Krisflyer Launches vRooms - Hotels and Cars Await as New Options to Redeem Miles
These are red herrings to avoid
It seems like the team over at Singapore Airlines managing its ever-popular frequent flyer program, Krisflyer, has been hard at work.
Apart from recently announcing new 'enhancements' to a co-branded banking product; Krisflyer now has programs like its monthly 'Spontaneous Escapes', and has local rideshare company, Grab as a partner. The frequent flyer program was also the first in the world to announce its intention to implement blockchain technology for its members.
Earlier today, the Krisflyer team sent out a mailer announcing the launch of vRooms, which allows fliers to now redeem their hard-earned miles for hotel stays and car rentals. This augments existing efforts by the Singapore Airlines Group carriers who have already have had long-standing partnerships with car rental companies and hotel chains. However, these were offered to the passenger only in the form of deals, payable only in cash.
It's great that Singapore Airlines is widening avenues for fliers to redeem their miles. However, upon analysis, we think that these new options offer little value, especially when there are better options (read: fancy First and Business class seats) available.
Krisflyer vRooms - Hotels
As mentioned, vRooms offers hotel deals to Krisflyer members much like what an online travel agency (Expedia, Booking.com and the like) does. The catch here is that members can offset the price of hotel stays with their miles. Considering that Krisflyer already partners platforms like Kaligo, Rocketmiles and Agoda, this is quite an interesting move by Singapore Airlines.
In any case, we did a test booking for a 'Krisflyer vRooms' hotel in Tokyo during the busy September holidays. Here's what we found.
The immediate options presented to us were either a) a booking full paid with miles or b) a mixed miles-cash alternative. For the latter, vRooms offers various cash/miles redemption options. For example, the least miles-intensive option would be the advertised $190 + 800 miles while a miles-heavy one would look like $76.22 + 15,100 miles. These are per night rates.
How do we judge the value of this proposition?
For this example, we took the displayed room rates to mean that vRooms believes that 23,800 miles should be roughly equal to $190. With that in mind, a stay with vRooms should yield about 0.8 cents per mile in value. This is a horrible value proposition as we've calculated that miles spent on redeeming business class tickets on flights within the SQ network will usually net you about 4 cents per mile.*
And while this is an extremely unscientific study with a sample size of one, a quick due-diligence check with Agoda should reveal what the elephant in the rooms looks like. Furthermore, note that the small 800 miles advertised in the cash-miles option are chargeable on a nightly basis which means that a 6-night stay would run you 4,900 miles. Bookings with vRooms will also not allow you to accrue any points/elite credits with the hotel's loyalty program (if applicable) since vRooms is considered as an OTA and hence, you're not booking directly.
*Based on a roundtrip Business Class ticket on SQ to Osaka going for $3266 or 86,000 miles. This redemption yields an effective value of 4.26 cents per mile.
That being said, if KrisFlyer vRooms is able to offer you a hotel room at a significantly cheaper price + a small number of miles; compared to any prices you can find elsewhere online, you’re in for a sweet deal.
For example, if Agoda were to offer me a price of $266 instead, those 800 miles that distinguish the vRooms price of $190 with the Agoda $266 would be valued at 9.5 cents per mile instead. Thus, a KrisFlyer vRooms booking that values miles higher than the 4 cpm of premium cabin redemptions can be considered to be 'worthwhile' even though these scenarios may be few and far in between.
Also take note that in such scenarios, booking with the least number of miles (in a cash + miles redemption) will be your best option as the marginal 0.8 cpm factor will begin to kick in once you start reducing your cash outlay for a miles one. From our previous example, this means that your 9.5 cpm redemption will start to dwindle in value.
Krisflyer vRooms - Rental Cars
With rental car bookings, Krisflyer vRooms tells a similar tale.
A dummy booking for a 'Krisflyer vRooms' car in Los Angeles yielded a daily rate of 6,300 miles or $49 + 300 miles. After some quick maths, we've calculated that the same redemption value of about 0.8 cents per mile applies for rental car bookings. And although we're not experts on car rentals, we think that there are probably better platforms to score deals on rentals. Or just take a train and an Uber.
That being said, we do concede that this 0.8 cents per mile redemption value probably isn't a hard and fast rule especially since we've only compared two redemption options. That being said, it's a fool wager to think that redeeming hotels and cars could ever reach a rate comparable to the (comparatively) high 4 cents per mile rate offered by redeeming Business Class tickets.
Though the same principles of finding a cheaper rate on KrisFlyer vRooms (from the previous section) also applies here, this is even less likely for the rental cars situation considering that the market is largely dominated by a few huge companies.
No Thank You, We Prefer to Fly in Style Instead
The ability to use miles to pay for hotels and rental cars is not a new concept. Other frequent flier programs around the world already have mechanisms that allow their loyal fliers to use their miles for various types of purchases. For example, one can pay for meals and beverages with their United MileagePlus miles in the comfort of the terminal while waiting for a flight. How innovative.
Nevertheless, the overwhelming consensus regarding this is negative as the value propositions (on a cents per mile basis) of redeeming miles for retail goods travel related services are anaemic at best.
Hence, we can't recommend vRooms to Krisflyer members especially with the award-winning quality of Singapore Airlines' in flight products.