Pros And Cons Of Loyalty Programmes By Airlines And Hotels


There was a time when people would only choose to fly a particular airline or stay in certain hotels. This was so that the consumers would be able to rack up frequent flyer miles or member points each time they travelled or checked in to these properties.

But “loyalty” in travel is not what it used to be any more, especially among the younger demographic. Travellers these days no longer blindly place their devotion behind a single brand as price point becomes a bigger priority.

And the Internet has made it so easy to source for the best travel deals.

Travel loyalty expert Mark Ross-Smith says there is a changing trend among travellers these days.

“When travellers are considering which airline to fly, especially in Malaysia, there is absolutely a shift in some segments towards what the airline is offering, versus what the loyalty programme can offer.

“The shift in passenger behaviour is driven by a culture of discounts versus value. Travellers that are drawn to discounts are more willing to forgo significant loyalty benefits in exchange for the perceived cost-saving,” he says.

However, competitive price points is just one driver of purchase behaviour among travellers.

The Internet has made it so easy for travellers to source for the best travel deals.

“There is a mountain of research out there, which shows that discounts don’t increase loyalty behaviour. In fact, it has the opposite effect over time where customers become less loyal to the programme, and more loyal to the constant ‘sugar high’ of discounts,” Ross-Smith offers.

What are travellers looking for in a travel loyalty programme then?

“Travellers who are not lured by discounts tend to buy based on value – that is, they want and expect more from their loyalty programme. These include priority check-in, lounge access, complimentary extra baggage and business class upgrades,” Ross-Smith answers.

Raking more benefits

The mechanism behind a travel loyalty programme is fairly simple. Typically, every airline ticket you buy earns miles or points that can be redeemed for free or discounted travel. Hotel loyalty programmes work very much the same too whereby guests accumulate free awards when they make repeated purchases with a hotel.

But do travellers actually redeem those rewards? In 2013, CNN reported that a study had found over 40% of British frequent flyers never redeemed their points.

Travel loyalty expert Mark Ross-Smith says there is a changing trend among travellers these days.

Ross-Smith says travellers need to spend some time to familiarise themselves with the processes.

“Loyalty programme members who take a few flights and spend a few minutes to learn about how to earn points and miles, earn more rewards, take more free flights and are more profitable customers for the airline,” he says.

To appeal to travellers, there’s now a trend of loyalty programmes building out horizontally, that is – points earning and redeeming opportunities outside of the core travel experience.

AirAsia BIG – the loyalty subsidiary of low-cost carrier AirAsia – has moved away from the miles-flown approach. It currently offers redemption beyond airline seats to include travel, lifestyle and financial services.

“We moved away from the miles-flown approach to ensure our customers could earn points faster and easier from more platforms,” says AirAsia BIG chief executive officer Spencer Lee.

Do you only fly a certain airline to rake frequent flyer miles?

“Without a new approach, most airline loyalty programmes risk alienating their customers. Loyalty programmes must continue to innovate to provide value,” he adds.

It’s a sentiment echoed by Malaysia Airlines group chief customer experience and marketing officer Lau Yin May.

“It is a misconception that you have to fly first to earn miles. In addition, times like this is where the discerning consumers are looking for ‘value’,” she says.

Malaysia Airlines’ Enrich programme lets its members earn points by converting their (participating) credit card points and transacting at non-air partners. These range from accommodation, car rental, dining, shopping and more.

“We also need to ensure the programme is aligned with the overall airline’s brand image and experience. At the end of the day, a positive customer experience, customer satisfaction and the value of the products or services the passenger gets from the transaction determines their loyalty,” Lau adds.

AirAsia BIG currently has over 24 million BIG Members. Redemption activities occur daily, with an average of 26 million BIG Points redeemed every day. As for Enrich, close to 10% of its 3.6 million members made at least one flight redemption last year.

