
In the LCC segment of the travel hacking community value is typically communicated in a ratio
language. The ratio language specifically helps users understand the perceived value in terms of
ease of accrual and redemption power. This is very important to the value-centric consumer
group because if a loyalty program gives you twice the amount of points per dollar, but restricts
your redemption award by half relative to other loyalty programs on the market; there is not a
strategic opportunity to use one card over the other. An example can be found in various online
forums:
Not all pointsare the same. Arrival miles are worth 1 cent each, but Ultimate Rewards are worth 2.1 cents
each. Even though you earn twice as many Arrival miles, you're not actually getting more value per dollar
spent. In fact, you're getting way more value from Sapphire Preferred for travel and dining purchases.
Same goes for Amex and Citi points.
Also I think it'simportant to note that Arrival does not give you cash back.It earns miles that can be used
as statement creditstoward eligible travel purchases.
Some value maximizers subscribe to programs that give them a reliable, hard benefit: cash back
or credit card statement credits with no annual fees. Annual fees are generally seen in this
community as a form of investment or fixed cost that typically enhances the value of award
redemption. In this case, the value maximizer has given up all hope on the loyalty programs and
wants a certainty of value with no “gotchas” at the end of the annual cycle:
Forget the airline miles credit cards. Get a good 2% cash back card with no annual fee. Then you have the
freedom to spend your rewards on whatever you want.Airline miles are valued at around a penny or less
per mile and devalue every time they announce "improvements" to their programs.
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Sometimes luxury travel does not work out as originally intended, even for those that subscribe
exclusively to cards that award transfer point flexibility. Here a consumer is frustrated to redeem
his points for something completely unrelated to travel, but is content to receive at least some
value from his loyalty.
I gave up on ever using my United miles fly. Instead, I redeemed the miles for a nice set of knives.Sure, the
pointsI cashed in for those knivesmade the knives expensive,but at least I got something for them and it
was something I wanted
The lack of attractive redemption options makes loyalty hard to come by and instead pushes the
value maximizer to take control over their own outcomes and remove material constraint.
Control of Outcomes
While some users are concerned about value or potential value devaluation, others are concerned
with the flexibility to choose when and how their points give them value. Attractiveness of
loyalty programs is compared with an airline-specific card that awards miles versus a card that
allows points to be transferred to partners:
No matter what this article recommends, it doesn't make any sense to use an airline-specific card since that
restricts redemption to a particularcarrier. Plenty of credit card companies have rewards programs where
accumulated pointscan be swapped for all kinds of merchandise including airline tickets on ANY airline.
Here we get a glimpse into some of the intricacies of the points marketplace. Here loyalty
program valuation is based on the availability of transfer partners. Collecting points or miles
does not benefit the consumer, unless they can use them to get what they want. This can be
defined as a consumer’s desire to exhibit dynamic control over when and where they extract
value out of the marketplace.
Some loyalty programs issue certain spend requirements within a certain time period in order to
obtain points. In other cases, consumers may have to resort to semi-fraudulent activity like
manufactured spending where a consumer sends money around the financial system by
purchasing gift cards with their credit card, depositing the value of those gift cards in their
checking account and then paying off the credit card. Other airlines require consumers fly a
certain amount of miles to retain tiered status so that may receive ancillary benefits like lounge
access and free upgrades. Consumers have been known to participate in what are referred to as
“mileage runs” or the “elite hamster wheel” where consumers intentionally use their miles or
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hard earned cash, to book an international trip for the specific purpose of meeting this
requirement to preserve elite status. Knowledge and execution of these profane strategies
requires system savviness fueled by a desire to control outcomes.
Once the ability to control is gained, it helps define the consumer’s approach going forward and
ultimately shapes their identity. Similarly, in the world of high finance, ethnographers would
attempt to explain how an investor’s desire to manage their own investment portfolios may result
in the investor changing their occupation to become full-time day traders. This is explained
further with the analogy of skydiving, “(Celsi, Rose, and Leigh 1993, p.11)”, a comparably
risky venture like day trading or “playing the loyalty game”. The motive to experience the rush
of free-falling to earth is eventually overcome by the motive to master skydiving. This drive
requires further commitment, strategies, and constant evaluations of performance relative to
peers, thus making the redefining one’s identity with the aid of a supportive community very
important.
