Will travelers remain loyal to loyalty programs when ‘normal’ returns?
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Within weeks of the pandemic shutting down life as we know it in the U.S., major hotel and airline loyalty programs rapidly extended elite status levels to their members for an additional year. It was only March, but loyal customers were concerned, business travel was screeching to a halt and travel brands were in desperate need of goodwill.
As a result of that swift response, the elite status hampster wheel — which many ran on like clockwork from January to December — became mostly irrelevant for at least nine months.
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At the time, a full-year elite extension felt perhaps overly generous, as many hoped that, by summer, life would have returned to something resembling normal. Now, of course, it’s August, and we have to accept that we’re still a long way from normal.
But eventually, someday, life more or less as we knew it will return. And when that day comes, will travelers who previously obsessed over their elite loyalty status remain loyal to the programs and perks that motivated them before the world stopped?
But maybe not in the same way as before.
Perks will always matter — but maybe not in the same way
To gauge just how much status junkies will care about their perks when the pandemic is behind us, we asked the experts.
In this case, the experts are those who live, breathe and eat loyalty — both within the TPG staff and the TPG Facebook Lounge.
A self-service breakfast buffet or access to the complimentary club lounge breakfast may not be an in-demand perk for a long time. But, we all still have to eat.
So, perhaps a wider range of breakfast benefits will be a way for hotel loyalty programs to stay relevant. For example, some properties have long allowed for free room service for top-tier elite members. A world in which that becomes standard may keep breakfast as the most important meal of the day for hotel elites. Grab-and-go meals may also become more prominent than a traditional club breakfast.
TPG’s founder and CEO, Brian Kelly, thinks that loyalty will still matter, but says that, for a while, the most valuable perk may be flexibility.
“The thing I care most about is fee-free award changes. Flexibility is paramount — especially in a COVID world with many unknowns,” Kelly said.
It’s long been normal for airline loyalty programs to be more generous with some fee waivers for high-tier elites than those without status. For example, United MileagePlus permits its top-tier 1K and second-tier Platinum elites to redeposit award trips with no fee, which is extremely valuable when the future is uncertain.
New and enhanced benefits
In addition to flexibility, it’s very possible new perks will be important in the competition to retain and attract more loyal travelers.
In a TPG Lounge poll, travelers said empty adjacent middle seats and waived parking or resort fees are the perks they’ll care about most in the coming year.
This also may be a good time to make some benefits loyal travelers already loved, well, better. Consider that many hotel chains will upgrade top-tier elites to suites, when available. But the process is rarely transparent or proactive. If a hotel chain went all-in on this strategy and confirmed guests by noon if suites weren’t sold for the night or similar, that may be a relevant, motivating benefit.
Some behavior-changing promotions may also help catch travelers’ attention. Miles and points blogs, for example, were largely born after the Great Recession. They shared details about offers such as Hyatt Faster Free Nights and the U.S. Airlines Grand Slam, where you could hook travelers into your program quickly by awarding lots of bonus points or miles with minimal travel.
Those travelers must return to use those points, of course. So, the cycle of loyalty could begin anew.
Leveraging business travel may not be possible
Delta Air Lines CEO, Ed Bastian, may have summed it up best on the July 14 Delta earnings call when he said, “I don’t think we’ll ever get back entirely to where we were in 2019 on the volume of business traffic.”
While no one knows for sure, the consensus among many experts is that whatever comes next for business travel won’t look like what we left behind.
In a July survey put out by the Global Business Travel Association, 85% of travelers said their companies have suspended all or most business travel. Only 1% said the coronavirus hadn’t canceled any of their business travel.
These findings are echoed by the airlines. According to recent investor calls, United’s corporate traffic was down 96% in June, while Southwest Airlines said its business travel is down between 90 and 95% from the same timeframe the previous year.
And while business travel will certainly resume, few expect it to be as frequent or robust as it was — at least for a while.
On that same July Delta earnings call, Bastian said, “The international trips that we’ve all been on where we’ve flown over to Europe for a two-hour meeting and flown back. That does nothing but beat you up, and you’d certainly be much better accommodated over a video call.”
In addition to many employees and companies transitioning to increased remote work, some sectors have been hit so hard financially, it will be difficult to justify that last-minute business-class fare as frequently as before.
Because business travel is the method by which so many elites earn some or most of their status, it simply won’t be realistic for many travelers to remain as “loyal” and hit that magical 100,000 miles flown number each year as they did before.
Premium travel credit cards may lose their appeal
Many “loyal” travelers shortened their path to elite status with high-end rewards credit cards.
These are the cards with impressive-sounding names like the Platinum, Aspire, Titanium, Reserve and Infinite — including annual fees upward of $550.
In a world filled with regular hotel stays for business and pleasure, frequent flights, time to burn in airports and travel-related expenses to avoid at every turn, the math on these cards usually works. But how does the equation shift for travel credit cards costing $450 to $550 per year when cardholders aren’t even on the road?
Some premium airline and hotel credit cards have done a better job than others adjusting to the current climate.
The issuers doing this best have allowed annual travel credits to apply to a broader range of categories; introduced bonus points on relevant purchase categories such as restaurants and groceries; reduced annual fees through an automatic statement credit or introduced new credits that can be used from home — like this awesome new $100 Dell credit.
That hopefully keeps their cards relevant when annual fees come due.
Because once a high-end travel card loses its wallet slot, the entire cycle of loyalty can be in jeopardy. If your high-end hotel or airline card gets you perks like free breakfast, lounge access or a shot at an upgrade when you use a certain brand, you’re more likely to continue turning to that brand. That, in turn, makes your card perks more valuable. But when the card and the perks are gone, the incentive to fly or stay with a particular program diminishes.
And without those cards, travelers will lose whatever status or access those thin slivers of plastic or metal conferred.
Travelers will prioritize peace of mind over miles
In many ways, the crisis facing the travel industry stems from a lack of confidence. Many frequent flyers simply don’t believe that flying in a plane packed with other people is a safe activity — at least compared to staying at home or taking a road trip.
Could we see a new world of travel where even the most die-hard loyalist chooses the airline or hotel chain that seems safest?
It’s entirely plausible that in the new world of travel — to borrow a (slightly) modified phrase from Vince Lombardi — “Confidence isn’t everything. It’s the only thing.”
It could be that whoever wins the war of confidence in terms of safety and cleanliness will secure the loyalty of customers.
After getting a behind-the-scenes look at how Delta is cleaning its planes, TPG’s loyalty and engagement editor, Richard Kerr, booked Delta for both of his flights this summer, even though he has top-tier status with American Airlines and also frequently booked the cheapest possible flight, regardless of airline.
“After I saw the Delta Clean demonstration of aircraft sanitizing between every flight, as well as Delta’s continued commitment to keeping flights at 60% capacity, I knew they were the only airline for me and my family when travel is necessary,” Kerr said.
Time and convenience will become more important
Top-tier elites often book connecting flights or a less desirable departure time with a preferred airline over a nonstop itinerary on a competitor. They’ll reserve hotel rooms miles from a meeting or conference location — just to earn points or take advantage of elite perks. That means more time on planes, in airports and around more people. It also means sacrificing time away from home (for business travelers) or, for leisure travelers, can cut into a vacation.
If there’s one thing this pandemic has taught us, it’s that time is precious.
Whether you’ve had a friend or family member sickened by COVID-19 or just have that travel itch from canceling multiple trips, you may balk at the concept of losing any time at all while exploring — or with your loved ones.
And we don’t blame you. Loyalty to any brand may be hard to justify when it interferes with these priorities.
Once loyal, always loyal
And then there’s a point at which math and logic stop and emotion takes the center stage.
There are frequent flyers who simply love being elite flyers and hotel guests. It’s a part of who they are. If you’ve seen the movie “Up in the Air,” you know George Clooney’s character, Ryan Bingham, embodies this type of traveler.
These travelers love their elite status cards, like to be thanked for their loyalty, enjoy boarding first, live for the upgrade and will do whatever it takes to maintain this part of their identity. (Hey, this is The Points Guy after all — we get it.)
When asked about elite status going forward, TPG’s senior news editor, Clint Henderson, said, “I care way too much — more than I should still.”
He described what needs to happen to keep different status levels and status matches that would sound dizzying to anyone who doesn’t live this life. But for Henderson, it’s pure enjoyment. “What’s the point?” he said, “Who knows. But it’s fun for me. Plus, I think upgrades will be much easier when we all start flying again.”
Some travelers will chase the loyalty carrot almost anywhere it goes, while others will only seek loyalty when it delivers relevant perks.
TPG’s credit cards editor, Benet Wilson, says she will always care about her loyalty programs. But for her, loyalty is about tangible benefits and cost — not extra time in a lounge, an onboard airplane sandwich or a hotel breakfast buffet.
And that type of loyalty may best weather this storm of change and uncertainty.
There’s no doubt the desire to travel will still be there when normal life returns — it’s just a matter of whether loyalty programs will pivot and accommodate travelers’ new priorities — and whether people will even travel enough to prioritize one brand over another.
Featured image by Nikada/Getty Images
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