One major consequence of the pandemic and its attendant travel restrictions over the past 18 months has been a wholesale reassessment and rapid evolution of loyalty programs across the travel industry—from airlines and hotels to cruise lines and rental car firms. These programs are no longer mere customer perks; in many cases they represent a substantial portion of a company’s value. For instance, American Airlines is valued at roughly $6 billion, while its loyalty program, AAdvantage, has been estimated to be worth around $24 billion, underscoring how strategic and valuable loyalty assets can be.
That value explains why companies scrambled to modify their loyalty offerings during the pandemic: they needed to keep members engaged despite sweeping uncertainty. Historically, many of these programs were built around frequent business travelers—a customer segment that has been slow to return.
“Most frequent-flyer programs or loyalty programs are geared toward high-repeat travelers, which are usually business travelers,” said Ben Baldanza, an economist and former CEO of Spirit Airlines. “If business travel reduces, changes, and people work at home or meet using video, not earning miles on room nights, it’s harder to earn a free flight or hotel room. If consumers have to wait years to get their rewards, loyalty reduces.”
Jay Sorensen, president of IdeaWorksCompany, pointed out that business travel has been particularly affected. “At present, business travel is largely missing. I would guess business travel is off 80 percent. That’s a huge number, so that is an uncertainty. Frequent-flyer programs are for business travelers, primarily.” IdeaWorksCompany advises travel brands on loyalty and frequent-flyer program development.
When demand is uncertain, reengineering a loyalty program to match a new environment is difficult, Sorensen added. To maintain engagement, many programs paused expirations and extended elite status to avoid alienating their most frequent customers.
McKinsey travel leaders Steve Saxon and Thorsten Spickenreuther noted that airlines, hotels and other travel companies extended elite status tiers, paused miles expiration and lowered requalification thresholds to retain members and preserve goodwill.
American Airlines’ AAdvantage extended elite status expiring Jan. 31, 2021, until Jan. 31, 2022, and introduced promotions that make it easier to earn status. The program also confirmed that lifetime elite-status members would retain their status.
Delta Air Lines extended elite status for SkyMiles members as well, maintaining Medallion status through Jan. 31, 2023, while extending benefits tied to partner relationships. Delta 360 members also retained their exclusive invite-only status for an additional year.
United’s MileagePlus program extended 2020 Premier status through Jan. 31, 2022, and cut 2021 Premier qualification thresholds by half. Certain elite members also received extended upgrade opportunities when the program prolonged PlusPoints expiration dates.
Major hotel groups took similar steps—extending status, easing qualification, and making points easier to earn—to preserve customer loyalty during a period of reduced travel.
Hilton, for example, was proactive in reassuring members. Jenn Chick, Hilton’s head of Honors and Customer Engagement, said the company implemented multiple extensions to status and points expiration and allowed nights from 2020 to roll over toward future tier qualification. Hilton also adjusted 2021 qualification requirements and extended reward certificate expiration dates for co-brand cardholders.
Radisson Hotels Americas consolidated its loyalty offering into Radisson Rewards Americas with a simplified award chart and a RewardSaver redemption option that can be up to 30 percent cheaper at select hotels.
Marriott Bonvoy launched “Moments,” a program offering VIP access to concerts, culinary events and sporting experiences, and expanded partners that allow members to earn points in new ways.
Hyatt also introduced more flexibility for World of Hyatt members, reducing elite qualification requirements and offering additional routes to earn points and status.
Amy Weinberg, Hyatt’s senior vice president of Loyalty and Brand Marketing, explained that Hyatt cut the elite qualification requirements by 50 percent for the 2021 calendar year so members could requalify or achieve status with half the usual nights or base points.
Some hotels launched new products aimed at remote-working guests, such as day-use rooms with business-friendly amenities or dedicated “work from hotel” offers that include overnight stays, full-board options, and even video-conferencing equipment. Importantly, certain packages earned loyalty points and counted toward status—an unusual but appealing feature for business users who no longer travel as frequently.
Hilton introduced WorkSpaces by Hilton to provide private office-like rooms for guests seeking concentrated work time. Hyatt added promotions like Bonus Journeys and programs such as Work from Hyatt Extended Stay and Office for the Day to give members multiple ways to earn points while meeting new customer needs.
Cruise lines likewise preserved loyalty for frequent guests. According to Baldanza, companies are reluctant to strip status from their most valuable customers and have generally maintained elite privileges to avoid losing those users.
With leisure travel recovering faster than business travel, industry observers expect 2022 to be a year of strategic change. Frequent-flyer programs will likely seek to attract leisure travelers, who fly less often but represent a growing share of demand.
“The entire industry is coming upon a reckoning over the next year,” Sorensen said. “The importance of leisure travel is paramount, as business travel will be far less important to the airline industry. There is an estimated long-term decrease in business travel, from 19 to 36 percent.”
Technology has permanently changed how companies meet, reducing the need for some business travel. Organizations are also re-evaluating travel to lower their environmental footprint.
Baldanza believes consumers may shift from hoarding points to using them for conveniences that improve travel experiences—things such as late checkout and faster internet access.
For major U.S. carriers, securing the remaining base of business travelers will be critical. Airlines may offer easier-to-earn upgrades and place greater emphasis on credit-card spend to demonstrate customer loyalty even when flying is reduced.
Saxon and Spickenreuther expect a wave of hyper-personalized offers, increasingly using gamification and emotional engagement to strengthen ties with members.
PHOTO: © VIKTOR GLADKOV | DREAMSTIME.COM
They also anticipate social responsibility options—such as carbon-offset earning and redemption—becoming essential features to attract younger travelers. Loyalty ecosystems may broaden to include more partner networks, bundled offers, and even the use of miles and points as a supplemental currency.
Subscription-style loyalty models with monthly or annual fees could become more common beyond low-cost carriers, with some networks experimenting with paid “light” status or one-time sign-up fees.
Emotional rewards that create memorable experiences—VIP access, once-in-a-lifetime events, or early product access—are likely to gain prominence. Such rewards foster emotional attachment and increase long-term engagement because members don’t want to lose privileges they’ve experienced.
Despite these emerging trends, Baldanza cautions that the future remains uncertain. “Everyone is waiting to see what will happen. Nobody is planting a flag and saying this is where our loyalty program is going.” Travel brands are adapting, but the final shape of loyalty programs will continue to evolve as travel behavior changes.