Loyalty Programmes

As travel budgets get trimmed and ballooning expense accounts become a distant memory, the canny corporate traveller is increasingly looking to leverage as much value from their business travel as possible. Richard Holmes looks into some of the latest trends and offerings among some of the groups in the African business travel market.

Discounted rooms, smaller hire cars, and business breakfasts instead of boozy dinners… the list of cost-saving options goes on. But top of that list should be getting even more value for doing what you would be doing anyway. By being a loyal customer – offering regular business in exchange for benefits not available to more fickle consumers – corporate travellers and travel managers can reap a host of benefits through the ever-growing array of travel industry loyalty programmes.

Airlines

Airlines have the longest track record when it comes to travel industry loyalty programmes, and the basic concept remains one of the most alluring prospects for frequent travellers – send your business to one airline, or alliance of carriers, and we’ll reward you with free flights and other perks. “Loyalty programmes remain a key selling point for airlines, especially within the corporate sector,” says Joris Holtus, Regional Manager for Air France/KLM, Southern Africa and Angola. “The loyalty to an airline has both immediate and long-term benefits for the traveller.”

“Emirates has experienced a noticeable increase in membership to its loyalty programme across its global network,” notes Fouad Caunhye, the airline’s Regional Manager, Southern Africa. “With Skywards, it’s not just about earning and spending Miles. It’s about managing your journey, going beyond the travel experience and enjoying the real privileges of a more rewarding frequent flyer programme.”

And while the basic premise of most airline loyalty programmes – the accrual of miles, avios or points to exchange for free flights in the future – is much the same, it’s in the finer details and ancillary benefits that airlines are increasingly working hard to distinguish themselves from the competition. For while miles can also be used to upgrade classes, and to purchase additional baggage allowance, it is the myriad other benefits – both tangible and perceived –that are encouraging travellers to remain loyal to their chosen carrier.

For instance, depending on your membership level, Air France will guarantee a seat in Economy Class to loyal customers… even on a fully-booked plane. It’s not a free flight, but it’s certainly a useful perk for emergency business travel. Similarly, Lufthansa offers Senator card holders improved flight award availability, and holders of the premier HON card – along with three travelling companions – will receive the best flight award availability until 14 days before departure.

Likewise, Emirates offers Skywards Gold members guaranteed reservations even on fully-booked flights (although conditions do apply), along with concierge-style travel assistance from the dedicated Gold Desk and faster boarding and immigration at Dubai International Airport. On the continent, EgyptAir offers members of ‘EgyptAir Plus’ discounts on purchases made in Duty Free, alongside the usual array of mileage benefits. But it’s the likes of Priority Boarding, Priority Stand-by and the prospect of complimentary upgrades for Platinum members, that keep many corporate customers using the Cairo-based carrier.

Like many loyalty programmes, including South African Airways’ Voyager, EgyptAir Plus also allows members to accrue miles more quickly as they climb in status, with Platinum, Gold and Silver members receiving 40%, 30% and 20% more miles respectively. The airline is also one of a handful that allow for an account holder to accrue miles flown by family members. Airlines are also increasingly looking toward terra firma to enhance the benefits of their loyalty programmes, allowing members to earn and burn miles at an array of non-airline partners. The ‘Flying Blue’ programme of Air France and KLM offers the check-in and excess baggage benefits common to most programmes, but miles “can also be utilised on hotel groups such as Hilton, Marriott and Radisson, as well as car hire companies such as Avis and Hertz,” adds Holtus.

“Membership of Flying Blue also entitles you to membership of various clubs,” continues Holtus. “This includes Flying Blue Petroleum, which offers benefits to oil and gas industry professionals; Flying Blue Golf, which has benefits including taking a free golf bag on board; and Flying Blue Club Africa, which enables networking opportunities with other businesses in Africa.”

Airlines will continue to “diversify the overall offering for frequent flyer members to redeem miles, by forming new partnerships as well as looking for country-specific awards for card holders to burn miles locally,” predicts Axel Simon, Director Southern Africa for Lufthansa German Airline and Swiss International Air Lines. The airline’s ‘Miles & More’ programme allows South African members the opportunity to burn their miles locally on South African Airways’ domestic flights, as well as redeem them for a multi-store MasterCard gift card that is valid for all shops in South Africa accepting MasterCard. Miles can also be redeemed on Rovos Rail, or donated to charitable organisations. But it’s not only about how to burn your miles – having plenty of options for earning them is equally important. And while some airlines choose to remain independent, and sign agreements with selected carriers, others opt for the safety in numbers of large global airline alliances (see sidebar).

