Loyalty and rewards programmes - what's the catch?

Joe Mortimer, 21 Mar 2013 15:59

“I don't spend a nickel, if I can help it, unless it somehow profits my mileage account.”
George Clooney as Ryan Bingham, Up in the Air (2009)

Since the economic crisis, even affluent travellers have been more mindful of what they spend, and what they get in return for their money. The prospect of added value is tempting for everyone, which is why loyalty or rewards programmes are such an attractive incentive for many travellers, and a guarantee of repeat business for suppliers. Hotels, airlines, car rental companies…they're all in on the action.

Almost every airline has its own loyalty programme that allows members to redeem points for flights or flight upgrades. Perhaps even more appealing are the benefits of achieving a higher level of membership; members that work their way up the ranks by spending regularly with the airline enjoying a bevy of perks including cabin upgrades, lounge access, additional baggage allowance and faster check-in.

Better still, a growing number of airlines are part of one of the global airline networks, which allow passengers to earn or spend miles on flights with their partner airlines, access dedicated lounges at hub airports and a multitude of other special privileges.

With the exception of a few stalwart luxury hotel chains, nearly all hospitality companies have their own loyalty programmes too. The bigger groups – those with multiple brands across all price categories and star-ratings – have the added benefit that their members can claim reward points on any of the hotels or resorts within their portfolio, meaning there is a hotel (and a reward) for every occasion.

What worries me it this: by pledging our loyalty to a rewards program, are we not limiting our travel experiences and seeing the world through brand-tinted spectacles? The world can already be defined by the number of flags hotel groups fly in each capital city – are these companies effectively buying our loyalty and making it impossible for us to choose to travel with any other brand? (Have you noticed that hotels and embassies are the only entities that fly flags in foreign cities?)

Essentially, the answer is yes; but is this really such a bad thing? Certainly, the footloose, fancy-free adventurer in all of us might scoff at the idea of embracing familiarity when we travel and encourage us to try out something new. But when you actually sit down and consider the options – flirting with different brands with an average success rate, versus loyalty to a brand that we like – the outcome seems obvious.

And at the end of the day, loyalty is a two-way street: they get our business and we get the precious value-adds that make us feel good about spending our money. We scratch their backs and they scratch ours. It’s like politics, only less disappointing.

I recently interviewed a gentleman who travels the world looking for new business. He is a long-time member of a certain hotel chain’s loyalty programme. When he travels, he will only stay in hotels that are part of that group, unless there isn’t one in that city, in which case he reluctantly finds an alternative.

“I'm a sucker for the benefits and the loyalty programmes,” he told me. “It’s like airlines – the more you travel the better the treatment. You get upgraded, you get free stuff…and I get it everywhere.”

You can’t argue with that.

Join us at the Seminar Theatre at ATM 2013 on May 7 to hear a panel of experts from some of the world’s leading loyalty programmes discuss the past, present and future of customer loyalty.

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