Travel Loyalty Programs - US - July 2005

INTRODUCTION AND ABBREVIATIONS
Introduction
Other relevant reports
Airlines—UK, Leisure Intelligence, June 2005
Definition
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Loyalty points multiply as consumers enjoy new ways to stockpile
Loyalty programs become a commodity—are they all one in the same?
Opportunity for loyalty program membership growth remains
Airline industry remains unstable
Discount airlines cause turbulence
Loyalty programs of major carriers favored among majority
Younger consumers drawn to discount carrier loyalty programs
Treat me special: individualism reigns
Travel industry showing gains
The new face of business travel
Red tape generates customer frustration
Convenience becomes key ‘soft perk’ for loyalty program members
Internet gives an edge to consumers
Future of loyalty programs
MARKET FACTORS
 OVERALL TRAVEL TRENDS
Figure 1: Travel expenditures in the U.S., at current and constant prices, 2000-05
Figure 2: Graph: Travel expenditures in the U.S., at current and constant prices, 2000-05
Trends in length of stay
 BUSINESS VS LEISURE TRAVEL
Business travel
Companies: “What’s in it for us?”
Catering to business travelers
Small business travelers targeted
Leisure travel
Leisure needs differ by generation
 MAJOR TRAVEL LOYALTY SECTORS
Air travel
Introduction
Market size and overall trends
Figure 3: Total U.S. scheduled airline passenger revenue, at current and constant prices, 1999-2004
Figure 4: Graph: Total U.S. scheduled airline passenger revenue, at current and constant prices, 1999-2004
Air travel and loyalty programs
Customer satisfaction with the airline industry
Concern about stability of travel loyalty programs
Rental car company loyalty driven by flexibility, innovation
Focus on business travelers
Market size and overall trends
Figure 5: Total U.S. car rental revenues, at current and constant prices, 1999-2004
Figure 6: Graph: Total U.S. car rental revenues, at current and constant prices, 1999-2004
Hotels
Hotel travel segment trends
 THE INTERNET AND TRAVEL BOOKING
Online distribution channels changing the way consumers book travel
Figure 7: Total U.S. retail sales of internet travel bookings, at current and constant prices, 2000-2005
Internet changing the way travel suppliers conduct business
MARKET BACKGROUND
 LOYALTY PROGRAMS OVERVIEW
Customer loyalty defined
Loyalty programs—why they started
 LOYALTY PROGRAMS—STRUCTURES, COMPONENTS AND OPERATION
Introduction
Components and enrollment
Hard and soft perks
Loyalty program customizing
CRM and database generation
Market differentiation and prediction
CRM: Customer service and satisfaction
Loosening ties and broadening options
Best price guarantees
The Internet and loyalty programs
Perks that promote
 UNREDEEMED MILES
Overview
Number of unredeemed miles
Figure 8: Total airline loyalty program unredeemed miles, 2000-2005
Airmiles as airline liability
Airmiles as airline asset
Trading airmiles
Difficulties of redeeming airmiles
Other redemption offers
Figure 9: Total redeemed travel rewards, 1999-2004
Rewards for the high milers
LOYALTY PROGRAMS BY SECTOR
 INTRODUCTION
Figure 10: Top airline loyalty program providers, membership 2005
Figure 11: Graph: Top airline loyalty program providers, membership 2005
Airline Global Alliances
Figure 12: Top 3 airline global alliances, 2005
Star Alliance
SkyTeam
OneWorld
Discount airlines overview
Figure 13: Name and type of frequent flyer programs, by discount airlines, January 2005
 AIRLINE LOYALTY PROGRAMS
American Airlines
Program overview
Program partners and co-branding
Unredeemed miles liability
Company background
United
Program overview
Partners and co-branding
Online activities
Company background
Delta Airlines
Program overview
Partners and co-branding
Company background
Northwest Airlines
Program overview
Partners and co-branding
Company background
Continental
Program overview
Unredeemed points liability
Company background
US Airways
Program overview
Company background
America West
Program overview
Partners and co-branding
Company background
Southwest Airlines
Program overview
Company background
JetBlue
Program overview
Company background
 HOTEL LOYALTY PROGRAMS
Introduction
Figure 14: Top 5 Hotel loyalty program providers, membership 2005
Marriott International
Program overview
Company background
Accor Lodging
Program overview
Company background
Starwood Hotels & Resorts
Program overview
Partners and co-branding
Company background
Hilton
Program overview
Partners and co-branding
Company background
Cendant Corporation
Program overview
Company background
InterContinental Hotel Group
Program overview
Partners and co-branding
Company background
Carlson Companies
Program overview
Company background
Choice Hotels International
Program overview
Partners and co-branding
Company background
Hyatt Hotels
Program overview
Company background
Wyndham
Program overview
Company background
 CAR RENTAL LOYALTY PROGRAMS
Introduction
Enterprise
Program overview
Company background
Hertz
Program overview
Partners and co-branding
Company background
Cendant Car Rental Group/Avis
Program overview
Partners and co-branding
Company background
Budget Rent a Car
Program overview
Partners and co-branding
