Points or Purpose: Loyalty Programs’ True Influence on Choice

What factors do consumers consider when they’re in the midst of booking their next leisure travel plans? SmarterHQ, a personalization platform used by travel and hospitality companies, notes that loyalty programs are not one of them.

The latest consumer survey results from SmarterHQ showed that loyalty programs have only a small impact on helping travelers decide their next trip. Instead, the report showed that Millennials and Gen Z are motivated to travel to experience different cultures — 48 percent of Gen Z and 36 percent of Millennials seek experiential travel compared to 25 percent of Gen X and 30 percent of Baby Boomers. 68 percent of Boomers look to “relax and unwind” when traveling, which is 30 percent less than other generations. Fifty-one percent of Gen Z travel for self-fulfillment — 20 percent more than any other generation.

However, this doesn’t mean that loyalty in travel and hospitality brands is dead. SmarterHQ’s report listed 18 travel and hospitality companies and found that among its 706 survey respondents ages 18-75+, Marriott is ranked at the top for consumer loyalty, followed by Hilton and Southwest Airlines. But just 39 percent of those who are in a travel loyalty program express any sort of loyalty towards a specific brand.

According to the report, hotels are not dead, either: 49 percent of leisure travelers prefer to stay at a hotel over anywhere else. Consumers are still more likely to stay with a family member or friend than they are to stay at an Airbnb, though SmarterHQ did find a 101 percent increase in Airbnb usage generation over generation. Twenty-five percent of Gen Z and 21 percent of Millennials prefer to book with Airbnb, compared to only 8 percent of Gen X and 4 percent of Boomers.

The report also revealed past bookings or brand loyalty does not influence where travelers start their research, nor does it impact the amount of time spent researching or the number of travel options considered. SmarterHQ found that most consumers (39 percent) start their research using Google Travel tools, but when it comes down to ultimately booking their travel plans, only 10 percent actually book through Google. Forty percent of the survey respondents would book directly on an individual brand’s website, but only 26 percent of consumers would start their research on these brand websites. Sixty-six percent also admit to doing other things during their research, such as watching television, working or socializing with others.

“Consumer preferences are not one size fits all. Today, leisure travelers make decisions quickly, only consider a few options and are often distracted while researching. Therefore, marketers have a small window in attracting and engaging consumers who are looking to research and book their next vacation,” said Michael Osborne, CEO of SmarterHQ. “But many brands wait to engage customers who abandon their booking too late in the funnel. Instead, these companies should prioritize providing travelers with more immediate interactions and a more convenient experience throughout the entire customer lifecycle.”

Loyalty programs may not always have a direct influence on consumers choosing where to book, but they do play a small part in a traveler’s booking sequence. Those who are in a hotel or airline loyalty program are more likely to book that portion of the trip earlier in the booking order—by 9.7 percent and 22.4 percent respectively. According to the report, 63 percent of consumers in an airline program are also part of a hotel program, and vice versa. Gen Z and Millennials are 123 percent less likely than Gen X and Boomers to join a hotel loyalty program (25 percent vs. 46 percent). Here is a breakdown of which types of reward programs that SmarterHQ’s surveyed respondents are a part of:

• 40.9 percent of consumers enrolled in airline loyalty programs

• 40.9 percent of consumers enrolled in hotel loyalty programs

• 16.6 percent of consumers enrolled in rental car loyalty programs

• 6.7 percent of consumers enrolled in cruise loyalty programs

• 39.4 percent of consumers enrolled in no loyalty programs

Loyalty programs also go hand in hand with mobile apps that some travel and hospitality brands now offer. Consumers who are in an airline loyalty program are three times more likely to download the app, and those in a hotel or rental car program are two times more likely. The report also shows that consumers who download a mobile app on average express 1.8 times more brand loyalty.