2020
9
US Frequent Travel Programs Market Report 2020
2020-08-27T16:05:08+01:00
OX987052
3695
123507
[{"name":"Holidays and Travel","url":"https:\/\/store.mintel.com\/industries\/holidays-travel"}]
Report
en_GB
"The challenges faced by frequent travel program providers are magnified by the COVID-19 pandemic. Currently, adults are limiting travel, diminishing their ability to accrue loyalty with their FTPs. Furthermore, the…

US Frequent Travel Programs Market Report 2020

£ 3,695 (Excl.Tax)

Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Frequent Travel Programs: Inc Impact of COVID-19 – US market, and the behaviours, statistics, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Travel is still halted in the midst of the pandemic, delaying much of the redemption aspect of frequent travel programs. While credit card-based programs still offer opportunity for accrual, FTPs through travel companies are stymied in both accrual and redemption. Moreover, the acquisition of younger travelers for both sources of FTP remains important, yet difficult, and the pandemic is an unwelcome complication.

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Expert analysis from a specialist in the field

Written by Mike Gallinari, a leading analyst in the Travel sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The challenges faced by frequent travel program providers are magnified by the COVID-19 pandemic. Currently, adults are limiting travel, diminishing their ability to accrue loyalty with their FTPs. Furthermore, the economic ramifications of the pandemic cast into doubt the ability to pay for travel once Americans have a place to travel to. Providers will have to be creative in developing new methods to attract and retain young FTP members, while at the same time making members feel accomplished, appreciated and special Mike Gallinari
Travel & Leisure Analyst

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definition
        • Executive Summary

          • Market overview
            • Top takeaways
              • The Impact of COVID-19 on frequent travel programs
                • Figure 1: Short-, medium- and longer-term impact of COVID-19 on travel and on FTPs, May 2020
              • Acquiring FTP members
                • Membership largely determined by age and income
                  • Figure 2: FTP membership, by age group, April 2020
                  • Figure 3: FTP membership, by HHI, April 2020
                • Innovating accrual programs is important in acquisition
                  • Figure 4: Desired FTP accrual options, April 2020
                • Members want travel with loved ones
                  • Figure 5: Redemption goals, April 2020
                • Retaining FTP members
                  • Reduced fees and room upgrades keep members going
                    • Figure 6: Motivations to achieve next airline FTP tier, April 2020
                    • Figure 7: Motivations to achieve next hotel FTP tier, April 2020
                  • Low fees, good service and data security are all important to retention
                    • Figure 8: Reasons for leaving an FTP, April 2020
                  • Members stay when they feel special
                    • Figure 9: Attitudes toward exclusivity, April 2020
                  • What it means/what’s next
                  • Impact of COVID-19 on Frequent Travel Programs

                      • Figure 10: Short, medium and longer term impact of COVID-19 on travel and FTPs, June 2020
                    • Opportunities and Threats
                      • Short-term threats
                        • Short-term opportunities
                          • Figure 11: Chase grocery bonus email, May 2020
                        • Medium-term threats
                          • Medium-term opportunities
                            • Long-term threats
                              • Long-term opportunities
                                • How the COVID-19 crisis will affect key consumer segments
                                  • How a COVID-19 recession will reshape reward travel
                                    • Recession can reduce perceived value of FTPs
                                      • Financial instability can reduce discretionary spending
                                        • Figure 12: Financial situation self-assessment, June 2020
                                        • Figure 13: Consumer Sentiment Index, January 2007-May 2020
                                      • Necessity increases appeal of cash back
                                        • Figure 14: Unemployment and underemployment, January 2007-May 2020
                                      • COVID-19: US context
                                      • The Market – What You Need to Know

                                        • FTP membership is deep, but varied
                                          • Loyalty is difficult to pin down among younger consumers
                                            • Economic indicators are grim
                                            • Travel Reward Program Membership

                                              • Travel providers and credit cards both play a role in loyalty
                                                • Figure 15: FTP Membership, April 2020
                                                • Figure 16: Credit card FTP membership, April 2020
                                              • FTP membership by select brands
                                                • Frequent flyer programs
                                                  • Figure 17: Brand-specific airline FTP membership, by age, by HHI, Fall 2019
                                                • Hotel loyalty programs
                                                  • Figure 18: Brand-specific hotel FTP membership, by age, by HHI, Fall 2019
                                              • Market Perspective

                                                • Young adults eager to switch, making loyalty a challenge
                                                  • Figure 19: Credit card provider switching, by age group, October 2019
                                                • Showing credit card users the money makes travel less attractive
                                                  • Figure 20: Type of credit card rewards earned, May 2019
                                              • Market Factors

                                                • Unemployment skyrockets
                                                  • Figure 21: Unemployment and underemployment, January 2007-May 2020
                                                • Low consumer confidence likely to persist
                                                  • Figure 22: Consumer Sentiment Index, January 2007-May 2020
                                                • Rising credit card delinquency spells uncertainty for related FTPs
                                                  • Figure 23: Flow into serious delinquency, 90+ days delinquent, quarterly 2005-20
                                              • Key Players – What You Need to Know

                                                • FTP providers are making risky changes
                                                  • Programs are struggling with consumer confidence
                                                    • COVID-19 causes mixed messaging among providers
                                                      • Alternatives to credit are gaining ground
                                                        • Post-COVID loyalty is going to be wild
                                                        • Changes in the Loyalty Landscape

                                                            • Chase
                                                              • Figure 24: Chase Sapphire mortgage offer, September 2019
                                                            • United Airlines
                                                              • Marriott Bonvoy
                                                                • Hyatt
                                                                  • FTP marketing examples
                                                                    • Programs are encouraging members to help others
                                                                      • Figure 25: Choice Privileges email, April 2020
                                                                    • Wyndham encourages members to take care in the present and look to the future
                                                                      • Figure 26: Wyndham Rewards point buy offer, April 2020
                                                                  • What’s Happening