For instance, Flying Blue members can earn and spend their miles on both Air France and KLM, as well as on airlines in the Skyteam alliance – including Kenya Airways and Alitalia – as well as 17 non-Skyteam partners. Lufthansa and South African Airways are members of the Star Alliance, while the like of Qantas, Cathay Pacific and British Airways are the big-hitters in the oneworld alliance

“Joining an airline loyalty programme has many benefits for frequent travellers,” says John Ridler, spokesperson for Thompsons Corporate, who also warns that corporate travellers should “look for an airline alliance that covers most of your flight plans for the future. Then be sure to stick to these carriers as well as the associated hotel groups and car hire companies. Also, check if you can link your credit card to the loyalty programme for additional benefits.”

But, there’s one over-arching benefit, above the pre-boarding and the dedicated check-in, the extra bag and the smiling hostess who knows your name. One benefit that will sway travellers to spend a little more to keep booking with their chosen carrier, and maintain their coveted Gold status… it’s the airline lounge. Whether delayed by weather or just needing a few quiet hours between long-haul flights, the carrot of access to Business Class lounges is a reward that few frequent flyers can resist. There’s no doubt the opportunity to use the lounge to catch up on work, use the Internet and freshen up before that next meeting is a worthwhile benefit, but frequent flyers should also do their sums with care.

While benefits abound for loyal airline customers, keeping your eyes only on the prize – and not the bottom line – could mean you’re spending more than you gain. The trick with airline loyalty is to be rewarded for the decisions you would have made anyway, not to skew your spend and schedule towards the pot of gold at the end of the check-in desk.

Which airline, which alliance?

Where you regularly fly to should dictate which airline – and which alliance – you give your business. Here’s who belongs to which of the big three alliances:

*pending 

Small business: BA & Emirates

While most frequent flyer programmes are aimed at individuals, a handful of airlines are ensuring that small businesses reap the benefits of becoming loyal corporate travellers. British Airways launched its ‘On Business’ loyalty programme a few years ago and it’s proven to be a hit with companies on the continent. Designed for small and medium-sized enterprises that don’t have the clout to secure large corporate discounts, but want the benefits of being loyal, On Business rewards both the actual traveller – who continues to earn Executive Club benefits – and the company.

“We haven’t actively marketed On Business, just offered it as a solution when we’re talking to companies which don’t qualify for a corporate deal, but are looking at ways of reducing their travel costs,” says Daniel Bainbridge, British Airways’ Strategic Commercial Development Manager, South Africa, who adds that companies can now also earn and redeem benefits on domestic and regional flights operated in southern Africa by franchise partner Comair.

Emirates, which serves over 20 destinations in Africa, has a similar offering with its ‘Business Rewards’ tailored to organisations with fewer than 80 employees. “The reward mechanism for Business Rewards is simple,” explains Fouad Caunhye, Emirates’ Regional Manager, Southern Africa. “For every $1 spent on travel with Emirates via Business Rewards, booked online or via a preferred travel agent, the organisation is awarded one Business Rewards Mile. Miles earned can be redeemed for flights on Emirates services worldwide.” Loyalty benefits aside, the Business Rewards online booking system also allows company administrators to manage employee travel on a dedicated Emirates portal. And, like On Business, there should be no disgruntled employees, as the individual traveller continues to earn their personal Skywards Miles.

Car Hire

While most corporate travellers are attached to their free lounge access, and prefer the peace of mind that comes with flying a trusted carrier, car hire companies have to work a little harder when it comes to convincing travellers to put loyalty above price. Bar the reliability and safety of the vehicles, there is perhaps little to distinguish one rented Toyota Corolla from the next, but the major global rental brands with a presence on the continent are becoming ever more innovative when it comes to keeping their customers loyal.

“Loyalty remains a key component of all car rental customer relationship programmes,” says Lance Smith, Executive: Sales at Avis Rent a Car, South Africa. “Loyalty programmes are growing and the trend is towards discretionary awards and recognition.”

Both Europcar and Hertz are revamping their customer loyalty programmes, and currently Avis is leading the way when it comes to offering a range of benefits for loyal customers. The agency partners with airlines including South African Airways and British Airways, and travellers can both earn and spend airline frequent flyer points with Avis. Avis also partners with banking loyalty programmes including the likes of eBucks, Greenbacks and American Express. A further benefit is that – unlike with redeeming airline miles for flights – Avis has no restrictions on redeeming points for car rental.

