Loyalty Tech Vendor Points.com Anticipates a Travel Rewards Boom

As pandemic restrictions eventually loosen, airlines, hotel groups, and other travel suppliers will count on pent-up demand to flourish. But it's not clear how this travel boom might impact how travel brands use their loyalty programs for "customer engagement, retention, and reactivation" — to use the industry jargon. Many brands want to wean customers off promotions that were common before the crisis. A surge in demand may give many brands pricing power. Yet fewer discounts might not translate into higher margins. Companies might face a spike in critical costs, such as jet fuel or rising wages for labor in tight markets, plus mounting debt service costs from their lost pandemic year. So travel brands may need to hold the line on full prices. They'll have to enter a "discount detox" program. Executives at travel brands may see loyalty programs as a critical tool to help quash the old discounting habit.

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Travel suppliers often lean on frequent flyer programs or rewards programs to coax customers to return for more purchases, and the quest to earn or redeem rewards distracts them from shopping for the lowest price. A case in point: Between 2015 and 2019, Delta Air Lines boosted its annual acquisition of members to its SkyMiles frequent flier program by 138 percent to about 100 million members, as the company revealed last year when it "mortgaged" its program. In 2019 alone, Delta added more than 1.1 million new Delta SkyMiles American Express cardholders. Delta has also succeeded at getting its best spenders to join its frequent flyer program. In 2019, the year before the pandemic, Delta saw that about 60 percent of its ticket revenu