Table of Contents
Executive Summary
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- Figure 1: Total US travel loyalty program memberships and fan chart forecast (millions), 2010-20
- The issues
- Loyalty programs successfully acquire members, but fail to fully engage them
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- Figure 2: Engagement rate for loyalty program memberships in the US, 2010-14
- Popular programs risk reward dilution
- Average members not getting enough from their rewards programs
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- Figure 3: Attitudes toward travel rewards programs, March 2015
- Comprehensive program changes may lead to member attrition
- Loyalty members may be bargain hunters at heart
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- Figure 4: Commitment to travel rewards programs, by all versus hotel/flight loyalty program members, March 2015
- The opportunities
- Targeting specific audiences can drive engagement
- Transparency and education can help ease program transitions
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- Figure 5: Attitudes toward travel rewards programs and member behaviors, March 2015
- Surprise and delight members with unique redemption opportunities
- Partnerships can expand program reach
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- Figure 6: Preferred types of rewards and rewards redeemed, March 2015
- What it means
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The Market – What You Need to Know
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- Travel programs comprise large segment of overall loyalty market
- Membership grows in all travel segment programs but airlines
- Travel spending drives market
- Domestic travel remains steady; foreign travel growing
- Hotels respond to positive travel outlook
Market Size and Forecast
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- Travel loyalty program memberships predicted to increase
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- Figure 7: Total US travel loyalty program memberships and fan chart forecast (millions), 2010-20
- Figure 8: Total US travel loyalty program memberships and forecast, 2006-20
Market Breakdown
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- Travel programs a major player in the loyalty market
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- Figure 9: Total US loyalty program breakdown by category 2012-14, and active memberships 2010-14
- Airline programs stall in light of recent changes
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- Figure 10: Total US airline loyalty program memberships and fan chart forecast (millions), 2010-20
- Hotel rewards program memberships are growing fast
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- Figure 11: Total US hotel loyalty program memberships and fan chart forecast (millions), 2010-20
- Cruise and rental car programs show robust acquisition
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- Figure 12: Total US cruises and rental cars loyalty program memberships and fan chart forecast (millions), 2010-20
Market Perspective
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- Airline program memberships dip in 2014
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- Figure 13: Frequent flyer program membership, by major US airline, 2009-14
- Drugstore programs exhibit above-average engagement
- Rewards cards dominate new credit accounts
- Travel spending outpaces overall spending growth from 2009-14
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- Figure 14: Total US vacations and tourism market value ($billions), 2009-14
Market Factors
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- Domestic travel remains steady
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- Figure 15: Domestic travel in the last 12 months, 2009-14
- A strong US dollar encourages travel abroad
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- Figure 16: 1 US dollar to 1 Euro exchange rate, weekly, not seasonally adjusted, May 2010-April 2015
- Positive outlook for business travel
- Hotels raise rates in response to heightened demand
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- Figure 17: US hotel occupancy rates, 2004-15
Key Players – What You Need To Know
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- Persistent growth in frequent travel memberships
- OTAs pursue the leisure traveler
- Ease of redemption is key program benefit
- Partnerships provide members more accrual and redemption opportunities
- Major airlines restructure loyalty programs, to members’ dismay
Overview
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- Strong membership growth in travel loyalty programs
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- Figure 18: Frequent travel program memberships, by segment, 2012 versus 2014
- Engagement is key challenge
What’s Working
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- OTA travel sites make it easier for casual travelers to redeem rewards
- Hotel loyalty programs improve satisfaction scores
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- Figure 19: Hilton HHonors loyalty email- earn bonus points through dining, May 2015
- Point aggregators streamline plan management
- Partnerships strengthen program offerings
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- Figure 20: American Airlines loyalty email- earn AAdvantage miles through cruise bookings, May 2015
- Figure 21: United Airlines Mileage Plus loyalty email- earn miles through FTD purchases, May 2015
- AAdvantage and Rapid Rewards boast multiple 2015 Freddie Award wins
- Subprograms target niche segments
Facing Challenges
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- Program rewards diluted by too many elite members
- Changes to airline programs dampen growth
- Loyalty programs vulnerable to hacking
What’s Next
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- Unique rewards provide more value to members
- Universal cards may keep rewards top of mind
- Coalition programs could increase engagement and redemption
- Dynamic prices replace redemption charts
- Programs embrace customer convenience via technology
The Consumer – What You Need to Know
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- The majority of Americans are enrolled in a travel rewards program
- Members prefer discounts to perks
- Email is the desired communication channel
- Program members are likely deal seekers
- A third of program members favor exclusivity
Rewards Program Enrollment
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- More than half of Americans belong to some type of travel rewards program
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- Figure 22: Loyalty rewards program enrollment, March 2015
- Rewards programs popular with 25-34s and high-household-income groups
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- Figure 23: Loyalty rewards program enrollment, by age, March 2015
- Men more likely to be program members
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- Figure 24: Loyalty rewards program enrollment, by gender, March 2015
Rewards Program Member Behaviors
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- Members use rewards programs to reduce travel costs
- Little support for dollar-based accrual of points
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- Figure 25: Attitudes toward travel loyalty rewards programs and member behaviors, March 2015
- Men aged 55+ getting the most out of travel rewards
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- Figure 26: Agreement that points translate to rewards, by gender and age, March 2015
Preferred and Redeemed Rewards
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- More than half of program members interested in flight rewards
- Perks and upgrades remain relevant rewards for members
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- Figure 27: Preferred types of rewards and rewards redeemed, March 2015
- Loyalty members have higher expectations for business travel
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- Figure 28: Very important business travel amenities, by all versus hotel reward members, March 2015
Preferred Engagement Tactics
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- Program members more willing than nonmembers to engage
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- Figure 29: Engagement tactics of travel rewards programs, by all versus hotel/flight loyalty program members, March 2015
Attitudes towards Travel Rewards Programs
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- Loyalty program members aren’t necessarily loyal
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- Figure 30: Attitudes toward travel rewards programs - commitment, by all versus hotel/flight loyalty program members, March 2015
- Privacy concerns and program complexity may deter membership
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- Figure 31: Attitudes toward travel rewards programs – trust, by all versus hotel/flight loyalty program members, March 2015
- Program education and transparency benefits members and nonmembers
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- Figure 32: Attitudes toward travel rewards programs – transparency and understanding, by all versus hotel/flight loyalty program members, March 2015
- One in three program members looking for more exclusivity
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- Figure 33: Attitudes toward travel rewards programs – exclusivity, by all versus hotel/flight loyalty program members, March 2015
Consumer Segmentation
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- Factors
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- Figure 34: Travel loyalty program consumer segments, March 2015
- Segment 1: Unwitting Participant (38%)
- Demographics
- Characteristics
- Opportunity
- Segment 2: Inclusive Traveler (32%)
- Demographics
- Characteristics
- Opportunity
- Segment 3: Loyalty Guru (30%)
- Demographics
- Characteristics
- Opportunity
Appendix – Data Sources and Abbreviations
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- Data sources
- Fan chart forecast
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
Appendix – Market
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- Figure 35: Total US airline loyalty program memberships, 2006-20
- Figure 36: Total US hotel loyalty program memberships, 2006-20
- Figure 37: Total US car rental/cruises loyalty program memberships, 2006-20
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Appendix – Key Players
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- Figure 38: Domestic travel in the last 12 months, November 2009- December 2014
- Figure 39: Enrollment in frequent flyer programs, November 2009- December 2014
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