Travel loyalty programmes have evolved beyond the traditional model of accumulating and redeeming points, and brands are having to work even harder and smarter to come up with loyalty offerings that appeal to the modern traveller, as Kate Kennedy discovered.
Loyalty programmes have been around for decades, with very few changes to their basic structure and premise. But as the Gen X and Baby Boomer generations slowly age out of the consumer space, ‘millennials’ are the new consumer target and things have to change if brands want to attract this new demographic.
Historically, loyalty programmes have been all about volume and compiling large databases containing millions of names and contact details, with the goal of retaining customers based on their ability to earn points in return for their spend. However, importance is shifting from the volume of loyalty programme members to the level of engagement of those members.
Regardless of the focus of programmes, be they in the hotel, airline or car rental spaces, the platform remains a key aspect of the business for most global chains, as it provides intelligence on the most loyal customers and their travel and spending habits.
What is a millennial consumer and how are they different from previous generations?
Millennials came of age around the turn of the century and were exposed to technology from an early age. According to research conducted by the Pew Research Center, many consider themselves politically and religiously unaffiliated. They are active on social media and tolerant of diversity. Workplace satisfaction matters more than monetary compensation and work-life balance is often considered essential.
Excessive exposure to advertising has made millennials sceptical about promotional material of any kind and they are more likely to heed the advice of friends, family and trusted colleagues over marketing material when making decisions about everything from products and services to employment.
They are not particularly loyal to a brand, going where the best deal is offered. While it is easy to win their attention, keeping a millennial loyal to your business often requires you to offer genuine value-for-money and incredibly personalised service.
As a result, brands are having to adapt their offerings.
“In South Africa, measurable loyalty programmes are a certainly a growing trend with many companies in the service and supply sectors recognising the need to offer their customers a value-add to reward brand loyalty,” says Sherl Camera, General Manager Business Development, Hertz Rent a Car. “Customer retention or loyalty programmes have advanced, as companies have come to better understand their target audiences and their customers’ expectations.”
Best Western’s loyalty programme, Best Western Rewards, has been around for over 25 years and is regarded as one of the more generous programmes, with points that never expire. It has the lowest redemption thresholds for awards and is truly international. With hotels in more than 100 countries, Best Western makes it easy for members to earn points that can be redeemed for global free room nights with no blackout dates, the Best Western Travel Card, dining, shopping and entertainment gift cards, petrol cards, airline/partner rewards and more.
Despite this track record, the hotel group is aware that it has to keep evolving, if it is to meet the changing needs of its customers.
“Some of our additional brand offerings have given us an opportunity to bring new guests to Best Western Rewards and our existing members can redeem their points in a different style of hotel to what they have had in the past,” says Karl de Lacy, International Development Director for Best Western Hotels & Resorts.
Another interesting development in the hotel space is the current theme of consolidation, with some big name acquisitions either in the pipeline or having recently taken place. In Africa, there was the acquisition of Protea Hotels by Marriott in 2014, and Marriott now has an even bigger fish on the line, with the international hotel world holding its breath ahead of its proposed buyout of Starwood Hotels & Resorts.
“In some ways this has put progress or evolution in hotel loyalty into a holding pattern, as these organisations turn inward to evaluate their current offerings and determine what they will do going forward,” says Teri Friesen, Mövenpick’s Vice-President Sales & Marketing: Africa.
In Friesen’s opinion, this trend is creating distance between the consumer and the brands they choose, as loyalty programmes become more about the parent company than the differentiated hotel brands themselves.
“It is no longer about accumulating a substantial number of points as a bragging right,” she says. “Points as currency are becoming less and less influential in consumer decision making and the most exciting programmes in the hospitality industry are being built based on personal recognition and rewards that are truly meaningful to the individual traveller.”
There’s no doubt that Friesen’s view is shared by others in the hotel environment – arguably the prevailing theme in the hotel space.
“It’s now about connecting with people and building emotional connections far beyond the in-hotel stay, and personalising the experience,” says Hassan Ahdab, Regional Vice-President Africa and Indian Ocean at Starwood. “The opportunity to cultivate what we call ‘loyalty beyond reason’ with the world’s most frequent travellers has never been greater. These are sophisticated consumers who have become bored with generic points and perks.”
