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Frequent Travel Programs - US - July 2018

Frequent Travel Programs - US - July 2018

"A strong economy encourages people to spend on travel. With many tools available to help consumers find the lowest prices, travel providers lean on their loyalty programs to build crucial brand loyalty. These programs must innovate in order to maximize their effectiveness in the face of changing traveler habits and desires."

- Mike Gallinari, Travel & Leisure Analyst

This report will look at the following areas:

Credit cards play a huge role in rewards travel
Traditional FTPs are used more by older and wealthier adults
Flying is increasing, but frequency is decreasing
Travelers have good intentions, but that may not be enough


OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
Overview
Figure 1: Total enrollment and share of enrollment in travel loyalty programs, by industry, February 2017-2018
The issues
Figure 2: Hotel, airline, and OTA FTP membership, by age, by income, March 2018
Figure 3: Flyer segments, by number of flights in the past 12 months, February 2018
Figure 4: Reasons for enrolling in an FTP, March 2018
The opportunities
Figure 5: Usage and interest of FTP rewards, March 2018
Figure 6: Desired types of notifications from FTPs, most and any important, March 2018
Figure 7: Preferred reward point accrual sources, March 2018
What it means
THE MARKET
What You Need to Know
One third of adults belong to an FTP
Conditions are right for increased travel
FTPs are almost all revenue-based
Credit cards play a huge role in points accrual
Frequent Travel Program Enrollment
One-third of adults belong to a travel loyalty program
Figure 8: Total enrollment and share of enrollment in travel loyalty programs, by industry, February 2017-2018
Market Breakdown
Figure 9: Share of enrollment in travel loyalty programs, by segment, 2013-2018
Frequent traveler program membership continues to grow
Frequent flyer program memberships still aloft
Figure 10: Frequent flyer program memberships, by major US airline, 2012-2018
Figure 11: Flyer segments, by number of flights in the past 12 months, February 2018
Hotel loyalty memberships expand in the face of OTA competition
Figure 12: Hotel loyalty/rewards program memberships, by major US hotels, 2017-18
Car rental club memberships motoring along
Figure 13: US vehicle rental privilege program/club membership, by major brand, 2012-18
OTA loyalty programs have a large opportunity with younger travelers
Figure 14: OTA loyalty program membership, by age group, March 2018
Market Perspective
Chase sets a new travel card standard, others try to compete
FIGURE 15: AMERICAN EXPRESS PLATINUM CREDIT CARD: SPECIAL OFFER FOR 60,000 POINTS, MAY 2018
Major airlines complete the transition to revenue-based rewards
OTAs limited in what they can offer
Airlines see large revenues by pairing with credit card companies
Market Factors
High consumer sentiment enables more frequent travel
Figure 16: Consumer Sentiment Index, January 2007-May 2018
Key generations are ready or willing to travel
Figure 17: US population by generation, 2018
Figure 18: Where extra money is spent – saving and spending, by age group, February 2018
KEY TRENDS
What You Need to Know
FTPs are more expansive in their offerings
Credit cards points are very popular
Loyalty still low for the less-frequent traveler
OTAs looking for their place
FTP piracy has begun
Big Data hits FTPs
What’s Working?
Reward flights are easier to redeem
Hotels expand their programs
Travel-focused credit cards
What’s Struggling?
Frequent flyers becoming less frequent
OTA FTPs limited in scope
Hotels may be more stick than carrot
What’s Next?
Enrollment increases, but engagement decreases
Fewer redeemers mean better rewards for the elite
Southwest willing to go toe-to-toe
Ampli-fied programs
THE CONSUMER
What You Need to Know
FTPs are for the older and wealthier
Loyalty program members are savvy, want flexibility
Members expect rewards to be a long time coming
Travel rewards members want … well, travel rewards
Members need help in reaching their goals
Tell them what’s in it for them
Meet them where they are
Opinions of Loyalty Programs
Consumers like their FTPs
Figure 19: Opinions of frequent travel programs, March 2018
Loyalty members are enthusiastic about membership
Figure 20: Opinions of frequent travel programs, net agree, March 2018
Younger members are the most enthusiastic, even if their numbers are small
Figure 21: Sentiment around FTP participation, net agree, by age group, March 2018
Offerings are well-received by members
Figure 22: Opinions of FTP rewards, net agree, by age group, March 2018
Members find FTPs to be straightforward
Figure 23: Opinions of FTP structure, net agree, by age group, March 2018
Who Signs Up and Why
Most travelers belong to an FTP
Figure 24: Frequent traveler program membership, March 2018
Mo’ money, mo’ programs
Figure 25: Hotel, airline, and OTA FTP membership, by age, by income, March 2018
Cost concerns are of primary importance
Figure 26: Reasons for enrolling in an FTP, March 2018
Consumers want something for nothing
Figure 27: TURF Analysis – Membership reasoning, March 2018
What FTP Members Want
Travelers use travel rewards, but are open to cash back
Members want to augment their vacations
Figure 28: Usage and interest of FTP rewards, March 2018
Cash offers flexibility on both sides
Figure 29: Usage and interest of FTP rewards, travel vs monetary, March 2018
Cash redemption popular among Black Americans, but they shoot for more
Figure 30: Cash back redemption and interest by race, March 2018
Figure 31: Interest in FTP rewards Black FTP members vs all FTP members, March 2018
Younger travelers, parents see FTPs as a booking asset
Figure 32: Opinions of FTPs, by age, March 2018
What FTP Members Want to Hear
Consumers want to know how to spend their points
On-site rewards
Figure 33: Top three desired types of notifications from FTPs, March 2018
Communication should move more toward mobile delivery
Figure 34: Top three desired types of notifications from FTPs, any chosen, March 2018
Reward progress more relevant with age
Figure 35: Top three desired types of notifications from FTPs, any chosen, by age, March 2018
Leveraging Bonus Opportunities
Bonus points are an effective feature of reward programs
Figure 36: Preferred reward point accrual sources, March 2018
Millennials want bonuses for pep-ups and 1-ups
Figure 37: Preferred award point accrual sources, Millennials vs all FTP members, March 2018
Millennial parents
Figure 38: Preferred award point accrual sources, Millennial parents vs all FTP members, March 2018
Baby Boomers
Figure 39: Preferred award point accrual sources, Baby Boomers vs all FTP members, March 2018
Consumers in the $25K-$50K income bracket want bonus leisure
Figure 40: Preferred award point accrual sources, $25K-$49,999 income bracket vs all FTP members, March 2018
Get to $50K-$75K earners’ hearts through their stomachs
Figure 41: Preferred award point accrual sources, $50K-$74,999 income bracket, March 2018
APPENDIX
Data Sources and Abbreviations
Data sources
Abbreviations and terms
The Market
Figure 42: Share of enrollment in travel loyalty programs, by segment, 2013-18
Key Players
Figure 43: Frequent flyer program membership, by airline, 2012-2018
Figure 44: US vehicle rental privilege program/club membership, by major brand, 2012-18
RESEARCH METHODOLOGY
US Research Methodology
Consumer research
The Mintel fan chart

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