Let’s face it. Among the hardest hit of all pandemic-affected economies, the travel industry continues to endure unimaginable financial losses. According to a McKinsey report, available seat miles on US airlines were down 71% in April 2020 from the previous year. Hotels worldwide were operating at 29% compared to 2019’s occupancy rates of 72%. In 2019 (try to remember), according to the World Tourism Organization, the urge to explore our planet internationally drove 1.4 billion individuals to travel abroad.
Now, most people have spent a year reminiscing about past vacations or contemplating when their next one might happen. And for the most avid travelers engaged in airline, credit card, and hotel loyalty programs, 2020 provided extremely limited opportunities to maintain status, earn points, or redeem travel rewards. To address this vacuum, leading travel brands have revamped their loyalty programs, shifting away from spend-and-get models toward personalized value-based loyalty programs.
Travel loyalty reimagined
Travel loyalty programs matter to consumers, and so do their responses to the pandemic. A survey by Data Axle finds that most consumers (83%) say that receiving loyalty rewards influences their decision to patronize a travel or hospitality brand. For decades, travel companies zeroed in on experiential and aspirational marketing campaigns, but now, that experience requires an honest indication that safety, mediation, and consistent attention to customer welfare have become the new normal. A study by Deloitte finds that 40% of consumers say they will purchase more in the future from brands that responded well to the crisis. The ideal response should take on many forms of customer communication, follow-through, and improvements to the experience.
Let’s take a look at how some airlines, hotels, and travel credit card companies are transforming their loyalty programs to provide additional value and keep members engaged until normal travel resumes.
1. Acting on customer loyalty data
Data Axle’s survey indicates that consumers loyal to travel brands want more personalized experiences from them. 44% of customers say they’d prefer brands to send them communications informed by their past behavior, while 29% say they’d like to see more messaging based on their demographic information.
Airlines, hotels, and travel credit cards do well by leveraging insights from loyalty program data. For example, brands can serve up relevant promotions and content by combining point balance and reward redemption history with trip history data, which gets the right message to the right audience each time. Demonstrating an understanding of your customers’ preferences, providing personalized recommendations, and making it easier for them to plan their next vacation will not only earn a share of wallet but a share of mind.
2. Providing greater flexibility and freedom
An obvious benefit to travelers in the new normal comes with the flexibility to change plans. This kind of choice resonates in these times as much as price, value, or even brand might have in the recent past. The McKinsey report affirms, in a “time of great uncertainty and fluid demand, it will be more important than ever to listen to travelers and understand their rapidly evolving needs. The companies that thrive after this crisis will likely be those that work with travelers and employees to co-create distinctive solutions in a rapid and agile manner, that find new ways to enable choice across the customer experience, and that communicate progress in an authentic and transparent way.”
Forbes reveals in great detail the plans some hotels and airlines have in store for returning travelers, reflecting a clear understanding of what consumers might expect. For example, Qatar Airways is “extending or giving back status to all members with status set to expire before Jan 31, 2021. The status will be extended for an additional year.” Other airlines will extend more perks and bonuses and remove qualifications for other benefits. Major hotel chains, such as Hyatt and Radisson, will also cancel the expiration of plans and member benefits so travelers will not miss out on rewards earned before the pandemic.
3. Offering additional ways to earn and redeem loyalty points and perks
Brands should fine tune their retention and loyalty strategies to provide more ways for members to enjoy the benefits of belonging to a loyalty program during times of limited travel.
Credit card rewards applied toward travel have been around forever, but the pandemic has ushered in a new way for members to earn and redeem rewards; for example, Delta Airlines rewards miles for purchases at select grocery stores. Some airlines, such as Delta and United, encourage their members to donate mileage to good causes instead of redeeming them, reflecting a global trend of greater social awareness and human rights. These tactics not only provide more value to members, but also provide brands with additional insight to power personalized experiences.
The future of loyalty for travel brands
If you read the headlines and in-between them, everyone is looking forward to a broad reawakening in the travel industry on the not-too-distant horizon thanks to a series of new vaccines combined with some semblance of a functioning economy. From adversity comes new ways of approaching and overcoming challenges, even if target solutions may shift and pivot to reflect real world conditions.
Any brand, marketer, or advertiser that ignores an audience waiting in place does so at their own peril. Loyalty programs remain valuable to travel brands and consumers alike if steps are taken to rethink the strategy, re-engage members, and reimagine the future of loyalty.