Company background
Vanguard Car Rental USA
Program overview
Partners and co-branding
Company background
Dollar Thrifty Automotive Group (DTAG)
Program overview
Partners and co-branding
Company background
 INTERNET TRAVEL COMPANIES
Travelocity.com
Orbitz
Priceline
THE LOYALTY PROGRAM CONSUMER
Introduction
Characteristics of loyalty program members
Figure 15: Participation in frequent flyer programs, by demographics, January-September, 2004
Consumer FFP enrollment, by airline
Figure 16: Participation in specific frequent flyer programs, January-September, 2004
Figure 17: Participation in multiple frequent flyer programs, cross-tabulation, January-September 2004
Figure 18: participation in specific frequent flyer programs, by race/ethnicity, January-September 2004
Figure 19: Participation in specific frequent flyer programs, by age, January-September, 2004
Figure 20: Participation in specific frequent flyer programs, by household income, January-September 2004
Figure 21: Participation in specific frequent flyer programs, by region, January-September 2004
Vehicle rental for business or personal usage
Figure 22: Rental of vehicles for business and/or personal use, by demographics, January-September, 2004
Enrollment in specific car rental clubs
Figure 23: Participation in specific car rental clubs, January-September, 2004
Figure 24: Participation in multiple car rental clubs, cross-tabulation January-September, 2004
Figure 25: Participation in specific car rental clubs, by race/ethnicity, January-September 2004
Figure 26: Participation in specific car rental clubs, by age, January-September, 2004
Figure 27: Participation in specific car rental clubs, by household income, January-September 2004
Summary
Hotel frequent guest programs
Figure 28: Enrollment in hotel/motel frequent guest program, by demographics, January-September, 2004
CONSUMER ATTITUDES TO LOYALTY PROGRAMS
Introduction
Enrollment in travel loyalty and rewards programs
Figure 29: Enrollment in travel loyalty and rewards programs, June 2005
Figure 30: Enrollment in travel loyalty and rewards programs, cross-tabulated by type of programs, June 2005
Figure 31: Enrollment in travel loyalty and rewards programs, by age, June 2005
Figure 32: Enrollment in travel loyalty and rewards programs, by household income, June 2005
Figure 33: Enrollment in travel loyalty and rewards programs, by marital status, June 2005
Figure 34: Enrollment in travel loyalty and rewards programs, by region, June 2005
Number of leisure and business trips in past 12 months
Figure 35: Number of leisure, personal or business trips in the past 12 months, June 2005
Figure 36: Number of leisure, personal or business trips in the past 12 months, by gender, June 2005
Figure 37: Number of leisure, personal or business trips in the past 12 months, by age, June 2005
Figure 38: Number of leisure, personal or business trips in the past 12 months, by household income, June 2005
Figure 39: Number of leisure, personal or business trips in the past 12 months, by presence of children, June 2005
Figure 40: Number of leisure, personal or business trips in the past 12 months, by marital status, June 2005
Figure 41: Number of leisure, personal or business trips in the past 12 months, by region, June 2005
How reward points are used, attitudes about future value of points
Figure 42: How reward points are used, June 2005
Figure 43: How reward points are used, by business travelers, June 2005
Figure 44: How reward points are used, by age, June 2005
Figure 45: How reward points are used, by household income, June 2005
Figure 46: How reward points are used, by region, June 2005
Frequent flyer programs: attitudes about redemption, blackout dates and price vs loyalty
Figure 47: Attitudes about frequent flyer programs, June 2005
Figure 48: Attitudes about frequent flyer programs, by business travelers, June 2005
Figure 49: Attitudes about frequent flyer programs, by gender, June 2005
Figure 50: Attitudes about frequent flyer programs, by age, June 2005
Figure 51: Attitudes about frequent flyer programs, by household income, June 2005
Location trumps loyalty for hotel choice
Figure 52: Hotel location or frequent guest program most important factor, June 2005
Use of credit card to earn travel points
Figure 53: Use of co-branded credit card to earn travel miles, June 2005
Figure 54: Use of co-branded credit card to earn travel miles, by age, June 2005
Figure 55: Use of co-branded credit card to earn travel miles, by household income, June 2005
Conclusion
FUTURE & FORECAST
 FUTURE TRENDS
The U.S. economy
The fate of the airline industry
New fees may offer loyalty clubs opportunities to cater to upper tier members
Soft perks will have an increasingly important role
Personalization and flexibility key to building loyalty
U.S. Travel trends
Leisure travel
Business Travel
Internet travel research and booking
Alliances and partnerships
Sorting through sameness
Credit card alliances
New alliances
Generating more loyalty through loyalty club membership
 MARKET FORECAST
Total unredeemed airline loyalty program miles
Figure 56: Forecast of total unredeemed airline loyalty program miles, at current and constant prices, 2005-2010
Forecast factors
APPENDIX: TRADE ASSOCIATIONS