Travel rewards points redemptions in the U.S. are up sharply this year as several brands focus on rewarding and retaining their elite customers. Hotel loyalty program redemptions in particular have shown bold increases as these programs add millions of new members per year.
More than half of all U.S. travel loyalty points redemptions happen from April to August –the bustling summer travel season — and redemptions for this summer are up 50 percent year-over-year as travelers take advantage of a growing U.S. economy.
That’s according to Connexions, a company helping brands create white label loyalty programs with travel clients such as United Airlines, InterContinental Hotels Group and Starwood Preferred Guest. The data is based on Connexions’ internal analysis of 2.2 million U.S. travel loyalty program members that are part of co-branded card programs from December 2014 to June 2016. All travelers included in the analysis were active, or made loyalty point redemptions, at least once during the 18-month timeframe. Most redemptions were made at brand.com sites compared to online travel agencies.
Connexions also found points redemptions for hotels and rental cars are up more than 70 percent year-over-year for this summer. “Consumer spend is on the rise which causes earning to rise and therefore the redemption side as well,” said Mike McDonnell, Connexions’ vice president of product. “We have also seen that travel rewards programs are putting greater marketing emphasis on ancillary redemption options and consumers are responding in kind.”
That represents a significant shift from last year as a recent Skift analysis found that while most major hotel loyalty programs increased their total membership from 2014 to 2015 many of those members were inactive, or hadn’t redeemed any rewards points during the past year. Skift’s analysis also found that as many as 80 percent of U.S. airline loyalty members were considered inactive in 2015.
The charts below highlight consumer redemption behavior online and through call centers, the percentage of add-on purchases made at the time of booking using reward points and the percentage of travelers that split pay when they pay for a hotel, for example, with both loyalty points and their own money. U.S. travelers are nearly 30 percent more likely to split pay when adding items to their carts (see Chart 4 below).
Chart 1: Nearly 75 percent of all travel loyalty program redemptions are made online via desktop computers. More than 25 percent, however, are still made over the phone. Connexions said that’s likely because points redemption is often confusing and complicated for consumers and added that the call center percentage is down from 2015 but didn’t have the percent decrease available.
Note that the percentages below only consider travel booked using loyalty points redemption and not general travel booking online and at call centers.
Chart 2: This chart considers what percentage of card loyalty members redeeming points for air travel also made add-on purchases at the time of a booking. Only three percent of travelers add-on combo purchases at the time they book.
This doesn’t mean travelers aren’t booking rental cars or hotels along with their flight. Rather, it shows many aren’t redeeming loyalty points for those purchases at the time of booking. This data also doesn’t consider what percentage of card loyalty members redeem points for these purchases at some point after the initial booking.
Chart 3: Connexions found that U.S. travelers are nearly 30 percent more likely to split pay when adding items to their carts. Travelers split pay when they pay for a hotel, for example, with both loyalty points and their own money. Adding-on more items equates to higher percentages of split paying. Using only loyalty points to pay for travel, it turns out, decreases as more items are added-on.
Chart 4: There are an average of 50 days from the time a traveler redeems loyalty points for a travel purchase to their travel date with air travel accounting for the highest average (55 days).
Photo credit: Travel loyalty program redemptions are up more than 50 percent this year in the U.S. Kevin Lamarque / Reuters