So, if they are bored with the standard offering, how do you get to them?
“Consumers are more loyalty programme savvy and direct spend behaviour to where they believe they receive the most valuable rewards and benefits that improve their lifestyle,” says Sharon De Leur, Group Loyalty & Direct Marketing Manager at South African hotel and gaming company, Peermont Hotels, Resorts & Casinos. “The current trend is to offer fewer benefits that are simple, easy to understand, earn and redeem. Providing benefits that offer the consumer real, relevant and meaningful value is critical to unlocking consumer loyalty through perceived value.”
The Marriott take on the subject is quite similar.
“In hotel loyalty, it is no longer just about points – it is also about a deeper level of engagement with the guest. The demands of the technologically-minded, next-generation traveller are driven by a world immersed in technology and social media,” says Mark Satterfield, Chief Operating Officer, Marriott International Middle East & Africa. “These travellers interact far more intimately with brands than previous generations, but research shows that they alter their purchase behaviour based on loyalty offers.”
During the Loyalty Conference 2015 in London, Flight Global conducted a survey with over 40 loyalty professionals to find out what they believed the key issues set to shape the loyalty industry landscape were.
The top two trends to emerge from this survey were ‘Big Data’ and ‘Mobile Technology’.
Tackling big data emerged as the top priority among the surveyed loyalty professionals. The mounting pressure to rapidly analyse large volumes of data proved to be a key challenge for those surveyed. As many as 79% of survey respondents said they would be investing in new technology to help capitalise on this long-term trend, and 51% said they would be investing in manpower in order to effectively interpret the data that was pouring in through technological channels.
In terms of mobile technology, the frequent flyer professionals surveyed felt that the existing airline loyalty programmes in the market were static, ‘boring’ and failed to engage fully with the end customer. Additionally, they felt that more availability of mobile products would make loyalty programmes more relevant and accessible.
In IHG’s 2016 Trend Report, CEO Richard Solomons says that the relationship between consumers and brands requires a new mindset.
“In today’s digital age, an organisation’s interaction with the outside world is more than transactional – it needs an emotional engagement to succeed, stay relevant and, most importantly, maintain trust,” he says. “For IHG, we believe that understanding this interplay is key to generating value for our guests and our business.”
Key findings in the report, titled Meaningful Membership: Transforming Membership in the Age of I, include the difference between signing in and signing on, where signing on creates pride of belonging to a community; one-think decision-making, where people expect to be satisfied in nanoseconds, which if gotten wrong, will damage perceptions of quality, leadership and trust; the universal need of belonging, where members want to be part of a group that has a bigger purpose; and the importance of a membership mindset.
Loyalty programme evolution
Lance Smith, Executive Sales Manager at Avis Budget, South Africa says that in decades past, it was enough to offer members a generic membership, but today that just won’t cut it.
“These days, you have to personalise your programme if you want to attract customers’ attention,” he says.
Avis Budget has 300 locations in 38 African countries, and its wide footprint makes it an attractive option for those car rental customers looking for a brand to remain loyal to.
The Southern African operation recently joined the Avis global loyalty programme which, for the first time, allows its customers to improve their status and benefits based on the value and number of rentals. These benefits are now available for redemption globally. Further to that, a new mobi app will allow customers to view their rental history and redeem their rewards vouchers.
“SPG has moved beyond being a loyalty programme to merely earn and burn points,” says Ahdab. “The more SPG Members stay, the more choices are available and the more personalised the benefits become with standouts like lifetime status, 24-hour check-in and a dedicated Starwood ambassador who provides one-on-one service to uniquely tailor the guest experience.”
Following its acquisition of Protea Hotels, Marriott has rolled out its Marriott Rewards programme to all of its newly-acquired properties in Africa. Members of Protea’s Prokard rewards programme have been converted to Marriott’s programme and rewarded with the appropriate Elite status within Marriott Rewards, based on the tier level within the existing Prokard programme. These ‘new’ members can now earn and redeem points at 17 hotel brands, including Ritz-Carlton, with more than 4,000 locations in over 80 countries. They also have the ability to choose to earn Rewards points or airline miles with 41 airline partners. Members can redeem their points for hotel stays, cruises, merchandise, flights and digital downloads.
