Travel loyalty programs are undergoing an evolution of sorts. As Skift recently noted, loyalty partnerships between major travel suppliers, such as United-Marriott and American-Hilton (and most recently, Emirates-Marriott) have traditionally targeted members with elite status. However, Accor Hotels and Air France/KLM recently announced a different kind of loyalty offering: one that targets all the brands’ loyalty program members, not just the elite. While Accor and Air France/KLM already have a close financial relationship, with Accor mulling a stake in the air carrier last year, their new offering offers inspiration for other suppliers in considering forging similar partnerships and raises questions about what the future holds for loyalty programs, in general.
Why is this important? Imagine a world in which you have easy and solid loyalty earning and redemption value across more than two travel suppliers, in which you could earn points on a train ticket and spend them, at an attractive redemption rate, on a hotel room. Where restaurants, theme parks, tour companies and other such players become loyalty partners with airlines and hotels. Maybe even where your loyalty program extends beyond travel and allows you to earn and redeem points at retailers.
Where’s the value? For the customer, the benefits of expanded loyalty programs—more ways to earn and redeem points—are obvious. But for travel suppliers, assuming loyalty currency trading between suppliers makes financial sense, the benefits may be equally attractive. The expectation is that broader loyalty programs grow the revenue pie and the individual “slices” for all suppliers. For instance, restaurants that are less busy on weekdays would benefit from increased business traveler traffic that comes their way from airline/hotel loyalty partnerships. There’s value in co-branding as well. Patrons of Four Seasons hotels, for instance, might be more likely to eat at Capital Grille, or shop at Nordstrom. Hotels, airlines, restaurants and retailers could choose their partners to reinforce their brand by positioning to common customer segments. Loyalty partnerships will also produce richer customer data and insights, making sales, digital marketing and other commercial efforts more effective.
Some of the same reasons that make this an attractive proposition present a risk to suppliers as well. For example, damage to a close partner brand could have collateral damage on a company’s own brand. Data integrity, aggregation and sharing can become cumbersome and less insightful without the right level of co-investment and collaboration by all partner companies.
In the end, while expanded loyalty partnerships come with certain risks to suppliers, there is great potential benefit for travelers and suppliers alike.