Heels First Travel reports that Expedia Rewards is changing its points earning structure.

They are doubling points earning for hotels and dropping points earning on airfare from 1 point per $2 (it used to be 1 point per dollar) down to 1 point per $5.

Personally I used Expedia only for airfare, since I care about getting elite benefits on stays (many chains like Hilton and Starwood won’t honor those if booking through an online travel agent) and I care about earning points and stay credit (the rest of the chains won’t award that).

• What’s striking is that the changes have gone into effect immediately, with no advance notice whatsoever.

• And that this isn’t the first devaluation the program has made with no notice — and the program is only two years old!

The program launched at the end of January 2011 but they didn’t tell you much about it at the time, including what in the world you could do with the points.

Two months later they revealed their award chart. The more points you earned, the more those points were worth.

Most relevant for me, you earned 1 point per dollar on airfare spend and those points were worth up to 2 cents apiece — so effectively up to a 2% rebate on airfare spend (plus rebates from going to Expedia via a shopping portal). Expedia became my booking engine of choice.

Then a mere 8 months later they reduced earning on airfare to 1 point per $2 spent and reduced the value of smaller stashes of points. The sweet spot was still redeeming 50,000 points for $1000 in a hotel stay.

Hotels are far more lucrative for online travel agencies to sell than airfare is. On certain hotels, that provide the greatest rewards and they offer the highest value rebates towards they may be getting 25% or more of your room rate as a commission. Airfare margins are small.

But this isn’t news to Expedia, and they thought they could make the economics work with the program they rolled out two years ago, and with the no notice changes announced some months after that.

Personally I have over 40,000 points saved up and was hoping to redeem at the 50,000 point level. 37,000 points is worth $400 while 50,000 points is worth $1000. Now it’ll take over $40,000 in additional airfare spend to get there, which means I may not even try.

Ironically, the increased earning for hotel spend may mean that I make use of Expedia for hotels on a very short-term basis. I need 8000 points to generate an additional $600 in rebate value for my account balance. That would be $4000 in hotel spend, meaning I’d effectively get a 15% rebate plus the value of points for going through a shopping portal. I’d give up points earning, but since I’ve already re-qualified for the hotel status I plan to keep next year this could make sense (especially for Marriott and Hyatt stays where they’ll honor elite benefits on Expedia bookings even though those bookings don’t count towards requalifying for status).

Perhaps I’m a little bit unfair to Expedia here. They did warn of unspecified changes to come in 2013.

Their announcement back in January even used my absolute least favorite word when referring to any loyalty program: enhance. I have never seen anything positive correlate with the use of that word.

Memo to all loyalty marketing executives — whenever you actually do something positive, don’t call it an ‘enhancement’ because we won’t believe you — the word has been so abused by your colleagues to mask “taking away the things you care about most.”

They said they were going to ‘re-imagine’ the program. And they have. Their imagination has turned it into a bad dream.

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