Understanding the role of travel rewards in the post-pandemic travel resurgence
After more than two years of yo-yoing pandemic-driven restrictions, Americans are more than ready to travel again. A survey conducted by arrivia in early 2022 of 2,150 U.S. consumers who are loyalty program members found that 69% were planning a trip this year, while 24% had already booked one.
The demand is clearly there but can loyalty programs capitalize on this demand? Yes, by offering members travel rewards to help subsidize their trip. That’s something 42% of the consumers we surveyed have utilized in the past. It can also help loyalty programs engage existing members, recruit new ones and boost customers’ spend within their program.
Almost 50% of consumers surveyed also said that earning points on everyday purchases and travel is extremely important. Why are travel rewards so attractive? Because they provide real, tangible value that people can experience. And value, as our survey revealed, is still very much top of mind for consumers when it comes to travel.
Are rewards meeting customer expectations?
Though travel rewards can be seen as very valuable, the reality is that many reward programs fall short of customer expectations.
Our survey report, Where travel meets loyalty, found that 24% of consumers felt their rewards don’t seem valuable enough, 32% were bothered by the lack of redemption options, and 29% said it’s difficult or complex to earn or redeem points. Other pain points they mentioned were “irrelevant or superfluous recommendations and marketing,” “poor customer service,” and “poor website user experience.”
Loyalty program managers agree. A parallel survey of loyalty program professionals that we conducted in early 2022 found that a lack of redemption options, poor platform design and difficulty demonstrating the value of rewards to customers were listed as their top three challenges.
Based on these findings, loyalty programs that offer travel rewards must expand the available redemption options and fine-tune their entire redemption and earning process to be more intuitive. That would significantly impact conversion rates (in a good way). But they also need to do a much better job marketing their program’s value proposition.
According to our survey, there’s a significant lack of awareness regarding travel rewards. While 65% of loyalty managers say they offer travel rewards, 54% of consumers said none of their loyalty programs do. That’s a big disconnect and reinforces why loyalty program managers must invest more in their marketing and awareness efforts.
Adapting to your audience
Loyalty program managers who want to raise awareness about their travel rewards or increase engagement or spending within their programs have a very powerful tool: a direct connection to members. By leveraging intelligent marketing technology, they can target messaging that adapts dynamically to members’ travel searches and preferences, enabling them to craft more relevant offers and provide more value.
Personalization is truly key. Our survey found that nearly half of the American travelers we surveyed talk with friends and colleagues when planning their trips. In an era of ad fatigue and privacy concerns, more consumers are leaning on recommendations and guidance from people they know, as their suggestions may align best with their values and interests. Travel rewards platforms with the technology that can personalize travel to align with consumer needs are most likely to convert interest to bookings.
Travel rewards and the financial services sector
While our survey queried loyalty program managers across different industries, including hospitality, education, transportation and travel, responses from the financial services sector revealed some compelling findings and reinforced why banks, credit unions and credit card companies have so much to gain from the travel resurgence:
- 81% of U.S. credit card holders belong to five or more loyalty programs
- 56% of those belong to a program with travel benefits
- 53% say their financial institution offers no travel rewards
Most U.S. consumers rely on one or more financial services be it a traditional bank, credit card issuer or digital financial platform. That’s a significant market share. A credit card company or bank that offers travel rewards that customers find valuable benefits not only from increased spending on travel within their ecosystem but increased spending overall on everyday purchases that allow customers and members to earn points that can be exchanged for travel.
Yet many financial services fail to offer their members direct booking capabilities — 61% according to our survey— resulting in a missed opportunity to capture the current travel zeitgeist. With most U.S. consumers relying on a financial institution of some kind, banks, credit card issuers, and credit unions would do well to invest in their loyalty capabilities to distinguish themselves from the competition.
For a deeper look at the findings from our survey on the intersection of travel and loyalty, download the report, Where travel meets loyalty: Understanding the role of travel rewards in the post-pandemic travel resurgence.
You’ll learn about key trends impacting travel loyalty and how consumer-facing brands can use travel rewards to provide customers more value and drive their business growth.