The year 2016 has been a pivotal year for loyalty programs across the travel industry and one of the latest moves was Hyatt Hotels replacing its old loyalty program with a new one, for example.
Some of the changes that brands have made to their programs align with the pain points travelers feel with loyalty, from how travelers can earn and redeem points and miles to eligibility for using co-branded credit cards.
That’s based on a recent study from Facebook IQ, Facebook’s research arm, which surveyed some 14,700 U.S. adults ages 18 years and older online in March 2016 and measured brand loyalty in five industries — auto insurance, airlines, hotels, grocery and restaurants. The survey included respondents who were brand loyal, or those that make repeat purchases and always use a particular brand, and disloyal travelers.
The data show price doesn’t rule every traveler’s decision. The survey asked respondents to describe the brands they love most and responses were categorized by consistency, cost, quality and experience. “By far the largest group of words was under experience,” the study said. “Perhaps people will always be willing to pay for the things that are memorable.”
Brand loyalists said service and trust, the cornerstones of a pleasant travel experience, are most important to them with airlines and hotels (see Chart 1 below).
Repeat purchasers, or respondents who said “I make repeat purchases from a company but I am not loyal to it” but could eventually become loyal, however, said price and flight availability and locations and price were their biggest reasons for choosing an airline and hotel brand, respectively.
Millennial respondents (ages 18 to 34), for example, are less loyal to airlines and hotels, where experience and price play a bigger factor, than in other industries, Facebook IQ found. “Millennials also want to be loyal to brands: They’re 1.75 times more likely than Baby Boomers to say they’d like to be brand loyal, except that they face challenges,” Facebook IQ’s analysis said. “We found, however, that many of the challenges Millennials face are unique among them.”
Facebook IQ found Millennial respondents were 2.33 times and two times more likely for airlines and hotels, respectively, to cite difficulty to reach or contact the brand as a barrier to being a loyalty member.
Recent Loyalty Program Changes
Hyatt’s Global CMO Maryam Banikarim said a key strategy behind Hyatt’s loyalty pivot is to “build community and engage with our customers who are that high end of the travel space.”
Wyndham Worldwide’s recent loyalty expansion matches up with preferences of repeat purchasers, who pegged locations as the main reason why they come back to a brand. Wyndham Rewards members can now choose to redeem their points at Wyndham’s portfolio of 25,000 hotels, vacation rentals, and timeshares — a significant boost and incentive compared with the 8,000 hotels they previously had access to.
Loyalty changes with airlines this year have been just as notable. Last month Delta Air Lines said it’s experimenting with a new way of pricing its partner award tickets for airlines like Virgin Atlantic. Airline repeat purchaser respondents named price and flight availability as main drivers behind their purchase decisions.
Albeit, price is often the make it or break it point for many travelers at the end of the day, all else being equal. Marriott International acquired Starwood Hotels & Resorts for $13.3 billion and Marriott Rewards and SPG members will gain better access to exclusive experiences like concerts or private neighborhood tours.
Chart 1: For brand loyal travelers, service and trust are most important. Price is more paramount for repeat purchase travelers.
Chart 2: Millennial respondents who said they’re loyal to travel brands indicated communication is the largest barrier to being a loyalty member.
Chart 3: About 42 percent of new parents (those with children one-year-old or younger) describe themselves as loyal compared to 36 percent of non-parents, or those who don’t have children under one year of age but may have older children.
The study points out new parents are particularly more loyal in verticals that may not trigger as much loyalty in non-parents, such as hotels. “This is especially true of verticals with products and services that tend to be more experiential,” the study said. “We think it’s because a desire to experiment gets replaced with a desire to stick to what they know.”
Source: Facebook IQ