“We are shifting the Marriott Rewards programme to be relevant to our guests in every aspect of their lives – not just when they have accrued enough points for travel, and not just when they have a trip planned. We are providing guests with experiences that enable them to enjoy the benefits of loyalty in ways that are most meaningful to them,” says Satterfield.
With the recent announcement of its ‘Fab Four’ benefits, Marriott Rewards’ 55 million members are now able to share points among more friends and family, book stays with a mix of cash and points, book travel in advance before having enough points, and earn Elite night credits for stays paid for with points.
Recognition is one of Marriott’s key strategies around loyalty, “and it goes beyond a warm greeting at the front desk, which remains critically important,” says Satterfield.
That recognition can take so many forms.
“In some hotels, we have put bluetooth beacons around the property that send messages to guests’ phones as they walk by the front desk, the spa and other locations with personalised offers,” says Satterfield. “One of the smallest yet most impactful things we learned from this is how much guests love the personalised welcome message they receive on their phone when they enter the hotel.”
Hilton Worldwide recently launched its ‘Stop Clicking Around’ campaign aimed at encouraging Hilton HHonors members to book directly through its brand websites, mobile app and reservation call centres, or through preferred corporate travel partners and approved travel agents.
“Last year, 57 billion Hilton HHonors Points – or more than 1.6 million free nights – went unearned because guests booked their stay through a third party,” says Mark Weinstein, Global Head of Customer Engagement, Loyalty and Partnerships at Hilton Worldwide. “There is a huge misconception that third parties always offer lower prices for our hotel rooms, which is simply not true.”
HHonors members will be rewarded for this behaviour with HHonors Points that can be used for free room nights, free wi-fi, and the ability to check-in, choose your own room from a digital floor plan, and use a digital key all via the HHonors mobile app on a smartphone.
to anyone who simply signs up as a Crown Key member. No jumping through hoops necessary.
“Rewards and benefits are instantly available, every time the consumer stays at a Peermont resort,” says De Leur. “The more the consumer spends, the more the benefits increase.”
The group’s benefits and rewards include expedited check-in and a variety of in-room conveniences.
All about the spend
Perhaps the biggest – and most recent – change to airline loyalty programmes is the move towards rewards based on spend, as opposed to distance flown. According to South African Airways, fewer than 10 airlines globally have adopted this policy.
“Frequent flyer programmes continue to face capacity, regulatory, accounting and liability pressures, notwithstanding the fact that we compete for ‘share of mind’ in an over-crowded loyalty environment, whilst weathering the storm of a highly competitive and technology-smart era,” says Tlali Tlali, spokesperson for SAA.
“There is a growing awareness of the limitations of the legacy FFP models (mileage-based), due to an increase in the line-up of partners for greater customer participation, which continue to put more pressure on the limited award seat inventory of airlines that was initially intended and often priced to fill empty seats. It is therefore no surprise that the widening of the target audience to include low and medium frequency travellers, primarily to generate more third party revenues for the FFP, undoubtedly provoked the evolution of FFPs from mileage-based to revenue-based models, in order to fully leverage the interests of members, partners and shareholders. Monetising the value of a mile/point with appropriate mobility for personalised customer convenience is a core challenge for any FFP from a customer loyalty perspective.”
British Airways has also made the move to rewarding spend.
“It is fairer that Avios should reflect the type of ticket bought,” says Edward Frost, Regional Commercial Manager South and East Africa for BA. “The more expensive the ticket, the more Avios earned. We are responding to customers’ feedback on this issue.”
Last year, British Airways made some changes to its Executive Club programme, to provide more opportunities for customers to spend Avios on reward flights.
“We are now guaranteeing there will be nine million redemption seats a year available – over 500,000 more than previously,” says Frost.
Reward seats are now provided across the airline’s entire network, many of which require fewer Avios to book than before.
“The programme is now geared to ensure that those who spend the most on flexible tickets see the greatest rewards,” he says.
