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Frequent Travel Programs - US - June 2015

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
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
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
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
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
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
Figure 6: Preferred types of rewards and rewards redeemed, March 2015
What it means
THE MARKET – WHAT YOU NEED TO KNOW
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
Travel loyalty program memberships predicted to increase
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
Travel programs a major player in the loyalty market
Figure 9: Total US loyalty program breakdown by category 2012-14, and active memberships 2010-14
Airline programs stall in light of recent changes
Figure 10: Total US airline loyalty program memberships and fan chart forecast (millions), 2010-20
Hotel rewards program memberships are growing fast
Figure 11: Total US hotel loyalty program memberships and fan chart forecast (millions), 2010-20
Cruise and rental car programs show robust acquisition
Figure 12: Total US cruises and rental cars loyalty program memberships and fan chart forecast (millions), 2010-20
MARKET PERSPECTIVE
Airline program memberships dip in 2014
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
Figure 14: Total US vacations and tourism market value ($billions), 2009-14
MARKET FACTORS
Domestic travel remains steady
Figure 15: Domestic travel in the last 12 months, 2009-14
A strong US dollar encourages travel abroad
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
Figure 17: US hotel occupancy rates, 2004-15
KEY PLAYERS – WHAT YOU NEED TO KNOW
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
Strong membership growth in travel loyalty programs
Figure 18: Frequent travel program memberships, by segment, 2012 versus 2014
Engagement is key challenge
WHAT’S WORKING
OTA travel sites make it easier for casual travelers to redeem rewards
Hotel loyalty programs improve satisfaction scores
Figure 19: Hilton HHonors loyalty email- earn bonus points through dining, May 2015
Point aggregators streamline plan management
Partnerships strengthen program offerings
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
Program rewards diluted by too many elite members
Changes to airline programs dampen growth
Loyalty programs vulnerable to hacking
WHAT’S NEXT
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
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
More than half of Americans belong to some type of travel rewards program
Figure 22: Loyalty rewards program enrollment, March 2015
Rewards programs popular with 25-34s and high-household-income groups
Figure 23: Loyalty rewards program enrollment, by age, March 2015
Men more likely to be program members
Figure 24: Loyalty rewards program enrollment, by gender, March 2015
REWARDS PROGRAM MEMBER BEHAVIORS
Members use rewards programs to reduce travel costs
Little support for dollar-based accrual of points
Figure 25: Attitudes toward travel loyalty rewards programs and member behaviors, March 2015
Men aged 55+ getting the most out of travel rewards
Figure 26: Agreement that points translate to rewards, by gender and age, March 2015
PREFERRED AND REDEEMED REWARDS
More than half of program members interested in flight rewards
Perks and upgrades remain relevant rewards for members
Figure 27: Preferred types of rewards and rewards redeemed, March 2015
Loyalty members have higher expectations for business travel
Figure 28: Very important business travel amenities, by all versus hotel reward members, March 2015
PREFERRED ENGAGEMENT TACTICS
Program members more willing than nonmembers to engage
Figure 29: Engagement tactics of travel rewards programs, by all versus hotel/flight loyalty program members, March 2015
ATTITUDES TOWARDS TRAVEL REWARDS PROGRAMS
Loyalty program members aren’t necessarily loyal
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
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
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
Figure 33: Attitudes toward travel rewards programs – exclusivity, by all versus hotel/flight loyalty program members, March 2015
CONSUMER SEGMENTATION
Factors
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
Data sources
Fan chart forecast
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
APPENDIX – MARKET
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
APPENDIX – KEY PLAYERS
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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