Table of Contents
Executive Summary
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- Market overview
- Top takeaways
- The Impact of COVID-19 on frequent travel programs
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- Figure 1: Short-, medium- and longer-term impact of COVID-19 on travel and on FTPs, May 2020
- Acquiring FTP members
- Membership largely determined by age and income
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- Figure 2: FTP membership, by age group, April 2020
- Figure 3: FTP membership, by HHI, April 2020
- Innovating accrual programs is important in acquisition
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- Figure 4: Desired FTP accrual options, April 2020
- Members want travel with loved ones
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- Figure 5: Redemption goals, April 2020
- Retaining FTP members
- Reduced fees and room upgrades keep members going
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- Figure 6: Motivations to achieve next airline FTP tier, April 2020
- Figure 7: Motivations to achieve next hotel FTP tier, April 2020
- Low fees, good service and data security are all important to retention
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- Figure 8: Reasons for leaving an FTP, April 2020
- Members stay when they feel special
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- Figure 9: Attitudes toward exclusivity, April 2020
- What it means/what’s next
Impact of COVID-19 on Frequent Travel Programs
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- Figure 10: Short, medium and longer term impact of COVID-19 on travel and FTPs, June 2020
- Opportunities and Threats
- Short-term threats
- Short-term opportunities
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- Figure 11: Chase grocery bonus email, May 2020
- Medium-term threats
- Medium-term opportunities
- Long-term threats
- Long-term opportunities
- How the COVID-19 crisis will affect key consumer segments
- How a COVID-19 recession will reshape reward travel
- Recession can reduce perceived value of FTPs
- Financial instability can reduce discretionary spending
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- Figure 12: Financial situation self-assessment, June 2020
- Figure 13: Consumer Sentiment Index, January 2007-May 2020
- Necessity increases appeal of cash back
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- Figure 14: Unemployment and underemployment, January 2007-May 2020
- COVID-19: US context
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The Market – What You Need to Know
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- FTP membership is deep, but varied
- Loyalty is difficult to pin down among younger consumers
- Economic indicators are grim
Travel Reward Program Membership
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- Travel providers and credit cards both play a role in loyalty
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- Figure 15: FTP Membership, April 2020
- Figure 16: Credit card FTP membership, April 2020
- FTP membership by select brands
- Frequent flyer programs
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- Figure 17: Brand-specific airline FTP membership, by age, by HHI, Fall 2019
- Hotel loyalty programs
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- Figure 18: Brand-specific hotel FTP membership, by age, by HHI, Fall 2019
Market Perspective
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- Young adults eager to switch, making loyalty a challenge
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- Figure 19: Credit card provider switching, by age group, October 2019
- Showing credit card users the money makes travel less attractive
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- Figure 20: Type of credit card rewards earned, May 2019
Market Factors
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- Unemployment skyrockets
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- Figure 21: Unemployment and underemployment, January 2007-May 2020
- Low consumer confidence likely to persist
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- Figure 22: Consumer Sentiment Index, January 2007-May 2020
- Rising credit card delinquency spells uncertainty for related FTPs
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- Figure 23: Flow into serious delinquency, 90+ days delinquent, quarterly 2005-20
Key Players – What You Need to Know
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- FTP providers are making risky changes
- Programs are struggling with consumer confidence
- COVID-19 causes mixed messaging among providers
- Alternatives to credit are gaining ground
- Post-COVID loyalty is going to be wild
Changes in the Loyalty Landscape
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- Chase
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- Figure 24: Chase Sapphire mortgage offer, September 2019
- United Airlines
- Marriott Bonvoy
- Hyatt
- FTP marketing examples
- Programs are encouraging members to help others
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- Figure 25: Choice Privileges email, April 2020
- Wyndham encourages members to take care in the present and look to the future
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- Figure 26: Wyndham Rewards point buy offer, April 2020
What’s Happening
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- Data breaches threaten loyalty membership
- Gamer crackdown can shore up confidence in providers
- Non-travel rewards are being limited by coronavirus outbreak
- Airlines test loyalty with bonus point awards during pandemic
- Bask shows interest in miles
