Points, a reseller of airline miles and hotel points, has begun to sign up travel companies to its newer ways of squeezing money out of their programs. But it's still too early to tell for sure how successful these efforts will be.
Just about every company wants their share prices to rise.
But on Wednesday, the Toronto-based technology provider for travel loyalty programs issued a statement weeks in advance of its fourth quarter earnings report to tease its full-year 2017 performance.
The forecast that after it finishes tallying its “gross profit” and its “adjusted earnings” — metrics defined by the company — will have been up 10 percent each for the year, broadly in line with a six-year trend.
Investors will have to wait until next month for the financial and performance data on profit and earnings, metrics which use generally accepted accounting principles.
Growth Across Segments
Points doesn’t operate airline or hotel loyalty programs. But it does provide services that help airlines and hotels make the most money out of their programs, including through third-party partnerships. One of its clients is Air France-KLM, which uses the company’s mileage retailing business to sell customers on miles to “top up” their accounts and to use its platform to sell miles to third-party companies.
Skift last profiled Points in June with a CEO interview. Here are highlights of its big loyalty accomplishments since then.
The company is best known for its loyalty currency platform, which lets users trade points and miles between programs for 37 companies, including United, Lufthansa, and Hilton. Consumers typically tap this service to top off their accounts to meet redemption thresholds.
Points is expected to report that it processed the sale of more than half a billion dollars worth of miles in 2017. Its largest new program in 2017 was enabling members of Hilton’s rewards program to combine points with up to 10 friends or family members.
Another division, Points Travel, aims to help airlines use their brand direct websites to sell hotel stays at standard rates either with miles or with cash in exchange for mileage bonuses.
Here’s how it works, using launch partner Lufthansa as an example. When a traveler books a hotel stay via Lufthansa’s website, Points goes out to find the lowest hotel cost for that room on the wholesale market. It takes an approximate 25 percent commission and then uses the remaining cash difference to buy miles in Lufthansa’s program. It uses the miles as a sweetener to lure customers to book travel on Lufthansa instead of from another source — perhaps 4,000 for a $400 a night stay. The product also works for rental cars.
Competition is heating up, though. For example, Booking.com’s RocketMiles enables consumers to earn miles for hotel bookings, including bookings made via Southwest Airlines’ website.
In 2017, All Nippon Airways began using Points’ services, Etihad expanded its participation, and Air Europa, Carlson Hotels, and two other travel brands will be joining in the first half of 2018, according to Points.
Points’ third segment is platform partnerships. The company is opening up its loyalty commerce platform to enable companies to tap into the loyalty programs that it works with. Points boosted the number of travel loyalty programs it works with from about 50 to about 60 in the past year, according to our comparison of the old and new list.
In late spring 2017, Points launched a deal with Apple. In 2017, InterContinental Hotels Group began using Points’ technology to offer a members a points bonus for electronics purchases at Apple’s online store. In the first half of 2018, another hotel program will start to use Points to sell via Apple, too.
Last autumn, Points debuted with flash deals service Groupon to offer travel points for every dollar spent.
Overall, the diversification into other loyalty monetization programs is important. Because companies like Booking.com, Switchfly, TravelBank, TripActions, and Upside are all innovating in aspects of loyalty monetization. All of them face a marketing challenge in modifying customer behavior from just booking a room to trying to book a room while also earning loyalty miles or points.
As we’ve noted before, the biggest knock against Points is that its business model may be too dependent on four loyalty program partners, who make up three-fourths of the company’s total revenue. Points doesn’t disclose the names of those partners.
Investors will be watching for the official fourth quarter and end-of-year numbers to make their judgments.
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Photo credit: On the consumer side, Points helps travelers make their loyalty points more flexible for redemption and purchases. On the business services end, the Canadian company helps travel brands increase customer usage of their loyalty programs. Points International