Evolution of Travel Industry Loyalty Programs
travel guest blog Changes in loyalty programs in the travel industry have brought much debate over the heads of frequent travelers and sometimes frustration for travellers when they travel more than others. The majority of airlines and hotels are changing their programs according to consumer behavior trends, inflation, and overall forces in play, but these moves are not applauded by all the travelers as most of them are claiming the rewards system is no longer accessible to them. As loyalty programs evolve, travelers rethink their relationships with airlines and hotels, in a search for ways to maximize points and miles amidst rising award prices and more complex rules.
Miles to Spending-Based Rewards
Traditionally, most airline loyalty programs awarded travelers on a per-mile basis. For nearly a decade now, however, major airlines have increasingly switched over to spending-based rewards. travel guest blog Delta and United were two of the first U.S. carriers to adopt revenue-based award programs, which most other airlines subsequently did. Points and miles have now largely been awarded by dollar amount flown rather than by distance flown. travel guest blog These changes mean that high-spending customers like business travelers accrue more generous rewards than the budget-conscious traveler who could be flying long distances in less expensive tickets.
This has attempted to boost the loyalty of profitable customers but, in doing so, has alienated some of the leisure travelers. The travel used to accrue points based on miles flown, which currently seems more difficult with some lower-cost flights. travel guest blog More so, spending-based rewards often favor frequent flyers traveling on one airline, hence pushing out travelers who value their preferred price and flexibility over the preferred brand.
But on the other hand, airlines raised the spending threshold for elite status. That made it difficult for travelers to get benefits such as priority boarding, free upgrades, and lounge access. travel guest blog Take, for example, Delta Air Lines, which recently upped its ante with changes to its Medallion Status program. The increases sparked a big public backlash when the spending requirements to earn elite status went up annually. Previously, the requirements for achieving status with Delta were a mixture of miles flown and dollars spent. travel guest blog However, the airline’s new policies place more emphasis on the latter. Travelers may need to pay many thousands more to qualify for the same benefits they have enjoyed in prior years.
Frequent travelers quickly took to social media to express their displeasure over the change, threatening to pull away their loyalty from the airlines altogether. In response to the howls, Delta further moved to ease the impact by allowing more flexibility in the Medallion Status program. The point is that the backlash, however, underscores how sensitive travelers are to changes which affect their ability to earn and maintain elite status. travel guest blog Other airlines, including American Airlines and United, similarly modified their loyalty programs, emphasizing spending over miles, in attempts to reward their most lucrative passengers.
Award Prices Rise with Inflation
Another trend is the rising price of award flights and hotel nights, which parallels the economic impact of inflation. In 2023, airlines including Southwest and United increased points or miles required to reserve a flight. travel guest blog This does push the cost of their rewards usage for customers even further. It has been described by some as “points inflation”: Miles and points aren’t as valuable anymore. For instance, Southwest recently increased award prices by 4% for 2024, while United quietly doled out price hikes ranging over 20% on award flights to popular international destinations.
Neither airlines nor hotel loyalty programs are immune to this issue. Marriott Bonvoy, Hilton Honors, and World of Hyatt, for instance, have lowered the points needed to redeem for free nights at most properties, although still many require more points to achieve that same goal than previously. travel guest blog Increased travel demand after the pandemic and economic pressure contribute to a sharp increase in prices of redemptions, causing many to feel their loyalty program does not have the same value.
Increasing Transparencies and Customization
As requirements are changing from customers, some travel companies seek to make changes concerning transparency and flexibility related to a loyalty program. travel guest blog Some airlines, for example, communicate the award availability or even the redemption rate. In some cases, travel companies introduce dynamic pricing where the prices of awards change with an equilibrium represented by the rates of demand in the market; this can also make it possible to find offers at off-peak traveling times.
Many airlines and hotels are increasing their redemption options to provide consumers with better choices. Some of these options include car rental, dining, and special experiences using miles and points instead of merely flights and hotel reservations. travel guest blog The diversification ensures that consumers can use the rewards based on their own preferences and travel objectives. Customizable rewards also attract younger travelers, who tend to be experience-oriented rather than status tier and upgrade-oriented.
The Rise of Co-Branded Credit Cards and Other Alternative Programs
Co-branded credit cards have emerged as an important part of loyalty programs that enable miles and points on routine purchases. travel guest blog For most travelers, co-branded credit cards remain the only source of earning points and miles since airlines and hotels are increasingly raising qualification thresholds for elite status. Some of the best airline credit card partnerships include Delta with American Express and United with Chase.
Besides the older forms, new alternatives are emerging in the shape of subscription-based travel programs. Companies like TripActions and other corporate travel management platforms offer an alternative to these old points systems. travel guest blog Companies wanting to manage travel expenditures without points will be fascinated by these, and more so business travelers looking at saving money. These developments, of course, show that loyalty in the travel industry is changing, and there grows a need to address a rather diverse crowd of travelers.
Conclusion
KreativanSays:- Loyalty programs have continued to change and evolve, making travel very complex and difficult for many travelers today. travel guest blog Higher spending requirements, increases in award prices, and a greater focus on high-value customers have led some frequent travelers to question the value of the traditional loyalty programs. Many now make decisions regarding staying loyal to an airline or hotel chain based on the flexibility, transparency, and value afforded by the program.
The travel industry’s challenge would be how to balance profitability and customer satisfaction. Loyalty programs can be a real winner in keeping the right customers coming back, but radical or costly changes risk alienating the larger traveler base. travel guest blog Thus, airlines and hotels should be attentive to the changing needs of their customers while providing options and incentives that make loyalty rewarding and accessible to all travelers.
But at the end, flexibility would define loyalty programs. Customizable rewards, greater transparency, and alternative models all give the travel industry a chance to redefine what loyalty really is all about for today’s traveler.