Delta was actually one of the first airlines to move its SkyMiles loyalty programme from figuring rewards based on miles to rewards based on amount of money spent, with other legacy carriers quickly following suit. At the time, the move was unpopular with frequent flyers, but it made sense for Delta from a dollars and cents standpoint.
“Miles for Delta flights are earned based on ticket price instead of distance flown. So when you pay a higher price, you’ll be rewarded with more miles—up to 75,000 per ticket,” says the American carrier’s website.
It used to be that a free flight or night in a bed was enough to lure customers to sign up for a loyalty programme, but that’s not the case any longer. With millennials’ growing insistence on personalisation, it’s becoming more and more important to provide guests with the flexibility to experience loyalty in the way that is most meaningful to them.
“That includes giving them the options to redeem their points flexibly,” says Satterfield.
Marriott Rewards members are able to spend their points in several ways, including on travel, designer fashion, the latest technology gadgets, dining and entertainment. Members can redeem points at more than 4,000 hotels across 17 brands, in 80 countries.
In Africa, Best Western has a presence in Algeria, Benin, Egypt, Ghana, Kenya, Mauritius, Morocco, Nigeria, Reunion, South Africa, Tanzania, Uganda, and Zambia, and has signed on with a number of redemption partners on the continent. Best Western Rewards members can spend their points at a variety of partners in Africa, including the Yuppiechef and Takealot websites, Spafinder, Feelunique, Firebox and Forzieri.
Peermont Crown Key points may be redeemed for a complimentary stay and used to unlock exclusive hotel experiences. Aside from these redemption offerings, Peermont awards Crown Key members with vouchers and special offers for personal indulgence. These include a complimentary welcome cocktail, discounts on golf green fees and spa treatments, as well as movie and show tickets at its resorts that offer these facilities. And as you move up the tiers, you can look forward to a complimentary laundry service, private airport pick-up from O.R. Tambo International Airport in Johannesburg (for Emperors Palace stays), a late check-out, and complimentary access to the Bidvest Departure Lounge at ORTIA.
Starwood believes that its SPG members value more choice and more luxury.
“Offering a suite of redemption products definitely appeals to them, but they are looking at experiences that go beyond that… like being able to redeem for airline tickets, or an Uber ride, or an experience money can’t buy, like a paddock experience at a Formula 1 grand prix, or back stage entry and VIP passes to a concert,” says Ahdab.
Hilton offers a variety of ways to earn and redeem HHonors Points. Members can redeem their points for free nights, premium merchandise, charitable contributions, or unique events through the HHonors auction platform, such as exclusive artist experiences and hotel concert events with Live Nation, or a race experience with the McLaren Honda Formula 1 team.
“To offer members more choice for their miles is a critical success factor for any FFP,” says Tlali, “especially since FFPs have established partnerships and alliances with traditional (travel) and non-traditional partners (credit card, retail and lifestyle). The fastest growing segment of FFPs is ‘mileage consumers’ and not frequent flyers. However, the reward of an airline ticket remains the highest aspiration for any loyalty programme member. In general, infrequent flying members still have high potential from an airline loyalty perspective.”
Friesen has a different take on the issue.
“It seems that ease and convenience – and the absence of restrictions – are more important than a large array of redemption products,” she counters. “It is more important that if I am eligible for redemption that I can book the stay I want or acquire the reward I want when I want it, than to have many diverse options that have obstacles to book, hidden expenses, or limited availability.”
It’s no secret that millennials are very attached to their mobile devices, and with technology at the forefront of modern day life, customers expect a hassle-free, seamless service or experience that offers tangible value.
“The world of the millennials revolves around technology and social media, and making sure that SPG engages with them through these platforms and allows them to engage with us is core to our strategy,” says Ahdab. “We also recognise that these are early adopters and therefore we launched our SPG Keyless with our tech savvy brands Aloft and W Hotels that speak to the lifestyle of this group.”
Starwood views technology as an enabler to deliver a more personalised guest experience and deliver it consistently.
“Technology has changed so much, so fast, for so many. It stands to reason that people will expect more from brands – especially personalised attention,” says Ahdab. “With our global reach, lifestyle brands and SPG, we have an opportunity to get much closer to our customers. Technology is changing the stakes for brands.”
