Frequent Surprises

By Laura Koss-Feder

Steve Graham, a lifelong R.-and-B. fan, had a fantasy: to spend time with the legendary B.B. King. The Minneapolis-based business-development manager for electronics manufacturer Avnet thought he had about as much chance of doing that as he had of becoming Governor of Minnesota. Until last New Year's Eve, that is, when Graham, 49, and his wife Janet plunked themselves down beside King following a concert in Indian Wells, Calif. The couple spent 45 minutes chatting with the blues great, whose work Graham has adored for nearly 20 years. Along with the cherished face time, the Grahams also got round-trip airfare to California, hotel accommodations and tickets to the concert.

How do you get a deal like that?

Steve Graham got his by cashing in 270,000 of his 500,000 Northwest Airlines frequent-flyer miles and bidding for the prize package at a special auction organized by Northwest. "You can always use your airline miles for a trip to a great place like Fiji or London," says Graham, who travels once a week on business, accumulates about 100,000 miles annually and at one point had 1.5 million miles in his Northwest account. "But meeting B.B. King was the kind of unique, special experience that you just don't associate with an airline program."

Debbie Hare, 40, director of administration at Hare Express, a Troy, Mich, trucking company, knows just how Graham feels. Last June she and her husband Ross, the firm's president, cashed in about 400,000 of their 2 million Northwest miles at a similar auction for the chance to build homes for the poor in rural Kentucky. Their partners on this Habitat for Humanity International project were Jimmy and Rosalynn Carter. "How often do you get to swing a hammer and help change someone's life, while being in the company of a former President and First Lady?" Hare asks.

Then there's the one about Denver architect William Elkjer, 57, who always wanted to launch himself on an adventure he would remember forever. In April, he and his wife Candy took an eight-day, professionally led dogsled trip across 180 miles of Alaska. Elkjer cashed in all of his Diners Club points--500,000 of them--to take the plunge. "I had been saving these points for years for something special," Elkjer says. "This was really an event of a lifetime."

This could be the golden age of business travel, especially for those who are rolling up bonus travel miles. Airlines, hotels and credit-card companies are trying to outdo one another in their quest to grab a bigger share of the 57 million people in the U.S. who belong to bonus-reward programs. These business travelers ring up a staggering 500 billion points and miles annually--more than the airlines, rental-car companies and hotel chains can accommodate without cutting off their paying customers. Hotel rooms and airline seats are increasingly--and exasperatingly--scarce during peak travel times, which makes it harder and harder for travelers to redeem their points in the traditional fashion, even though such offerings are still the bread and butter of frequent-travel programs. With the average travel-frequency program costing $25 million to maintain, travel suppliers know they had better offer alternatives to their members, who may be shut out of award redemptions during popular travel seasons. So the trick is to find other ways to meet their obligations.

Especially for those who rack up major miles, the new rewards can be as rich as the marketer's imagination will allow. No longer measured merely in terms of upgrades to first class and discounts on hotel rooms, rewards now come in the form of highly orchestrated fantasies, charitable works and gobs of expensive merchandise. "It's a great time to be a member of these programs," says Randy Petersen, editor and publisher of InsideFlyer magazine, a monthly industry publication. Petersen, the foremost expert on frequent-flyer programs, has been analyzing and publishing information about these programs for the past 12 years. "There's more out there to earn than just free airline tickets," says Petersen, who earns close to a million miles annually from the 50 to 70 business trips he takes each year. "It's almost anything you can think of, as long as it's legal and doable."

One of the industry's most doable and popular methods of providing rewards is to co-brand a credit card with a noncompeting company. This technique lets you earn miles and points from everyday purchases made without ever fastening an airplane seat belt. Delta Air Lines awards you 300 miles with every floral purchase of $29.99 or more from the Flower Club. American Airlines gives 5 miles for every $1 spent with phone company MCI. United Airlines even gives you a housewarming gift: 1,000 miles for every $10,000 borrowed through specified mortgage brokers. "I can get miles by using my Bell Atlantic cell phone and making calls using MCI. What a concept!" says Ira Birns, 35, assistant treasurer with Arrow Electronics in Melville, N.Y. Birns has about 800,000 miles through his memberships in the AAdvantage and Marriott Rewards frequent-traveler programs.

Some of the most outrageous rewards go to the best customers of charge-card programs. In addition to restaurant gift certificates, savings bonds, donations to charities and about 200 different kinds of merchandise, Diners Club lets you customize your redemptions, says Walter Sanders, vice president of corporate affairs. Members with 100,000 points or more--accumulated on the basis of Club Rewards points for every Diners Club charge dollar--can buy such goodies as a Harley-Davidson motorcycle, a two-bedroom apartment in London or part of the cost of a liposuction procedure, says Sanders. One member used 187,899 points to pay for a memorial headstone for her husband, who passed away last year. A businesswoman in Dayton, Ohio, who requested anonymity, cashed in 1.5 million points to pay for her daughter's bat mitzvah in Israel and took 13 members of her immediate family on a week's tour of the country.

