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When it comes to travel loyalty programs, the landscape has changed dramatically in the last decade.
The development of one company over the past few years is a prime example.
Points International, a Toronto-based company founded in 1999 that includes Points.com and PointsHound.com, provides loyalty e-commerce and technology solutions to top brands around the world.
Points.com is indicative of how everything has become digital. Through Points.com, users can manage all of their loyalty programs in one spot, as well as trade and exchange points and miles with other users.
Points is also working on an API that will be compatible with various digital wallets, and will give travel companies with loyalty programs more marketing range (airlines, for example, traditionally have just marketed to travelers while they're at airports or on the plane).
The ability to manage loyalty program accounts seamlessly is rather important these days. A recent study by Bond Brand Loyalty found that U.S. internet users own more than 10 loyalty program accounts on average. Since just last year, average loyalty program membership has spiked by 2.4 programs.
But Points International's acquisition of San Francisco startup PointsHound last year may be even more telling when it comes to what consumers truly want from travel loyalty programs these days.
PointsHound, founded in 2013, is a hotel booking site featuring more than 150,000 global properties that rewards travelers with loyalty program points and miles in exchange for booking on its site.
"Points and miles" are the key words here. While loyalty program membership has grown, that doesn't mean members are actively participating in all of their programs. The same study from Bond Brand Loyalty found that the average U.S. Internet user is actively engaged in less than seven (6.7) of their dozen or so loyalty programs, down from 7.8 in 2014. Pete Van Dorn, co-founder of PointsHound and current general manager of consumer services at Points, thinks this is in part due to more competition, but he also thinks it's a statement on how consumers feel about traditional discounts and promotional offers.
"I think the travel industry is notorious for all the different deal sites," said Van Dorn, who previously held posts at Hotwire and Switchfly. "I think customers have been seeing those types of offers and have kind of been beaten over the head with them from various travel brands. Taking that discount and passing it along as (points and miles) … that seems to be more effective marketing for brands, and I think that resonates more with consumers (particularly frequent travelers).
"I think savvy travelers that really understand how these loyalty programs work see more value in the points and miles," Van Dorn added. "If they're smart about how they redeem those points, they can just get a ton of value. There's not as much range [with discounts and promotional offers]."
Uber, for example, now offers reward points for Starwood Hotels & Resorts, and American Express loyalty program members who use its transportation service.
Even Expedia, well-known for featuring countless discounts and promotional offers, offers points and miles for booking hotels, flights, activities, and - most recently - cruises.
"One trend we see in the OTA travel space … I think they've all struggled getting traction with loyalty," Van Dorn said. "All those big online travel agencies spend quite heavily on user acquisition. They're very reliant on when someone visits their site. They don't have that kind of stickiness or that retention to get customers coming back and back. What we're seeing is online travel agencies starting to tap into frequent flyer programs, and working directly with the airlines to have an established currency that already resonates with members and essentially using that as their own instead of starting to create yet another new currency … They're finding that these currencies, for at least a certain segment of users, are a very powerful incentive."
These days, you are either a travel company enthusiastic about how the world is changing, or you're a travel company overwhelmed by technology and the increase in competition for loyalty program members.
Count Van Dorn and Points as enthusiastic about the future.
"It's an exciting time," Van Dorn said. "There's a lot of change happening and a lot of new technologies. We're starting to see some pretty big shifts in consumer behavior and in how people book travel."
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