SPG Keyless, powered by the SPG app, enables guests to bypass the front desk (where available), go directly to their room and unlock their stay with a tap of their smartphone.
“As online and digital social experiences grow, people want to share their opinions, experiences and insights with others just like them, while at the same time maintaining and expressing their personal uniqueness. This increasing desire to maximise both individuality and inclusiveness – the ‘age of I’ – is now a major driver behind social connectivity. Understanding how to manage belonging and uniqueness is essential for a successful, profitable and branded membership community,” says IHG’s Solomons.
Mövenpick launched a completely revised responsive mobile site at the end of February, which it believes will appeal to the 42% of travellers who currently use their smart phones to book their travel.
“We need to place continuous focus on our online content, especially mobile,” says Friesen.
A different world
The world is constantly changing and it seems that just about every brand with a presence in the loyalty space is updating its offerings, changing the way it speaks to its customers, and taking the next generation of travellers into consideration.
“We are shifting our programme to be even more flexible, experiential, and community-oriented,” says Satterfield.
Five, 10 or 20 years ago, loyalty programmes were really about status and the accumulation of points, as consumers built towards earning themselves free flights or accommodation – even if that meant ‘paying’ an exorbitant amount of points to receive it.
“Now it is all about being recognised and being known,” says Friesen. “It’s about a brand understanding who I am and that what I want during a business stay is going to be different to what I want during a personal stay. It is about connecting in a meaningful way and providing me with access or experiences that enhance my stay in the moment, rather than accumulating points that I am continuously reminded will expire.”
For Marriott, successful loyalty programmes are no longer just about points, dollars and rewards.
“Success is about engaging with the guest even when he or she does not have any travel planned,” says Satterfield. “Loyalty is greater than just rewards and guests are looking increasingly for programmes with more flexibility and better experiences, not just points.”
“In order to create truly loyal guests, hospitality programmes must evolve to deliver more than just the traditional value propositions such as points for room nights,” he says. “Programmes must also deliver personalised recognition through the use of technology and provide access to unique benefits and experiences.”
In today’s fast-paced world, consumers have more brands, more options and more deals to choose from. Empowered by technology, they can, and will, switch to the brand that offers them the best deal.
A Google Travel study reported that two in three business travellers are open to trying a new loyalty programme if it provides a new, different or unique experience. It shows that competition is fierce, but with the continued evolution of loyalty programmes in the travel space, it’s clear that the likes of hotels, airlines and car rental companies are all going to fight hard to give consumers what they want.
Some of the rewards on offer
Avis Budget Preferred Loyalty Programme members spend less time filling out forms and more time enjoying the benefits of priority service, upgrades, a free additional driver and free weekend rentals.
Hertz Gold Plus Rewards offers members one free rental day after every 10 rentals. Membership is structured according to three tiers – Gold, Five Star and President’s Circle – and is determined by the number of rentals taken during a calendar year. Higher tiers receive increased benefits, including car upgrades and guaranteed availability.
Best Western Rewards members earn 10 points for every dollar spent, or can choose to earn airline/partner rewards. Members enjoy priority check-in and Platinum and Diamond Elite members are offered room upgrades where available. Since 2015, SAA Voyager members have been able to earn Miles in Best Western-branded hotels globally.
Hilton HHonors members earn 15 points for every dollar spent. They can take advantage of a guaranteed discount at any of Hilton’s 4,500 hotels, as well as free wi-fi, digital check-in with room selection and digital key room access.
Marriott Rewards’ MegaBonus promotion, running until 15 May, gives members registered before 15 April a free night after their second paid stay at participating properties. All members receive free wi-fi and mobile check-in, with additional bonuses as you move up the tiers. Regardless of your tier, you’ll get up to 10 points per dollar spent at participating properties.
Mövenpick Hotels and Resorts’ Circle M members benefit from exclusive discounts on food and beverage and room rates at participating hotels. The group also offers miles to members of Lufthansa, Etihad and Qatar Airways’ loyalty programmes.
