Last week we released our latest report in the Skift Trends series, Portrait of the Millennial Traveler 2016: A Study in Contradictions.
Below is an extract. Get the full report here to get ahead of this trend.
Many travel marketers assume millennials are not loyal to travel brands. But this hasn’t stopped travel marketers from figuring out how to crack the code on millennial loyalty habits, as the companies that are successful will reap the rewards for years to come.
“[Millennials are] acutely aware of the rewards that come to loyal customers,” said Guy Langford, Deloitte’s U.S. travel, hospitality and leisure practice leader. “The brand that locks in the customer’s loyalty first and wins that race — is the brand that wins that customer, and potentially their loyalty, for life.”
As it turns out, research reveals that millennials can be extremely loyal in certain situations, they just need travel loyalty providers to cater to their distinct needs. This frequently involves offering easier-to-earn and redeem rewards, along with a broader range of redemption options beyond the typical points for hotel nights or free flights.
Another way millennial loyalty differs is that they’re looking for more unexpected rewards than just getting free hotel rooms and flights. “Millennials are looking deeper than just points,” said Brian Kelly, Founder and CEO of loyalty program website The Points Guy. “They want the experience with the technology, the in-flight perks like Wi-Fi and entertainment when booking a flight. More so than just saying ‘Oh, this is my preferred airline.’”
Research into millennial loyalty preferences confirms this. In a 2014 examination of guest loyalty trends by Deloitte, 66% of high-frequency millennial travelers mentioned “unique rewards” as an important factor when choosing a loyalty program. This was compared to just 43% of their older frequent-traveling peers.
Easy-to-earn rewards matter too. In another study of the motivations of millennials for joining hotel loyalty programs by Software Advice, an IT research and advisory firm, “easy-to-earn rewards” came in as the second-most popular answer, with 41% of millennial respondents mentioning it as a key factor.
This focus on easy-to-earn rewards, coupled with the growing importance of mobile in the booking process, is forcing a renewed emphasis by many loyalty programs on instant gratification or rapid redemption. “Loyalty programs are evolving to address the immediate needs of millennials,” confirmed Kelly.
One example is Starwood, which has a program called Instant Redemptions that allows travelers to use points to cover incidentals or portions of their hotel stay. Kelly also pointed to efforts by American Express to make instant redemption simpler. “With New York City taxis and Uber you can actually use points to pay for your ride instantly on your phone,” said Kelly. “They also have instant gift card redemptions where on your app you can actually redeem AmEx points for retailer gift cards while you’re in the store.”