New Product Intervention: Travel Hacking Portal & Exchange
Marketplace
Travel Hacking Persona
Travel Hackers leverage unorthodox methods that require very little personal capital to extract
extraordinarily fiscal and cultural benefits in the form of luxury travel. While bragging to friends,
families and fellow virtual hackers about the upper class lifestyles they are able to achieve, a
more prevalent consumer behavior is travel hacking with the purpose of maximizing the value
they receive from loyalty programs. The desire to obtain system savviness and control of
outcomes define this low culture capital consumer group and explain a shift in identify.
Additionally, the support of experts and communities, a common language of expression, and the
ability to form personal strategies based on personal goals allow average consumers to
implement the travel hacking lifestyle and new identity.
Inexact Calculation
One of the more popular and influential blog / forums experts, Brian Kelley, who is also the
founder of ThePointsGuy.com, composes a monthly valuation chart highlighting the perceived
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value of loyalty program points/miles in terms of US dollars along with any pertinent changes to
the programs that might influence his valuation. At the end he provides a disclaimer:
The Calculations
There isn’t a mathematical formula at work here. At some point I’d like to create a system that could
calculate a precise value based on award availability,fees, award levels and ease of accrual,but for now
these valuationsare based on a combination of how much I would pay to buy points if given the
opportunity,and the overall value I could get from redeeming them. I encourage you to share your
thoughtswhere you think I’m off base (and on point,no pun intended),and I’ll take TPG reader feedback
into consideration when I update the list next month. This list doesn’t include every currency under the sun,
and I’ll work to add more moving forward, so let me know which you’d like to see featured.
This disclaimer cites that there is not exact science to loyalty benefit valuation; it is up to what
the reader values. Ultimately, this has inspired my new product intervention that allows the travel
hacker to be in control.
Travel Hacking Portal
Provide an online platform where consumers can use the credit card systems more
purposively and efficiently by starting with a personal goal (travel, cash-back, etc.) and
then empower them to independently design how they accomplish that goal.
1. Users will first select a goal with explicit details (i.e. planning to stay Paris for
two weeks and would like to leave 6 months from now).
2. Then, corresponding accommodation (Hilton, Marriott, etc.) and transportation
(Delta, American Airlines, etc.) solutions would be suggested like a
TripAdvisor.com service.
It is essential that the selections be left up to the user with the ability to
customize and control based upon their preferences.
3. Finally, the tools needed to accomplish the desired goals and offset the costs will
be recommended: a co-branded Citi/American Airlines card, a transfer points
card like Chase Sapphire Preferred, etc. with a prescribed usage (must obtain $4
thousand spend within 3 months).
Points Exchange Marketplace
4. As an additional service, there should be a miles/points exchange marketplace.
This would allow users to interact and discuss rewards but also allow for loyalty
program points to be negotiated (point for point or $ / point) and transferred peer
to peer.
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This solves the problem of points being left unused out in the marketplace.
Furthermore, it would allow users who would prefer to avoid the credit
card game to still save money from those that are savvy enough to
leverage it.
This power-user / user service already exists on sites like
TravelHacking.org and PointsPros.com
Allowing individual consumers in the marketplace to produce their own
price discovery is the highest form of capitalism available and closely
resembles what we see today in our stock markets which have created
enormous wealth for participants.
Savviness and control of market conditions are at the heart of this new online platform
which makes it the perfect solution for this discerning consumer.
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References
1. Bernthal, MatthewJ.; Crockett, David; and Rose, Randall L. (2005), “Credit Cards as Lifestyle
Facilitators,” JOURNAL OF CONSUMER RESEARCH, Inc. (Vol. 32, June 2005)
2. Celsi, Richard L.; Rose, Randall L.; and Leigh, Thomas W (1993), “An Exploration of High-Risk
Leisure Consumption Through Skydiving,” JOURNAL OF CONSUMER RESEARCH, Inc. (Vol.
20, Issue 1, 1993), 11
3. Netnographic Research: Atlas codes report with quotes