 If there’s a downside to the array of partners, it’s that terms and conditions may vary depending on whether you’re cashing in eBucks or spending Voyager Miles. “Each programme is different and as such the rental programmes have different costs and inclusions,” explains Smith, but “in general, our rates do include our car rental waivers, specified free kilometres and VAT.”

While a revamp of their loyalty programme is to be unveiled in the second half of 2013, Hertz has taken a different tack when it comes to loyalty, opting to keep most of ‘Hertz #1 Club Gold’ in-house. Although they are partners with South African Airways, this simply offers passengers a preferred rate and no miles can be accrued or redeemed on car rental. Rather, instead of a complex arrangement of miles earned and miles spent, customers are awarded free rental days and upgrades according to the number of rentals they have made. For every 10 rentals, you get one free rental day. Rent more than 10 times a year and you qualify for a free one-class upgrade. If you rent more than 30 times a year you’ll qualify for a ‘best available’ upgrade, subject to availability.

Simple as it may be, “the loyalty programme is growing on a monthly basis, specifically on the corporate rental side,” says Susan Marshall, National Marketing Manager for Hertz Southern Africa. But free hires and upgrades aside, both Hertz and Avis also put plenty of effort into saving business travellers that most valuable of commodities – time. Touting it as “the fastest way to rent a car,” Avis Preferred Service “is just one of the ways Avis makes frequent business travel in South Africa more efficient and convenient,” explains Smith. “It involves signing a master rental agreement and enrolment application. Once you’ve done this, you need never sign a rental agreement again. Based on your Master Rental Agreement, your preferred car group will be recognised at over 5,000 locations worldwide. Simply stop at the Preferred Service counter, show your driver’s licence and Avis will hand you your keys.”

Similarly, members of Hertz’s #1 Club Gold enjoy speedy rentals worldwide, with rental agreements pre-populated with relevant licence details and vehicle preferences. “You would arrive at the counter, produce your driver’s licence, sign your rental agreement and go,” says Marshall. “We have a #1 Club Gold board that displays your name, our staff recognise frequent renters by name, and your car will be parked closest to the entrance for convenience.” 

Hotels

For an idea of the power of hotel loyalty programmes, look no further than Hilton HHonors. With 34 million members, and four million new members joining in 2012 alone, there are perhaps few loyalty programmes that can match it. Need more proof? Last year, over half the guests at all Hilton properties worldwide were members of Hilton HHonors. HHonors could owe some of its success to following the lead of airline loyalty schemes, offering an array of options and opportunities when it comes to earning and spending loyalty points. The programme is partnered with over 50 airlines, and has eight car rental partners worldwide. But perhaps most importantly, and surely the reason for its massive popularity, is the opportunity to earn two sets of points for a single stay. “HHonors members can earn both airline miles and HHonors points for the same stay. It is the only hotel loyalty programme that provides this,” explains Daniel Ebo, Regional Director of Sales and Marketing, Hilton Worldwide, Africa & Indian Ocean.

Tapping into a trend of guests wanting “not only the recognition that comes with loyalty; they also want to earn valuable currency which is flexible,” HHonors –unlike many other programmes – allows huge flexibility with loyalty points. As with airlines, points can be used for redeeming free rooms, but equally upgrading to a more comfortable class of room. “HHonors points can be used to guarantee an upgrade on an existing reservation to a premium room or suite at a hotel within the Hilton Worldwide portfolio with no blackout dates,” says Ebo.

No blackout dates? Perhaps the airlines could learn a thing or two from the hotel trade. A further innovation is allowing members to combine points and cash payments for bookings, as well as allowing conscientious travellers to donate points to local charities. But most travellers on loyalty programmes want to earn points as quickly as possible, and again HHonors offers similar benefits to airline loyalty programmes. Points are earned more quickly the higher your tier status.

“The perks get better as you move into the elite tiers,” says Ebo. “Hilton HHonors members with the elite Diamond status receive 50% bonus points… they also receive complimentary high-speed Internet in their rooms, guaranteed reservations availability if the request is made within 48 hours, room upgrades etc.”

