There are loyalty programs everywhere. From coffee shops to local businesses, and even the frequent traveler programs of major airlines and hotels. According to a study from 2022, as of 2020 89% of U.S. customers were registered in at least one loyalty programme.
Travel rewards programs have been growing at a rapid pace. American Airlines announced earlier this year that first-quarter enrollments for its AAdvantage program had increased by 60% from pre-pandemic 2019 levels. United Airlines reported that signups to its co-branded cards increased by 30% over the past year. Hilton also reported that its Hilton Honors membership grew 60% compared with last year.
Why is the inflation so high? The continued high demand for travel, despite inflation could be a factor.
According to Marcus Collins, clinical professor of marketing at University of Michigan Ross School of Business, “I believe people are looking for ways to get more out of their money.”
This growth of travelers who are savvy about points, credit cards and perks also creates more competition for the ever-changing program benefits. This phenomenon begs the following question: How can you stay ahead of your competition with more loyalty program members?
Why is the number of people participating in loyalty programs increasing?
Companies are offering incentives for customers to sign up, not only to help them save on their travel costs, but also to get the most out of it.
Collins, who has worked with brands such as Apple, Nike, Apple, Delta Air Lines and Delta Air Lines says that it costs 8 times more to get a new client than to keep an existing one.
SkyMiles membership is the only thing Delta’s executives require for their new in-flight free Wi-Fi. Delta claimed that the decision helped to drive new registrations of millions in early 2018.
To accommodate all the new members in loyalty programs, airline, hotel and other companies have had to change their structure.
A new loyalty landscape
Many airlines and hotel chains have changed the way members can earn loyalty currency and redeem it in recent years. Instead of charging the customer a fixed, predictable number of miles or points for a complimentary flight or hotel room, companies are now tying redemptions to demand-based algorithms.
Some programs award elite status not only based on the number of hotel or flight nights that a member has accrued but also on their travel spending.
When American Airlines redesigned its AAdvantage Program last year, they began awarding the elite status to members based on how many “Loyalty points” a person earns by combining not just flying, but also charging purchases through American Airlines’ co-branded cards, and its online shopping platform, among others. You could achieve elite status as an AAdvantage Member without ever having to step foot into an airport.
Similar variations are offered by other companies. JetBlue is one company that offers limited benefits to those who are not yet elite. These changes give customers an opportunity to taste status.
This is why Delta and American Express are imposing stricter rules for airport lounges due to reports of crowding.
Darron K. Kirkley, an associate professor at the University of South Carolina College of Hospitality, Retail and Sport Management, says, “If everybody is platinum, no one is.”
In fact, members who want to get the most out of their loyalty will have to navigate such a world.
How do you win at the loyalty game?
There are ways to stand out from the pack and still save money when traveling.
Collect transferable points
Consider a flexible credit card with rewards that can be used in multiple loyalty programs. This can help protect you against sudden changes or devaluations, such as when a loyalty program charges more for stays or flights.
Use your points as if they were cash
You can avoid future actions that programs may take to reduce the value of their currencies by spending your points or miles as soon as possible. Knowing the value of loyalty currencies is important because prices for award flights and hotel stays are now more volatile than ever.
Use to your benefit
When crowded lounges or upgrade queues prevent you from enjoying some of the most expensive loyalty benefits, it’s best to concentrate on earning cost-saving rewards like complimentary checked baggage and hotel credits.
Some travel credit cards offer these perks that can help you save a lot of money.
Despite more volatile prices for redemptions earning points, miles, and elite status is easier than ever, Kirkley says. This is especially true when considering the growing number of partnerships, such as those that enable Marriott Bonvoy Members to earn points by using Uber, or Delta SkyMiles Members to earn miles while at Starbucks.
Loyalty programmes are not going away. Kirkley believes that the number of signups will continue to rise.
The competition to get perks is still on, so you’ll have to work smarter to earn points and miles and prioritise the benefits that are important to you.
Assemble your reward
It’s essential to choose a credit card for travel that puts your priorities first. Our picks of the top travel credit cards for 2023 include those that are best for: