back icon Back Insights 05/29/2024

Beyond Points: Exploring Creative Rewards in Travel Loyalty Programs

It’s been more than 40 years since American Airlines introduced AAdvantage, one of the world’s first travel loyalty programs for frequent flyers, and the industry simply hasn’t been the same since. What began as a humble, invitation-only program evolved into an open-membership, points-based system for rewards—and most competitors in the travel and hospitality space have followed suit. 

From airlines and accommodation providers to rental car services and resort brands, just about every travel company has crafted a loyalty program, most of them points-based. Today, most consumers seek loyalty program differentiation, particularly more innovative travel rewards. This begs the question: What are some creative rewards offered by travel loyalty programs?

In this guide to creative loyalty rewards, we’ll explore alternatives to traditional points-based perks in the travel industry. 

Traditional Points-Based Systems

Loyalty programs have long been a cornerstone of customer retention strategies in the travel and hospitality vertical, particularly after the launch of AAdvantage in 1981. Designed to encourage repeat purchases, travel loyalty programs have predominantly deployed a points-based structure, allowing members to earn a set number of reward points for every dollar spent or mile traveled. 

Though transactional rewards have forged the foundation of travel loyalty programs, modern travelers—inundated with program options—increasingly seek more unique loyalty program rewards. For instance, airline, cruise, and hotel travelers join an average of three to four loyalty programs per sector but ultimately spread their spending among multiple brands.

Rather than consolidate spending with one travel brand to reap the most rewards, modern travelers prefer to shop around, constantly in pursuit of something better. Loyalty surveys conducted in 2021 and 2023 exposed a steep decline in the likelihood that members would recommend travel loyalty programs to a friend or colleague. Instead, travelers are seeking more creative loyalty rewards.

Tiered Benefits: More than Just Levels

As points-based travel loyalty programs have begun to lose traveler interest, tiered loyalty programs have quickly taken the top spot. Rewards tiers topped the list of consumer preferences for travel industry loyalty trends in 2023, with 62% of consumers agreeing that tiers are a valuable way to make members feel appreciated. Creative loyalty rewards in tiered programs can include:

  • First access to new product offerings
  • Members-only early access to sales
  • Invitations to exclusive events

So, how do non-point rewards impact customer loyalty? Tiered rewards play into the underlying psychology of loyalty programs, incentivizing consumers to unlock new levels of reward offerings through continued engagement. Like most customer engagement loyalty programs, tiered rewards programs improve customer retention through a sense of ongoing achievement and exclusivity. 

Experience-Based Rewards: Elevating Travel

Tiered benefits in loyalty rewards programs have given way to new travel industry loyalty trends and innovative loyalty strategies, namely experiential rewards. As the name might suggest, experiential rewards refer to experience-based rewards designed to create lasting memories, such as immersive travel experiences that transport loyalty members to new or trending destinations.

At a time when 50% of loyalty members claim that receiving special treatment not available to other customers is important to them, experience-based rewards can significantly enhance customer satisfaction and loyalty. These creative loyalty rewards grant program members access to premier experiences, such as VIP events, and access to otherwise difficult-to-visit locations.

Unsure which experiential rewards are suitable for your audience? Global research revealed these travel industry loyalty trends:

  • 36% of travelers are seeking water-centric getaways, like cruise opportunities 
  • 58% of travelers express interest in sleep-focused retreats
  • 20% of travelers want to explore health retreats

A couple enjoys a romantic, exclusive dining experience provided by their travel loyalty program in Koh Kood, Thailand.

Integration with Lifestyle Services

Travel and hospitality providers can easily offer transactional, points-based rewards, like discounts on hotel stays and free flights. However, experience-based rewards can be trickier, especially for travel brands needing more partners. Enter strategic partnerships with lifestyle services to advance loyalty program differentiation and enhance customer loyalty. 

One-third of loyalty programs partner with complementary lifestyle brands, often creating coalition loyalty programs to offer more creative loyalty rewards beyond their scope of service. Partnering with non-travel businesses allows travel providers to expand their loyalty perks, creating more value for members’ continued spending. Lifestyle rewards in loyalty programs can take the shape of:

  • Access to dedicated coworking spaces
  • Complimentary gym memberships
  • Exclusive dining experiences 

Personalization and Flexibility in Redemptions

Did you know that nearly 30% of loyalty members would be willing to share their personal data to receive more personalized creative loyalty rewards? Despite this, less than 25% of travel loyalty programs offer personalized loyalty benefits. It’s time to change that. With the help of technology, particularly artificial intelligence (AI), brands can seamlessly enable custom rewards:

  • Predictive budgeting to identify cost-saving opportunities for travelers
  • Dynamic pricing to tailor personalized promotions for travelers 
  • Customized itineraries based on previous traveler activity 

Nearly 80% of consumers are likelier to make repeat purchases when offered a personalized experience. Not to mention, creative personalization can take other shapes beyond AI-powered perks, such as flexible redemption options. For instance, brands can allow travelers to redeem rewards and transfer them directly to other loyalty program members, similar to gift cards. 

Implementing Innovative Loyalty Strategies with arrivia

Discounts and complimentary upgrades are nice-to-haves in every travel loyalty program, but in today’s industry, consumers expect much more. With multiple loyalty programs under their belt, travelers are seeking more creative loyalty rewards that offer additional value for their continued patronage. Create your own unique loyalty program rewards with the experts at arrivia.

For nearly 30 years, arrivia has crafted travel loyalty and rewards programs to engage and retain customers in travel, hospitality, financial, and membership-based organization spaces. If you want to enhance customer loyalty and engage loyalty members at your organization, explore arrivia services today to learn how to offer creative loyalty rewards.