Travel Loyalty Programs: Looking Beyond The Points

Major hotel brands have been aggressively pushing their travel loyalty programs over the past few years. And, at the same time, Online Travel Agencies (OTAs) have rolled out new or improved rewards programs. Is all this effort impacting the number of “loyal” travelers? Do these programs still matter?

Brandie Wright, Phocuswright analyst, reports, “Half of US leisure travelers now belong to a hotel loyalty program, up 10% from 2014. This membership rate is higher than both the air and OTA segments.” The company also found that many travelers belong to more than one program—OTAs are the top choice for those with one membership and hotels are number one for those with two or more memberships.

Personalized Rewards

But, there’s much more going on with loyalty programs. In an interesting tnooz.com article in late-2017, digital analyst and consultant Simone Puorto references a J.D. Power study that found member satisfaction is 31 times higher when loyalty points can be used for more than hotel stays, for things like shopping and special event tickets.

In that same piece the author writes about an “important shift in loyalty programs” that he describes as “the drop of the one-size-fits-all-approach in favor of reward personalization: business travelers prefer to accumulate points to redeem them during their vacations, while tourists prefer immediate gratifications and on-site recognition, such as complimentary upgrades, welcome drinks or gift cards.”

Melia Hotels International offers members an online store to earn and redeem points with a wide range of retailers, including Amazon, where Hilton Honors members also can shop with their points. Choice Hotels members can redeem points for digital gift cards and Marriott allows members to redeem points instantly during their stay.

Lower Rates Frequently Favored Over Loyalty Programs

Updated hotel loyalty programs may have increased membership, but the consensus seems to be that they aren’t harming OTAs. Weighing in on hotel programs and OTAs, the Trefis.com team explains why OTAs shouldn’t worry. “Hotels remain more dependent on the OTAs than they’d like to be. The size and scale of the OTAs, their significantly bigger hotel networks, superior marketing, and technological strength are some of the reasons why customers prefer OTAs to direct booking.”

According to Mark Ross-Smith, editor at TravelDataDaily.com, “OTAs already have a strong reputation for having the lowest rates – and despite what major hotels are trying to tell the world – it can still be cheaper to book through an OTA under the right circumstances. However as hotels move to compete on the battle ground which OTAs are known for (best pricing), this opens a new, larger and lucrative opportunity for OTAs to move in on the hotel’s traditional turf – loyalty programs.”

Leading OTAs Developing Loyalty Programs

OTAs have certainly moved more deeply into the loyalty program arena. Expedia and Orbitz give travelers options to redeem points immediately and both offer branded credit cards. Orbitz Rewards Visa customers earn up to 10% back in rewards and receive “Orbucks” for non-Orbitz purchases. Depending on your membership level with either Expedia or Orbitz, you may earn free breakfast, reduced resort fees, reimbursement for checked bags, spa discounts, free drinks or flexible check-in.

Hotels.com has a straightforward rewards program—stay 10 nights, get 1 free. And Booking.com’s Genius program gives travelers a 10% discount after 5 stays in 2 years. Properties need to be part of the Genius program and the perks and freebies vary by property.

Writing for Skift in 2017, Dave Montali notes “OTA reward programs offer more realistic chances to earn free stays than traditional brand-based memberships might,” and adds that being loyal to your traditional loyalty program can be a challenge when you have to deal with “hurdles such as extensive blackout dates.”

Another voice touting the strength of OTAs in this loyalty battle is Ross-Smith who acknowledges OTAs “may be feeling the pinch over the book direct campaigns,” but he sees an opportunity unique to OTAs—data. They have volumes of data on their customers, the hotel rooms and flights they book and how and when they book. “Plotting this business intelligence out could show an interesting loyalty composite score not available to airlines or hotels. This data architecture would then allow for more accurate insight on spend and loss probability of new business, market trends and segmented consumer traits.”

Big name OTAs may be introducing loyalty programs to compete with hotels and drive repeat bookings, but private accommodation sharing leader Airbnb has no plans to follow suit. Airbnb co-Founder, Nathan Blecharczyk, told attendees of the 2017 Skift Global Forum that the company had considered one. However, as Phocuswright reported, the company has no trouble attracting repeat bookings – Airbnb’s desktop repeat booking rate for the first half of 2016 was almost 5 times that of leading OTAs and 3 times that of top hotel brands.

While Airbnb might not need to worry about winning repeat bookings, loyalty programs are an important tool for OTAs and suppliers in achieving repeat bookings. Such loyalty programs have evolved over decades and the current iterations reflect a more responsive and consumer-friendly model, which probably means loyalty programs are here to stay.

For more like this see ‘OTAs vs. Direct Booking: Rivals or Competitive Teammates?’.