If you read this site, you know in which direction I lean. I believe most frequent flier and stayer programs unnecessarily divide us into castes, compel us to make mindless purchases, and encourage arrogant, entitled behavior.
So when David Chen recently asked me if he should pay for miles, my immediate and reflexive answer was: Probably not.
This feature is called Is This a Scam, so you know what’s coming next, don’t you?
Maybe I’m being too hasty, I thought. Chen’s question deserves a fair hearing. So here we are.
Chen recently signed up for a Rocketmiles.com account through a targeted e-mail from United Mileage Plus. Rocketmiles allows frequent fliers to earn “previously unheard of quantities of loyalty program miles and points” when booking rooms at high-quality hotels, according to the site. The company promised that by using Rocketmiles, Chen could earn 1,000 or more “free” United Mileage Plus points per reservation.
“After receiving the sign-up confirmation e-mail, I proceeded to Rocketmiles.com and made a booking for a late January one-night stay,” says Chen. “The rate of $179 was shown and the price was the same as available on Kayak.com, Hotels.com or Booking.com, so I went ahead and made the reservation through Rocketmiles.com, expecting to receive 1,000 loyalty points upon completion of travel.
What Chen didn’t expect was that his credit card would immediately be charged $220, an amount that included taxes and “fees.”
“That $41 additional amount seemed kind of high, and sure enough, it works out to be a 23 percent surcharge on the $179 quoted room rate,” says Chen. “A bit of sleuthing determined that the official hotel and sales tax rate for that area is a combined 11.2 percent, or 11.8 percent less than Rocketmiles was charging.”
So he wondered: Is Rocketmiles inflating the taxes and fees to cover the cost of the loyalty points? He asked. Here’s Rocketmiles’ response:
We purchase our rooms at pre-negotiated, discounted rates, and then sell them at competitive market value on our site. The taxes and fees include local taxes as well as any applicable booking fees, and we do not have an itemized breakdown.
We understand that we may not have the lowest price for this particular trip, but hopefully the mileage reward still makes us a good value for you, or if not on this trip, keep us in mind for future travel needs.
Chen doesn’t buy it.
“In effect, they’re saying, ‘Sorry for charging you more, but we hope the mileage reward makes up for the difference,'” he says. “Except that they’re charging an additional 11.8 percent for those mileage rewards, which means they’re not really rewards.”
Chen canceled his reservation and made a new reservation with Booking.com, which didn’t include the 11.8 percent surcharge. But he wants to know if this inflated rate is a scam, and I think it’s an interesting question.
If a business discloses a rate before you click the “book” button, it’s not a scam. But this mysterious 11.8 percent surcharge sure does look suspicious to me. Maybe it doesn’t rise to the level of a full-fledged scam, but some of you, dear readers, will probably find it a little scammy.
We’ve always known that frequent flier and frequent stayer points are not “free.” A business raises prices to cover the cost of the points, as Rocketmiles seems to be doing in this case. It’s really up to you, the consumer, to say whether paying 11.8 percent more for a hotel room is worth it. Are the miles worth the markup?
Some of you might say yes, they are — and, of course, you are free to do business with whatever company you choose. I can’t save you from yourself.
But others see the problem with this system and know what I already do: that there are more losers than winners when it comes to loyalty programs.
Like me, maybe they simply refuse to play a game where the rules are rigged to favor the business and can be changed at any time, for any reason. Smart choice.