Jim and Joanne McAvoy of Alexandria, Va., traded in 130,000 Club Rewards points to give their son Michael, 13, a unique birthday present. In August he will take part in a special five-day space-camp program sponsored by NASA. At one point, he will be put behind the controls of a small two-person propeller plane for 30 minutes and will receive credit toward a private pilot's license. "Our son wants to be a pilot someday, and he is just so excited about taking part in this," says Joanne McAvoy. "I never would have thought you could do something so different through a charge-card program."

The airlines are not far behind. American, Delta, Northwest and other major carriers will arrange for you to give 5,000- and 10,000-mile increments to such charities as the Make-A-Wish Foundation, the United Way of America and the Pediatric AIDS Foundation. Lufthansa's Miles & More program lets you trade in 125,000 miles for a hot-air-balloon ride for as many as four people. Virgin Atlantic Airways offers a two-day parachuting course in exchange for 30,000 miles.

Then there are the auction items like the one Steve Graham successfully bid for. Participants can attend in person or phone in or write in their bids ahead of time. Hotel companies offer auctions as well, but InsideFlyer's Petersen says the airline auctions tend to have sexier awards. Take Northwest's: since 1996, WorldPerks, the frequent-flyer program of the airline, based in Minneapolis, Minn., has conducted three bidding sessions--in Detroit, Minneapolis and at Sotheby's in New York City. No minimum bids are required, and the proceedings are open to any of WorldPerks' approximately 17 million members worldwide. Some of the 25,000 people who have taken part have won goodies like tickets to the Grammy Awards, private cooking lessons in Paris with world-renowned chefs and an escorted trip to a Cape Canaveral launch, according to Susan Edberg, director of WorldPerks marketing.

If none of those appeal, how about a ride in the cockpit of a Concorde flight simulator? British Airways has offered its Executive Club members that experience at auction in exchange for 143,500 miles, says Elizabeth Weisser, director of Executive Club and its various partnerships. Other auction awards have included an African safari, a five-day cooking course with master chefs in Italy and a golf outing in Scotland. "People want experiences that are unique and different," Weisser says.

Delta holds similar auctions about four times a year. Prizes have included tickets and travel packages to the 1996 Centennial Olympic Games in Atlanta and tickets to the 1995 Super Bowl in Miami.

Hotel companies also provide a mix of unusual nontravel rewards. Best Western International's 10-year-old Gold Crown Club International program gives its members 3 points for every $1 spent at a Best Western hotel. The points can be redeemed for everything from groceries to savings bonds to movie passes. Points can also be exchanged for gift certificates at major retailers like Home Depot, Macy's and the Sharper Image. "With enough points, you can go to Home Depot and redo your whole kitchen," says Wayne Wielgus, vice president of worldwide marketing and sales for Best Western. "Our members love these kinds of options."

Not to be outdone, Hilton Hotels as of May is allowing members of its HHonors Worldwide program to trade in 600,000 points for a one-carat-diamond engagement ring. For those who still want to travel but are looking for something different, Marriott Rewards and Hyatt Hotels Gold Passport programs offer cruises to a host of exotic destinations for top members. Hilton counters with a six-night safari for two in Kenya, at a cost of 250,000 HHonors Worldwide points. "It's those different, unanticipated awards that are so meaningful to our members," says Jeff Diskin, president and chief operating officer of HHonors, which provides 10 points for every $1 spent at a Hilton property.

Even if you don't have megapoints in your hotel account, you can still cash in. Hilton will give you a tin of Mrs. Fields cookies for a mere 12,500 points, which you can earn on as little as a five- or six-night stay at one of the chain's hotels. Holiday Inn offers a mountain bike for 3,200 points through its Priority Club Worldwide. Created in 1981, Priority Club is the granddaddy of the hotel frequent-guest programs. Such off-line rewards have their appeal. "For some business travelers, the last thing they may want to do in their free time is spend another night in a hotel," says Don Schmitt, vice president of relationship marketing for Holiday Inn.

"Our customers' appetite for rewards is unending and insatiable," says Rob Rosenblatt, vice president of consumer marketing for American Express, which offers co-branded credit cards as well as its own rewards program for card members. Steve Graham can vouch for that. Besides his photos with B.B. King, an autographed jazz-festival program and the memory of a lifetime, he still has more than 200,000 miles left in his Northwest account--and more dreams he wants to chase. "Who knows, maybe I'll get to go to Italy and cook with a famous chef, or even meet a great rock-'n'-roll star at some point," Graham says. "The possibilities for future experiences are just endless." Or at least they stretch on for a few million travel miles.