Attracting young travellers

More recently, a research by Adobe revealed that fewer Gen Z travellers (those born between mid-1990s and mid-2000s) are signing up for travel loyalty programmes compared to the Baby Boomer generation (born between 1946 and 1964).

AirAsia BIG’s Lee says changes in generational travel habits could explain this phenomenon.

“Unlike before, travellers now take shorter trips, and more frequently. As such, traditional loyalty programmes that emphasise miles flown or fares spent do not cater to that demographic,” he offers.

Many multi-generational trips are planned by Gen Z travellers, making them an important segment for travel loyalty programmes.

Lee also advocates the usage of technology to cater to travellers that expect a more personalised experience.

“Brands must leverage new technologies to make full use of live, granular data to better understand customer expectations so they may serve the most relevant offers and products to each customer,” he says.

The way Marriott International Asia Pacific vice president (Digital, Loyalty and Portfolio Marketing) Alan Tsui sees it, attracting Gen Z travellers is vital in keeping travel loyalty programmes relevant.

“Multi-generational travel is this year’s top global vacation trend, and what we see is that these trips are planned by Gen Z travellers. They are influencing the decisions made when travelling with their families, which means they hold the purchasing power.

“With Gen Z travellers, we need to do away with the traditional notions of luxury, and usher in the ‘next generation luxury’ travellers. They are seeking personalised and differentiated experiences, and are willing to shell out extra cash for food and drink experiences with traditional luxuries, such as airfare upgrades,” he offers.

Alan Tsui, Vice President, Digital, Loyalty and Portfolio Marketing, Marriott International Asia Pacific

The Marriott Bonvoy programme recently began offering once-in-a-lifetime experiences in culinary, entertainment, lifestyle and sporting events.

According to Ross-Smith, Gen Z kids are demanding a different type of loyalty experience.

“While Gen Z travellers are not entitled, they certainly expect more from travel loyalty brands. Other non-travel brands have raised the bar by giving these consumers more products and faster access to services.

“Travel loyalty programmes largely have not adapted to the on-demand world we live in, and that means less buy-in from Gen Z into travel loyalty programmes,” he explains.

When all is said and done, should travellers still sign up for loyalty programmes?

“Yes, absolutely 100%! It’s like ordering a combo meal at your favourite restaurant but saying you don’t want the drink. You’re already paying for the drink, so may as well take it.
“Airline and hotel points are the same. The price you pay includes the points. It’s like getting something for nothing. Take the points,” Ross-Smith concludes.


How to pick a travel loyalty programme?

Travel loyalty programmes can help you earn free flights and stays at hotels. The trick, though, would be to accumulate enough points to actually enjoy the benefits offered.

If you’re new to the world of loyalty in travel, it can be pretty daunting choosing the right programme. Here are some tips from experts to help you pick the right one.Look for ways to earn miles outside of the airline/hotel ecosystem.

For the average Malaysian spending just RM2,000/month on living expenses, if these costs were put on a credit card to earn miles, that could be 10,000+ airline miles every year, which is more than enough for a free flight in Malaysia for spending money you have to spend anyway. It’s the payment method (eg: credit card) which is key to earning airline miles. – Mark Ross-Smith, travel loyalty expert

 

Find a programme that suits your needs and spending patterns in order to maximise the number of potential points you can earn, then stick with it so that your loyalty points are concentrated in a single programme instead of being spread across several providers. You might also want to look for programmes that have partners or agreements that allow you to transfer points among them. – Spencer Lee, AirAsia BIG

 

Look for a programme that offers more than the basic travel necessities such as flights and accommodation. A good programme allows even the most discerning traveller to experience the country as a native by offering once-in-a lifetime experiences. – Alan Tsui, Marriott International Asia Pacific

 

Everyone should be a member of a frequent flyer programme whether they are flying or not. Some airlines’ loyalty programme offers benefits beyond point and miles such as discount and exclusive access to other privileges including events. – Lau Yin May, Malaysia Airlines





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