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(UPDATE 10/4 – thought this was worth rerunning given the recent fiasco with the Dosh / CVS deal from earlier this week. It was first announced, then limited to $20 / day and excluded gift cards, then limited again to $5 / day. Anyone with any sense could have figured out this was going to end up EXACTLY how it did…)
Multiple stories in the past couple weeks have highlighted how quickly people figure out a way to exploit “the system”, whether that is a promotion or other deal that a company offers. It surprises me that in the age of big data that this still happens. Yet it does. Many times, it seems, companies don’t vet their promotions thoroughly enough. They need to operate with the assumption that someone will find a loophole and spread it like wildfire across the internet, and to therefore guard against all possible loopholes.
The Iberia debacle
Unless you were living away from all civilization for two weeks, you surely heard about the Iberia “promo of the year“. The Spanish airline offered a promotion of 9,000 bonus Avios on flights, but with one unexpected twist: the points would be awarded 10 days after booking. Not after flying. And it would apply on up to 10 tickets. The promotional Avios can be used up until December 1.
This meant that many people were able to book 10 cheap one-ways and qualify for 90,000 promotional Avios for as little as $250 or so. If you don’t know the value of Avios, this is insane value. We’re talking nearly enough for a one-way flight in Cathay Pacific first-class from Hong Kong to London. For $250.
Today we’ve seen the first of the Avios post. But we’ve also heard about numerous reports of people’s accounts being locked, and some where Iberia is indicating that the terms of the promotion were violated and the tickets would be refunded. Some of the time Iberia has reached out for identity verification. As they start to send out more and more Avios to people, I really don’t expect things to get much better. At least they appear to be honoring those with established accounts who took the promotion at face value. Burn those Avios fast. I wouldn’t expect to see much Oneworld award space in the next few months.
The Chinese restaurant that was eaten out of business
I just came across this story today and I love it. It is such a great comparison to the award travel community and how we can operate. Just like those who exploited the generous terms of the Avios promotion, lots of people exploited this restaurant’s generous offer.
The news article details how a restaurant in Chengdu, China went from launching a phenomenal promotional deal to shuttering its door within two weeks. How? Someone in management decided to sell monthly all-you-can-eat passes for the insanely cheap price of ~$25 USD. During the two weeks, the Chinese hot pot eatery was seeing over 500 patrons per day, often in a giant queue out the doors. Besides already being an unsustainable offer at $25 for a month’s worth of restaurant food, many patrons were obviously sharing their purchased card with friends and family.
The restaurant closed over $100,000 in debt. It had been in business 18 months.
What boggles my mind is how no one at the restaurant realized how terrible of an idea this was. It also boggles my mind how companies don’t vet their promos with a miles and points guru who can point out any potential for exploitation or major financial loss.
And then there is MoviePass
Don’t get me started on this one. I have friends who have MoviePass, and they are putting it to fantastic use. They are also putting up with MoviePass changing its terms on a whim, which has gotten worse and worse as times goes on.
When MoviePass launched, it was pretty much the best deal ever for cinema-goers. At one point you could pay $90 per year for one movie per day. There were other, likewise amazing, deals offered by the company. When something is too good to be true, it probably is. And this is too good to be true for moviegoers. I don’t see a sustainable future for this company. People who would not have gone to the movies more than once or twice per month are suddenly going as much as they like. They want to get their “money’s worth” out of their pass. And MoviePass is on the hook for every ticket.
MoviePass has since added things like “surge pricing” for popular movies, and limiting people to seeing a specific movie one time. MoviePass offered a limited subscription as well of something like 3 or 4 movies per month. Even with these changes, the company has millions of subscribers who may a mere $10 per month in most cases. There is no way that this is sustainable. The company is like one giant promotion for moviegoers that will one day fizzle into nothing.
MoviePass’ parent company is looking to borrow over $1 billion to keep it afloat. It still has cash reserves and a line of credit, but the company is bleeding $22 million monthly. I have no idea how this is a sustainable model, but their CEO seems to think that somehow they will pull it off. Whatever “it” is.
While I am definitely one to get excited about a stellar, too-good-to-be-true promotion or deal, I am also one to be a bit skeptical. And for good reason. Companies sometimes roll out ill-informed promotions (or they are just an poorly-conceived idea, like MoviePass), and have to figure out a way to limit their losses. In the case of the Iberia promotion, I hope everyone gets their Avios.