Game Changers

Travel brands revamp loyalty programs to keep customers engaged.

- MARLENE GOLDMAN

One of the many fallouts from the turbulent past 1.5 years of pandemic-related travel restrictions and lockdowns has been the rethinking and imminent restructuring of loyalty programs throughout the travel industry, from airline and hotel brands to cruise and rental car companies. Loyalty programs are more than a perk for customers; they can be worth more than the brand itself for the program owners and operators. For example, the world’s largest airline, American Airlines, is valued at roughly $6 billion, whereas its passenger loyalty program, AAdvantage, boasts an estimated worth of $24 billion according to a recent analysis by Financial Times.

The value loyalty programs bring is one reason brands all across the industry restructured their programs to keep loyal customers enrolled and engaged amid all the COVID-sparked uncertainty. But the nature of loyalty programs has traditionally targeted business travelers, a sector still far from recovery.

“Most frequent-flyer programs or loyalty programs are geared toward high-repeat travelers, which are usually business travelers,” said Ben Baldanza, an economist and former CEO of Spirit Airlines (2005–2016). “If business travel reduces, changes, and people work at home or meet using video, not earning miles on room nights, it’s harder to earn a free flight or hotel room. If consumers have to wait years to get their rewards, loyalty reduces.”