Revolutionizing Loyalty Programs in Travel and Hospitality: Four Driving Forces and Six Steps for Transformation
Loyalty programs have been central to the travel and hospitality industry since the 1980s. Airlines, hoteliers, restaurants and credit card issuers all take part in this nearly $200 billion a year sector. Though business travel once was the driver of loyalty programs, leisure travel has taken the lead in the United States. To adapt to evolving market dynamics and capture a larger share, many companies have shifted from traditional travel-based metrics to spend-based programs, leveraging co-branded credit cards to elevate perceived value and overall brand experience for consumers. In this rapidly changing and competitive landscape, a robust loyalty scheme is indispensable for travel companies aiming to maintain their market presence.
A&M believes four forces will significantly impact how travel and hospitality loyalty programs operate in the future. Companies must understand the impact of these forces on their loyalty programs at both the customer and P&L level. Any changes to loyalty programs must be carefully and thoughtfully communicated to avoid customer pushback and negative brand impact.
Four Forces Changing the Dynamics of Loyalty Programs in the Travel and Hospitality Industry
These forces will have a significant impact on both the perceived customer value and profitability of loyalty programs:
- Market Saturation – The rise of co-branded credit cards and increasing competition amidst economic changes pose challenges for growth and differentiation.
- Capacity Limitations – As loyalty redemptions surge, balancing premium experiences against profitability becomes crucial.
- Shifting Behaviors – Evolving travel patterns, like 'bleisure' trips and sustainability concerns, demand agile loyalty offerings.
- Political and Regulatory Threats – Regulatory changes impacting interchange fees and consumer protections necessitate program recalibration.
Six Steps Travel and Hospitality Companies Can Take to Begin Their Loyalty Reinvention
Now is the time to initiate the journey of reinventing loyalty, positioning yourself better to maintain and enhance the strength of your loyalty program.
In this dynamic landscape, innovation is key! Explore our full article to gain insights into the factors influencing the travel industry's evolution and learn strategies to transform loyalty into a powerful brand connection that can elevate customer experiences and drive growth.
How A&M Can Help
A&M’s global, market-leading Travel, Hospitality and Leisure team understands the industry, its influencing trends and business situations that require deep expertise. Amidst the evolving landscape of the travel and hospitality industry, A&M stands ready to support companies in navigating these changes with innovative strategies for sustained success. Contact us today to learn how A&M can help you take action.
