COVID-19 has undoubtedly prompted the Hospitality and Travel industry into a new era of customer loyalty. Currently, "shelter in place" or similar nonessential travel bans are instituted by many countries and companies across the world. Once travel restrictions are lifted, there will be a transition period where travel will be limited or less available until the virus is fully contained. Thus, the disruption to both leisure and business travel is expected to continue for an extended period, potentially taking months or even years to return to normal levels. This disruption will significantly influence the earning, redemption, and expiration activity of travelers, and will change the member behaviors and their engagement with loyalty programs. Because travelers are less likely to take trips and hit their loyalty and rewards statuses right now, this year will likely see a shift away from the traditional activity- and spend-based loyalty programs of the past toward more personalized, experiential-based loyalty programs.
During an online loyalty summit, in a session on Travel's Loyalty Renaissance, Jon Glick -- partner, customer experience and loyalty at PwC -- and Corbitt Burns -- director of Rapid Rewards at Southwest Airlines -- agreed that engagement, fueled by personalized digital interactions, is one of the most important metrics for successful loyalty programs right now, and that strong, relevant customer data is what it will take to create those moments.
The COVID-19 pandemic has shown that Hospitality and Travel brands need to rethink consumer trust and loyalty programs to adapt to the new normal and truly deliver the personalized experiences that today's travelers expect.
Leading Hospitality and Travel brands are changing their loyalty game plan by revising their policies in different ways such as:
Flexibility on rewards redemption by extending the expiration dates of loyalty programs.
American Airlines was one of a few major airlines that offered generous mileage bonuses for people who bought miles in recent promotions. AA Extended elite status for AAdvantage members until January 31, 2022. AA further introduced up to $400 in special credits for future travel on American Airlines Vacations packages for elite members. JetBlue, in partnership with American Express Membership Rewards, has launched a new pilot program, Pennies for Points, that gives targeted cardholders the opportunity to round up purchases to the nearest dollar and turn the spare change into TrueBlue points.
Bonus reward points/miles and exchange offers.
Popular luxury Hospitality and Travel rewards cards that usually offer primarily hotel and airline perks have updated their programs to include limited-time bonus rewards.
Bonus grocery rewards: Delta provided four times the usual amount of miles for purchases with American Express cards at U.S. supermarkets. Delta SkyMiles Blue, Gold, Platinum, and Reserve cardholders could earn 4x miles at U.S. supermarkets from May through July 2020.
Loyalty-integrated food services: Food purchases and delivery are an opportunity for "everyday rewards" that keep program engagement high while at home. Restaurant, takeout, and food delivery purchases are now eligible for annual hotel credits. American Express recently revamped its rewards strategy, which has typically been travel-centric, to accelerate points earned for food delivery, streaming services, and groceries.
New streaming and wireless statement credits: Capital One Venture and VentureOne Rewards Credit Card members can redeem miles as a statement credit for eligible food delivery, streaming services, and takeout.
Rewards at gas stations: Chase Sapphire Reserve cardholders also benefit from more flexibility with their annual $300 travel credit: Gas station and grocery store purchases now count toward earning your travel credit through December 31, 2020.
More options to donate frequent flyer miles/points.
While donating to charity is always a worthwhile cause, and now that social justice causes are in the spotlight more than ever, many big airlines and hotel brands across the board dig deeper into their social responsibility and give loyal customers more flexibility to donate their points and miles for a good cause (for example, United, Southwest, Delta Marriott, IHG, and Hilton Honors).
Loyalty programs in the Hospitality and Travel industry have evolved with one goal in mind: Keep a brand's most valuable customers hooked in to return as quickly as possible by adding more value to their travel and non-travel experiences.
In a post-pandemic society, loyalty programs make a lot of sense for a number of reasons. They are positioned to play a key role in driving the Hospitality and Travel industry back to normal levels. Loyalty programs can:
- Offer bonus points for new booking after the travel disruption ends, which has the benefit of increasing new earnings and future redemptions, spurred by higher account balances
- Increase the accrual rate of points or decrease redemption requirements for existing members, or offer sign-up bonuses to new members, which can be used to encourage future redemption activity
After normal travel resumes, there will likely be many "free agents" -- former members of competing loyalty programs who have grown disengaged or had their points expire. Since these members are more likely to switch brands, you may want to pursue them with targeted offers and sign-up bonuses.
To start, those who have existing loyalty programs will need to lean on their database of customers heavily to try and get their most valuable patrons back into their hotels and airlines. Quite frankly, this will likely mean promotions, coupons, frequency discounts, and other traditional levers. For Hospitality and Travel brands that have this data, this is the time to groom the database and begin to construct campaigns to entice loyal customers back into their business (for example, restaurant, hotel, and travel brands).
For those who have never acted on customer loyalty, such as small-scale restaurants and food chains, the time to do it is now. A well-designed loyalty program can act like a "tackle box" for managing customer data, your restaurant-specific information (e.g., integrated online ordering), and most importantly, the ability to link a mobile wallet. Customers will return to restaurants when the objections they have and concerns about personal safety are addressed; incorporating non-contact payments, and online menus and ordering, along with the traditional capabilities native to a loyalty program, will go a long way toward checking many of the boxes.
Learn how Akamai helps top global Hospitality and Travel brands grow their loyalty programs and provide a great experience for their customers.