                                                                    • Data breaches threaten loyalty membership
                                                                      • Gamer crackdown can shore up confidence in providers
                                                                        • Non-travel rewards are being limited by coronavirus outbreak
                                                                          • Airlines test loyalty with bonus point awards during pandemic
                                                                            • Bask shows interest in miles
                                                                              • Layaway popularity goes up, up and away
                                                                              • What to Watch

                                                                                • Experiences can fall out of favor post-pandemic
                                                                                  • Airline loyalty will be turbulent
                                                                                    • Keeping up with travel schedules will cause consternation among consumers
                                                                                    • The Consumer – What You Need to Know

                                                                                      • Age and income are indicators of FTP membership
                                                                                        • Innovation in program offerings lies in accrual
                                                                                          • Fees and poor service drive members away
                                                                                            • Points are for taking a trip, whether one is planned or not
                                                                                              • Air and lodging program advancement differs a little
                                                                                                • Vacations are the goal of accrual
                                                                                                  • Exclusivity is important among the youngest members
                                                                                                    • Credit card alternatives could threaten acquisition efforts
                                                                                                    • FTP Members

                                                                                                      • FTP membership is age-dependent
                                                                                                        • Figure 27: FTP membership, by age group, April 2020
                                                                                                      • Membership also rises with income
                                                                                                        • Figure 28: FTP membership, by HHI, April 2020
                                                                                                      • Parents more likely to belong to FTPs
                                                                                                        • Figure 29: FTP membership, by parental status, April 2020
                                                                                                    • Desired FTP Features

                                                                                                      • Acquisition has more room for creativity than redemption
                                                                                                        • Good financial behavior, partnered shopping are popular accrual mechanisms
                                                                                                          • Figure 30: Desired FTP accrual options, April 2020
                                                                                                        • Early access to travel is more appealing than non-travel redemption options
                                                                                                          • Figure 31: Desired FTP redemption options, April 2020
                                                                                                        • Think “Millennials” when thinking acquisition
                                                                                                          • Figure 32: Desired earning methods, by age group, April 2020
                                                                                                        • High-income consumers can be incentivized to spend
                                                                                                          • Figure 33: Desired FTP features, by HHI, April 2020
                                                                                                      • Reasons for Leaving an FTP

                                                                                                        • The greatest good is not being bad
                                                                                                          • Figure 34: Reasons for leaving an FTP, April 2020
                                                                                                        • Youngest members are unfazed by fees and service . . . for now
                                                                                                          • Figure 35: Reasons for leaving an FTP, by age group, April 2020
                                                                                                        • High-end earners are concerned about changing terms, data
                                                                                                          • Figure 36: Reasons for leaving an FTP, by age group, April 2020
                                                                                                      • Redemption Plans

                                                                                                        • Encouraging family travel aligns members with common goals
                                                                                                          • Figure 37: Redemption goals, April 2020
                                                                                                        • Younger FTP members are more goal-oriented
                                                                                                          • Figure 38: Redemption goals, by age group, April 2020
                                                                                                        • Multicultural FTP members are the most likely to want add a traveler
                                                                                                          • Figure 39: Redemption goals, by race and gender, April 2020
                                                                                                        • Transportation, lodging top redemption goals
                                                                                                          • Figure 40: Rewards spending targets, April 2020
                                                                                                        • Younger FTP members exhibit more flexibility in spending goals
                                                                                                          • Figure 41: Rewards spending targets, by age group April 2020
                                                                                                      • Loyalty Tier Motivations

                                                                                                        • In the air, free is the name of the game
                                                                                                          • Figure 42: Motivations to achieve next airline FTP tier, April 2020
                                                                                                        • Room upgrades should be attainable to promote FTP usage
                                                                                                          • Figure 43: Motivations to achieve next hotel FTP tier, April 2020
                                                                                                        • Room exists for experiential loyalty tiers
                                                                                                          • Figure 44: Motivations to achieve next hotel FTP tier, by age group, April 2020
                                                                                                      • Attitudes toward FTPs

                                                                                                        • Vacations are the redemption dream
                                                                                                          • Figure 45: Attitudes toward FTP redemption, April 2020
                                                                                                        • Programs may want to move toward experiences for beginners
                                                                                                          • Figure 46: Attitudes toward FTP redemption, by age group, April 2020
                                                                                                        • FTP communications should primarily focus on program issues
                                                                                                          • Figure 47: Attitudes toward FTP providers, April 2020
                                                                                                          • Figure 48: Southwest Rapid Rewards email, May 2020
                                                                                                        • FTPs play a role in positive PR
                                                                                                          • Figure 49: Attitudes toward FTP providers, April 2020
                                                                                                        • The juice needs some squeeze
                                                                                                          • Figure 50: Attitudes toward exclusivity, April 2020
                                                                                                        • Age trends reveal the stakes in loyalty
                                                                                                          • Figure 51: Attitudes toward exclusivity, April 2020
                                                                                                        • Banking by age group
                                                                                                          • Figure 52: Attitudes toward bank relationships, April 2020
                                                                                                      • Appendix – Data Sources and Abbreviations

                                                                                                        • Data sources
                                                                                                          • Consumer survey data
                                                                                                            • Direct marketing creative
                                                                                                              • Abbreviations and terms
                                                                                                                • Abbreviations
                                                                                                                  • Terms
                                                                                                                  • Appendix – The Consumer

                                                                                                                      • Figure 53: Worry over risk of COVID-19 exposure, March-May 2020

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