Growing Loyalty Programs Mean More Travelers Competing for Perks
If you thought it's been harder to get upgrades or lounges have been more crowded lately, you're not alone.
Loyalty programs are everywhere, from coffee shops and local businesses to the major airline frequent flyer and hotel programs. In all, 89% of U.S. consumers were enrolled in at least one loyalty program as of 2020, according to a 2022 study.
And travel rewards programs are growing especially fast. Earlier this year, American Airlines reported first-quarter enrollments in its AAdvantage frequent flyer program were up 60% compared to pre-pandemic 2019. United Airlines said sign-ups for its co-branded credit cards were up 30% year-over-year. And Hilton reported membership in its Hilton Honors program grew at a 60% clip compared to last year.
What’s behind the explosion? One reason could certainly be the continued, heavy demand for travel in the face of inflation.
“I think people want to stretch their dollars further,” says Marcus Collins, a clinical professor in marketing at the University of Michigan’s Ross School of Business.
But this growth in travelers getting savvy with points, perks and credit cards also means more competition among consumers for many of the program’s ever-changing benefits. It’s a phenomenon that begs the question: With more travel loyalty members than ever, how do you get ahead?
Why are more people joining loyalty programs?
Not only do customers want to save money on travel, but companies are giving them incentives to join, too.
“It costs eight times as much to acquire a new customer as it does to retain one,” Collins says, citing his experience working with major brands like Delta Air Lines, Apple and Nike.
It’s a key reason Delta executives required just one thing for customers signing up for its new complimentary inflight Wi-Fi — a SkyMiles frequent flyer membership. Delta said the move helped drive millions of new enrollments early this year.
But to support all of the new members, airlines, hotels and other companies had to make changes to how these loyalty programs are structured.
A changing loyalty landscape
In recent years, many airlines and hotels have shifted how members earn and redeem loyalty currency. For example, instead of charging customers a predictable, fixed number of points or miles for a free flight or hotel stay, many companies now tie redemptions to the same demand-based algorithms that dictate cash prices.
Similarly, some programs now hand out elite status based not just on how many flights or hotel nights a member accrued, but also based on money spent on travel and beyond.