Providing regular guests with a selection of ancillary benefits is also what makes ‘Frequent Guest’ – the loyalty scheme of Tsogo Sun – so popular. Guests receive complimentary newspapers each morning, a welcome gift, priority reservations when the hotel is full, and an upgrade to the best available room. Like Hilton HHonors, Frequent Guest also prides itself on its travel industry partnerships, with Amex Rewards, Nedbank Greenbacks, Sunswops and Europcar all affiliated with the Tsogo Sun offering. But when it comes to mid-level corporate travel, money talks. To succeed, loyalty programmes often need to make the current stay cheaper, not just promise affordable rooms in the future. With this in mind, “members qualify for 10 percent off best available rates, and five percent discount off our leisure rates,” says Michael MacKinnon, Loyalty Programmes Administrator for Tsogo Sun Hotels.

Frequent Guest is also a relatively uncomplicated system, with one ‘Sun Rand’ earned for every Rand spent. And unlike many other hotel loyalty programmes, Sun Rands can also be earned when spending real Rands in the hotel’s restaurant and bars. For corporate travellers, the programme should be a no-brainer, says MacKinnon. “Your business pays for your travel and you still earn with us. You, in turn, can use your Sun Rands towards a free holiday… we have no block-out periods and currently members are only required to include a weekend night in their stay to utilise their Sun Rands,” he says.

A similar set-up applies at the 32 properties in the Three Cities portfolio, where guests can earn Exceptional Rands through the ‘Exceptional Rewards’ programme. Rands are earned based on the accommodation charge for your stay, and cardholders can use Exceptional Rands to settle their bill on the spot. Although restaurant charges and ancillary costs do not qualify for earning Exceptional Rands, a range of discounts and free-night vouchers are offered to each guest based on their tier status. And status is something Three Cities seems to take seriously. While Silver membership is free of charge and open to anyone, Gold membership – with its increased benefits – will cost you R1,200 per year, and the top-tier Black status is by invitation only; for guests staying at Three Cities properties at least 50 times in a 12-month period. Occupying a curious space in the hotel loyalty spectrum are the hotels that count leisure and gaming visitors amongst their largest markets, so aim to cater to both.

Sun International’s Most Valued Guest programme is primarily aimed at casino punters, but is equally useful for corporate travellers that enjoy a flutter in the evenings. Developed over the past decade, MVG members enjoy reduced accommodation rates, as well as meal discounts at hotel restaurants. Crucially, the MVG programme is available at all Sun International properties across Africa, and benefits can be redeemed at any casino-hotel. Also hoping to attract a larger slice of the weekday travel market, gaming and hospitality company Peermont Hotels recently launched its Crown Key rewards programme, whereby members that stay for 10 nights receive an 11^th night free.

Crown Key guests also receive complimentary Internet access, room upgrades when available, and dedicated check-in. Importantly, there are also no black-out dates for redeeming free nights, and members can earn points on incidentals such as room service and laundry. A similar approach applies at Premier Hotels and Resorts, which has recently revamped its Royalty Club loyalty offering to target corporate guests visiting its business-focused hotels and conference venues. “Our Royalty Club members receive a full 10 percent back on their entire spend at our hotels, including food and beverages,” says Eugene Oelofse, Marketing Manager of Premier Hotels and Resorts.

“We have big plans in store for our members and are busy developing the full benefits list which will be ever-changing to keep it as dynamic as possible. In future, our members will be able to spend their accrued points on spa treatments, travel and other varied offers.”

Loyalty: a different view?

While travel companies continue to innovate in the world of loyalty programmes, global consulting firm Deloitte has revealed that travellers may be becoming less loyal to specific brands, favouring a cheap deal over long-term relationships. In the firm’s ‘A Restoration in Loyalty’ survey, of 4,000 people polled, only eight percent of respondents said they always stay at the same brand of hotel, while 14 percent always fly on the same airline. Of 26 reasons to book with a particular airline, frequent flyer points came in at 19, while it was the 20^th most important factor when reserving a hotel room… value-for-money, comfort and location were by far the biggest considerations. Punctuality, safety and value-for-money came tops for choosing an airline.

“It is clear that travel brands need to up their game if they want to drive genuine loyalty among consumers,” says Adam Weissenberg, Vice-Chairman of Deloitte. “While earning and redeeming points are the most important attributes for choosing hotel and airline loyalty programmes, travel brands should focus on enhancing the customer experience, making rewards personally meaningful, encouraging loyalty with unexpected rewards if they want to boost consumer engagement, and ultimately building long-term customer relationships.”