- Layaway popularity goes up, up and away
What to Watch
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- Experiences can fall out of favor post-pandemic
- Airline loyalty will be turbulent
- Keeping up with travel schedules will cause consternation among consumers
The Consumer – What You Need to Know
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- Age and income are indicators of FTP membership
- Innovation in program offerings lies in accrual
- Fees and poor service drive members away
- Points are for taking a trip, whether one is planned or not
- Air and lodging program advancement differs a little
- Vacations are the goal of accrual
- Exclusivity is important among the youngest members
- Credit card alternatives could threaten acquisition efforts
FTP Members
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- FTP membership is age-dependent
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- Figure 27: FTP membership, by age group, April 2020
- Membership also rises with income
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- Figure 28: FTP membership, by HHI, April 2020
- Parents more likely to belong to FTPs
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- Figure 29: FTP membership, by parental status, April 2020
Desired FTP Features
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- Acquisition has more room for creativity than redemption
- Good financial behavior, partnered shopping are popular accrual mechanisms
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- Figure 30: Desired FTP accrual options, April 2020
- Early access to travel is more appealing than non-travel redemption options
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- Figure 31: Desired FTP redemption options, April 2020
- Think “Millennials” when thinking acquisition
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- Figure 32: Desired earning methods, by age group, April 2020
- High-income consumers can be incentivized to spend
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- Figure 33: Desired FTP features, by HHI, April 2020
Reasons for Leaving an FTP
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- The greatest good is not being bad
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- Figure 34: Reasons for leaving an FTP, April 2020
- Youngest members are unfazed by fees and service . . . for now
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- Figure 35: Reasons for leaving an FTP, by age group, April 2020
- High-end earners are concerned about changing terms, data
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- Figure 36: Reasons for leaving an FTP, by age group, April 2020
Redemption Plans
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- Encouraging family travel aligns members with common goals
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- Figure 37: Redemption goals, April 2020
- Younger FTP members are more goal-oriented
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- Figure 38: Redemption goals, by age group, April 2020
- Multicultural FTP members are the most likely to want add a traveler
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- Figure 39: Redemption goals, by race and gender, April 2020
- Transportation, lodging top redemption goals
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- Figure 40: Rewards spending targets, April 2020
- Younger FTP members exhibit more flexibility in spending goals
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- Figure 41: Rewards spending targets, by age group April 2020
Loyalty Tier Motivations
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- In the air, free is the name of the game
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- Figure 42: Motivations to achieve next airline FTP tier, April 2020
- Room upgrades should be attainable to promote FTP usage
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- Figure 43: Motivations to achieve next hotel FTP tier, April 2020
- Room exists for experiential loyalty tiers
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- Figure 44: Motivations to achieve next hotel FTP tier, by age group, April 2020
Attitudes toward FTPs
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- Vacations are the redemption dream
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- Figure 45: Attitudes toward FTP redemption, April 2020
- Programs may want to move toward experiences for beginners
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- Figure 46: Attitudes toward FTP redemption, by age group, April 2020
- FTP communications should primarily focus on program issues
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- Figure 47: Attitudes toward FTP providers, April 2020
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- Figure 48: Southwest Rapid Rewards email, May 2020
- FTPs play a role in positive PR
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- Figure 49: Attitudes toward FTP providers, April 2020
- The juice needs some squeeze
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- Figure 50: Attitudes toward exclusivity, April 2020
- Age trends reveal the stakes in loyalty
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- Figure 51: Attitudes toward exclusivity, April 2020
- Banking by age group
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- Figure 52: Attitudes toward bank relationships, April 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Consumer
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- Figure 53: Worry over risk of COVID-19 exposure, March-May 2020
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