The Ugly Truth About Travel Loyalty Schemes

Travel loyalty programs are a bubble. And it

may be about to pop…

“A new study of over 4,000 business and leisure

travellers showed hotel loyalty programmes have

little or no impact on their purchase decisions and

could even be driving consumers to switch

brands.”

“Four-out-of-ten UK residents who collect air miles

or points have never tried to redeem them while

six-out-of-ten complain it takes too long to collect

sufficient points to gain anything of value.”

“On average, nearly half of hotel guests' annual

spend is not with their preferred brand and almost

a third were "at risk" of switching their preferred

brand.”

The Sales Pitch

Avios/BA Amex

“Our fee–free Card lets you collect Avios on your

everyday spend and unlock a world of exciting

opportunities, from reward flights and upgrades to

hotel stays and car rental”

The Reality

You need to spend £15,000 on a BA Amex card

just to earn enough miles to take a BA return flight

to Rome - and even then, you’d still be left paying

for the taxes, which can be up to half the regular

fare.

The Sales Pitch

Hilton Honours

“We will be expanding to ten hotel reward categories to

account for all of the new hotels and resorts that have

opened in the past few years. With 3,900 hotels and

resorts in 90 countries you are sure to find the perfect

place for your next reward stay.”

The Reality

Probably the worst single hotel loyalty program

devaluation we’ve ever seen. The award price of

some hotels and resorts has risen by as much as 90

percent. As of March 28th 2013, your hard-earned

points are worth next to nothing.

The Sales Pitch

Emirates Skywards

“Frequent flyer benefits get even better as you move

up tiers, so you can look forward to advantages such

as lounge access and dedicated check-in.”

The Reality

When a customer earns 25,000 tier miles in one year

they are able to go from Blue to Silver – this requires

between 15 and 30 flights from Istanbul to Dubai to

be taken in one year, not an easy feat. If you are

travelling to Dubai and pack light & print the

boarding pass, there is not a single benefit for being

a Silver Skywards member (minus the couple

hundred extra miles that is earned).

The Sales Pitch

IHG Priority Club Rewards

“Get the special recognition and benefits you so

richly deserve. As a Platinum Elite member, you’ll

enjoy exclusive benefits available only to our most

valued guests.”

The Reality

The most you seem to get is a drinks voucher at

check in with some properties and if you’re lucky an

upgrade to a better room or corner view if available.

Here in the UK it's as if you've never been in their

hotel before, rather than upgrade you’re given a

token piece of fruit or worse than that a 20% off

voucher.

The Sales Pitch

Delta SkyMiles

“Did you know we’re the only major U.S. airline

without mileage expiration? That means you have

the freedom to fly with us and redeem your miles on

your timeframe.”

The Reality

It turns out your ‘expiration free’ miles expire when

you do. As of the 20th March 2013, your miles can no

longer be inherited by your next of kin when you die.

Charming.

Listen to their desires“Find what is most meaningful to guests, such as free Wi-Fi, parking,

breakfast or lower rates.”

Offer mini-rewards as incentives“62% of consumers said being able to use their points to purchase goods such as electrical items or travel accessories would act as an incentives”

Make the rewards more accessible“70% of scheme members said that making rewards more accessible would

encourage them to collect.”

Give members the ability to top up rewards with cash

“The ability to top up rewards with cash to buy goods was popular with 63% of those who collected points”

Make top-tier members feel extra special“Your loyalty program reward tiers must make sense to your guests and

create appropriate distinctions for the top tier members”

Be transparent“Transparency and what points are really worth is going to be an increasing

challenge. Consumers will want to know if earning two points on one scheme is better than earning one point on another”

Establish a two-way value proposition“As you design your program, determine which rewards have the highest value for your customers but also have the lowest internal cost for your

company.”

http://forteconsultancy.wordpress.com/2011/02/28/loyalty-programs-gone-wrong-%E2%80%93-ten-common-mistakes-to-avoid/http://www.emirates.com/english/Skywards/about/skywards.aspx?showinterim=true

http://milepoint.com/forums/threads/airline-loyalty-schemes-failing-to-take-flight-new-study-shows.62783/http://boardingarea.com/blogs/onemileatatime/2013/02/21/what-the-past-few-weeks-have-taught-us-about-hotel-loyalty-programs/

http://www.travelmole.com/news_feature.php?news_id=2004769http://www.guardian.co.uk/money/2009/sep/13/loyalty-schemes-value-for-moneyhttp://articles.latimes.com/2013/jan/28/business/la-fi-travel-briefcase-20130128

http://www.delta.com/content/www/en_US/skymiles.htmlhttp://www.travelandleisure.com/travel-blog/carry-on/2013/4/12/trip-doctor-deltas-expiration-free-skymiles-now-expire-with-you

http://www.deloitte.com/view/en_US/us/Industries/travel-hospitality-leisure/72ce4f52478ab310VgnVCM1000003256f70aRCRD.htmhttp://www.europeanbusinessreview.com/?p=2845

http://www.ihg.com/priorityclub/hotels/us/en/global/offers/platinumhttp://www.businesstraveller.com/discussion/topic/Priority-club-platinum,-worthless

Sources

If you are keen to move beyond loyalty schemes fuelled on commoditised interactions and you know that your audience deserves relationships driven by value, and built from meaning, talk to us…

Pomegranate, where the journey is as exciting as the destination.