Customer Loyalty In The Airline And Hotel Industries
Alexander

Customer Loyalty In The Airline And Hotel Industries

Every industry strives to achieve customer loyalty. A loyal relationship is a lasting one and can lead to customers becoming brand evangelists - encouraging others to use your brand above others. This is not without challenges in a free market where the customer has many alternatives.  For travel - specifically airlines and hotels, the picture is a little clouded. Whilst most airports will have several or more carriers serving them, at others, customers won’t have much choice with whom they’ll fly. For hotels, location is everything - for major hotel brands they will be vying for customer attention in key cities across the world.

Many loyalty programmes solely focus on acquiring new customers and encouraging repeat business, but this in itself is not necessarily indicative of loyalty. The elephant in the room is the recent press that airlines have been receiving with passenger videos showing less than favourable customer service on flights. This is damaging the reputation of many airlines. Whilst this is a separate issue, it does demonstrate that the best loyalty scheme must be backed up with impeccable customer service at all service points.

 

What Counts As Airline Customer Loyalty?

A Deloitte report found that many airline loyalty programs fail to engage with the customer. Particularly with the high-margin business and high-frequency fliers - 44% of business travellers (and 72% of high-frequency business travellers) are actually participants in two or more loyalty programs. Indeed, Loyalty Programs languish down in 19th place of important airline experience attributes (apart from high-frequency business travellers, who place it 2nd).

When people have a preferred airline, they tend to give them repeat business. For both leisure and business travellers, 43.9% give 76-100% of their business to their preferred airline. Overall having the best loyalty scheme ranked 9th in importance to factors for a preferred airline; however, 33% said that they would not switch loyalty schemes even once they’d achieved the highest status level.

 

What Counts As Hotel Customer Loyalty?

PWC research[2] found that leisure travellers over 30 have 3.2 loyalty memberships versus just 2.3 for millennials. What makes a program more attractive to customers? Primarily, it’s perceived point value for both business (54%) and leisure travellers (46%). Second most important are prices (41%) and a more personalised experience (40%). Business Travellers redeem points most frequently (70% have redeemed points once or more times in the last year).

The most popular redemption is against hotel nights (84% for business and 79% for leisure travellers). Second comes Upgrades and Airmiles and third is merchandise. This shows a mixture of hard benefits and experiences. One good measure of loyalty schemes encouraging repeat business is the fact that customers will pay more to stay in a brand’s hotel to gain loyalty points - in the US, customers will pay on average $23-27 more a night.

 

Case Study

Best Western Hotel Group

Best Western have an award-winning loyalty programme (Best Western Rewards®). It is one of the richest in the industry. It already offered some of the most generous rewards compared to competing schemes. However, the rewards administration required streamlining and the organisation wanted to centralise their supply chain management. With millions of customers worldwide, it was vital to offer locally relevant gift cards available.

Customers move up through to the five status levels based on the number of nights/stays or points accrued, giving more opportunity to ascend the levels. Best Western will also match any elite tier with another hotel group with their status match programme. The Diamond tier is also a lifetime reward - never being downgraded. Points aren’t just used for room upgrades or air miles - also available are shopping vouchers, meal vouchers and e-gift cards for top brands.

Furthermore, the hotel chain will continue to monitor what customers’ preferences are and adjust the offering accordingly. It is this attitude and forward-thinking that has kept the Best Western Rewards ranked in the top hotel customer loyalty schemes.

Learn more about Ovation Incentives’ relationship with Best Western here.

 

Conclusion

As loyalty programmes continue to grow and mature, hotels and airlines will see a demand for a more tailored experience and price-based rewards for loyal customers. More organisations are beginning to recognise that one size does not fit all. Especially when you have such diverse demographics as business versus leisure travellers - i.e. those who are spending the company’s money versus their own! These are divergent customers who seek choice. The challenge faced by airlines and hotels is to provide that choice seamlessly and in a way that keeps customers interested and, ultimately, loyal.

 

Quick Tips

Want to see your customer loyalty program thrive?

  • Provide the traveller with a good choice of redemption options
  • Make sure they can redeem points instantly
  • Assign a competitive redemption value to points
  • Make the scheme as easy as possible: Easy to earn and accumulate points which can be redeemed for a wide range of rewards.

Want to know more about Customer Loyalty solutions?