It Had to Happen

A new study from Deloitte & Touche, LLP found that about three-quarters of high frequency business travelers—the most lucrative kind to airlines—belong to more than one loyalty program. And only about 40 percent of these business travelers log at least three-quarters of their miles on their preferred airline. Many will book another airline even it means abandoning a program in which they’ve earned elite status. Deloitte said it based its findings on a survey of 4000 travelers and focus groups with business and leisure travelers.

That means for 60 percent of business travelers, loyalty programs are no longer determining where they spend their travel dollars. Why? Because many of the airlines and hotels have so devalued their points/miles that when flying a particular airline or staying at a particular hotel means spending $30 to $50 more, they can’t justify it. Just as the devaluation is relatively recent, so is this shift away from the loyalty programs.

It had to happen. Business travelers are voting with their wallets. If airlines wonder why they are being abandoned, they need to look inside their value propositions. The problem with adding value is that consumers are constantly looking for more goodies, more perks, more value.

It’s the challenge all marketers face. You must add value to survive, but consumers are expecting more and more every year. The key is to look for what has a high-perceived value to consumers and a low cost to the airline or hotel chain. They can do it; it will just require more creativity than they are currently applying.

When airlines and hotels are delivering less and less bang for the buck, it is any wonder that they are being deserted? To be fair not all of the programs are in this situation. Marriott is still a lot better than Hilton and American’s program beats US Airways, hands-down. The challenge for these service providers is to reward their frequent travelers enough so that they will stay. For 60 percent of frequent flyers, this Deloitte study says, “They’re failing!”