Peermont Crown Key members earn one point for every R10 ($0.65) or BWP10 ($0.90) spent on room bookings and charges, such as room and laundry services. In return, members receive upgraded rooms (when available), free in-room wi-fi, a newspaper delivered to their door, expedited check-in, room guarantee and their room key ready on arrival. Crown Key members also benefit from a partnership with Mango Airlines with discounted airfares, free flight change, an extra 10 kilograms of checked luggage, a meal voucher and access to the Bidvest Airport Lounge
Starwood Preferred Guests earn two Starpoints for every dollar spent at Starwood hotels. Points also accumulate through eligible spend on food and beverage at participating establishments, Uber rides, and flights booked with Delta and Emirates. You can also purchase Starpoints to add to your account, give as a gift or use as incentives.
Arik Air’s Affinity Wings benefits include priority check-in, extra baggage allowance, boarding and baggage priority. Lounge access is offered to Silver and Gold tier members, but all members may use their miles to purchase lounge access.
British Airways Avios can be earned by South African customers through spend with Absa Rewards, the Avios credit card, Avis, BP fuel purchases, Pick n Pay, Rocketmiles Hotels, Lew Geffen Sothebys and UCount. Executive Club members can earn and redeem rewards across Oneworld partners.
South African Airways’ Voyager programme offers four tiers – Silver, Gold, Platinum and Lifetime Platinum – and members earn bonus miles based on their tier status. SAA has renegotiated its non-airline redemption options, with a consideration to add more lifestyle redemption partners in the near future, in addition to a constant conversion rate from Miles to ZAR value. Voyager Miles can be earned on SA Express, Airlink, Mango and Swaziland Airlink, as well as Star Alliance member airlines.
What do customers really want?
As airlines continue to battle for their share of customers, PwC in the UK surveyed over 1,000 UK adults, all of whom had flown at least once in the past year, to find out what they wanted most from an airline. Free food and drink (34%) and brand reputation (21%) were the biggest factors influencing consumers’ choice of one airline over another. A further 16% said they would choose an airline based on the availability of wi-fi in the air, including access to free media services such as Netflix or online games.
Based on the assumption that they could reach their destination for approximately the same cost, the survey revealed other added-value pre-boarding offerings with the potential to influence passengers’ airline choice.
35% said they would like to receive free, optional and customisable mobile phone notifications providing gate details, length of time from departure desk to gate, and destination information such as weather details.
30% said they would like information on, and the ability to book, transport to and from their departure airport that would work seamlessly with their flight times.
29% said they were interested in a loyalty scheme rewarding them for all purchases relating to their trip, from the flight through to duty free.
33% said they would like their luggage sent on to their hotel ahead of them.
“While a number of airlines provide food, drink and mobile ticketing, it is interesting how consumers really value these – and the little improvements they’d like that would make a world of difference to them as they travel,” said Ben Paul, UK airlines leader, PwC. “Investing in mobile app and online ticketing updates that could add gate details and real-time information on how long it might take to get from check-in to the plane, for example, could have a real impact on booking numbers and, ultimately, an airline’s bottom line.
“By increasing customer choice and personalisation – factors that our survey showed are highly valued – airlines can boost their potential to generate extra revenues. And as in-flight personalisation develops and expands, it can trigger a virtuous circle of loyalty and usage: the more a passenger uses these in-flight services, the more data the airline can collect, and the more personalised services it can provide, such as having a passenger’s favourite drink, snack or magazine available. Often it is these small, simple acts that have the most powerful impact.”
Majority of LCCs eschew loyalty programmes
Loyalty programmes are not for everyone and not for every service provider. For cost-conscious airlines such as South Africa’s Mango, a loyalty programme doesn’t fit with its strategy of offering cheaper fares.
“The cost of starting and maintaining a loyalty programme ultimately adds to overheads and, as such, has an impact on the fare that travellers pay when purchasing a ticket,” says spokesperson Hein Kaiser.
Like most low-cost airlines, Mango doesn’t offer its customers a loyalty programme and says it would only reconsider if there were zero cost and as such no impact on pricing and cost to the consumer.
Interestingly, Air Arabia, the Middle East and North Africa’s first and largest low-cost carrier, launched its Airewards programme in 2015 – the first ever LCC rewards programme in the MENA region. As with the likes of SAA and BA, Airewards points are rewarded based on money spent rather than distance flown.