In 2018, many elements of the industry are at some kind of crossroads.
Driven by advances in technology and changes in consumer-buying behavior, travel brands often find themselves looking forward to what's next, at the same time considering how they might shift from processes and systems that have served them well for many years.
Hotel and airline distribution, customer engagement, digital marketing - disciplines in the sector that are currently experiencing fundamental levels of change.
Loyalty in travel is no stranger to this (r)evolution.
Recent research by Expedia Affiliate Network and loyalty ecommerce and technology solution provider, Points, reveals an overall increase in loyalty over the past two years, but some questions are raised around the tactics behind the recent gains and if travel brands are prepared to sustain loyalty growth through investment.
Our extensive loyalty benchmarking survey, Travel Loyalty Report: A Wake-Up Call For Sleepwalking Loyalty Programs, took in multiple geographies and stakeholder groups from airlines to OTAs to loyalty companies.
The survey revealed that travel businesses need to explore long-term loyalty strategies to drive engagement in an evolving and intensely competitive industry.
Old school
Legacy solutions like discounting, vouchers and point schemes are popular for their ability to win price conscious travellers but changing consumer needs require a deeper look into what is really driving engagement.
Heavy reliance on discounting drives down transaction values and commoditizes travel purely based on price, rather than affinity and experience.
Today’s savvy travellers are looking beyond price as they choose their preferred brands.
Travel companies that really tune-in to consumer expectations, listen to what they want and invest in new services will be better placed to engage today’s traveller.
After all, the key to winning loyalty is still winning over the customer, and today it takes more than low prices to win them for the long haul.
The good news is that it seems many in the industry have begun to recognise this fact.
New school
In today’s shareable economy, travel companies hold vast amounts of data and insights into travel trends and can use innovative technologies (like machine learning) to understand changing consumer behaviour and what truly drives long-term loyalty.
In our survey, globally, quality of offering was rated 71% when it comes to the factors that most impact loyalty. Customer experience and an improved breadth of product and service offering were also valued above discounting methods.
The bad news? There is an apparent gap between insight into what works and action.
That is, only half of the respondents to our survey were actively working to improve their product range and customer experience, and even less were taking steps to improve the breadth of product and service offering.
Discounts and coupons are still the single most popular tactic for driving loyalty, despite widespread agreement by those surveyed that these tactics are no longer working.
Even though new ideas like personalization and gamification are believed to be effective, particularly by the airline industry, very few companies are actually doing it.
Even though our survey pointed to an overall positive outlook and active investment in loyalty programmes, with 84% of respondents saying that customer loyalty had increased in the past two years and will continue to do so over the next two, some remain unconvinced - and with good reason.
A stronger economy, increased marketing spend and changing customer demographics could very well be behind the current loyalty gains, and these conditions won’t last forever.
When we look at the different sectors, some are seeing slower growth than others. Airlines are dealing with a mature market and as a result, many fear that loyalty will flat line in the coming years.
OTAs seem to be lagging behind others and are struggling with penetration: 59% report that their loyalty programme has signed up just 1% - 25% of customers.
Again, this shows that the sector needs to be more sophisticated in how they drive loyalty.
The problem, of course, is that some tactics are easier to put into practice than others. True personalization and diversifying your product offering are extremely difficult to operationalize alone.
Moving forward again
In Expedia’s affiliate business, we have helped hundreds of affiliate partners access our global rates and availability for travel products.
In addition to our supply, we provide partners with best-in-class technology tools, built from Expedia Group’s more than a billion dollars in tech investment every year.
The combination of supply, technology and smart data help our partners drive their businesses by increasing customer loyalty and engagement.
Hotels.com for Partners is one of our solutions that allows travel providers to deliver choice, relevance and a seamless booking experience, through an extensive list of hotel rates and availabilities combined with all of the functionality of the Hotels.com site – winner of TopTenReview's "Best Hotel Booking Services of 2017".
Our platforms are constantly optimised for conversion and provide partners the tools and technology to help find the perfect trip for their customers, and partners are able to increase customer loyalty and traveller spend as a result.
As the travel industry modernises its approach to loyalty, brands can’t afford to ignore what travellers want.
Loyalty programs can’t and won’t stand still. The next phase of loyalty calls for more focus on delivering quality, seamless experiences through superior product offerings and personalised service.