By Mike Putman
The travel industry has become an expert in customer profiling, and for years hotel chains have used loyalty programs to retain frequent travelers.
A recent survey revealed that the global loyalty management market in travel is projected to reach $59.52 billion by 2029, driven by the shift to digital platforms and mobile apps, which are transforming how loyalty programs operate. This shift offers convenient booking options, personalized rewards and instant communication. However, loyalty schemes aren’t just about building customer relationships anymore; they’re vast data engines collecting as much information as possible to drive tailored promotions. Moreover, subscription-based loyalty programs are helping advertisers gain access to customers’ first-party data and deliver hyper-personalized incentives.
For some travelers, this works well. A free spa offer just when you’re thinking about a weekend break can be very welcome, but for others it may feel like too much.
The problem is that customers are overwhelmed by the sheer number of choices. Programs designed to keep them coming back leave them feeling uncertain about the actual value they receive, creating loyalty fatigue. Customers won’t stay loyal just because you offer a benefit. In fact, for many, it will have quite the opposite effect, causing a disconnect between the brand and its customers.
In the U.S., around 55% of travelers are enrolled in loyalty programs, with many European markets not far behind. However, there are fundamental differences when it comes to engagement. For example, figures are lower among 18-24-year-olds across Europe, with older age groups more likely to be enrolled in programs. For European travelers, price is the primary loyalty driver, while room upgrades or spa access are less appealing options. For price-sensitive travelers cheaper room rates elsewhere are often favored over future rewards, so loyalty has become more of a transactional process.
So, how do you cut through all the noise and encourage customers to stay loyal to your brand?
By offering what customers want at the right time, travel businesses can build out strong personas and genuinely loyal customers.
Loyalty programs that engage members with seasonal offers, incentives and discounts remind customers of the value they can expect from their subscription year-round, whether it’s peak travel season or shoulder season. Indeed, many CTS partners launch premium travel clubs to create a community-driven platform, offering exclusive travel experiences while diversifying revenue streams. However, each one comes with its own set of challenges related to branding, differentiation and audience targeting. They need to stand out, drive membership, and, more importantly, retain them. By utilizing data-driven insights and strategies, they can target campaigns with premium travel deals and packages that meet their audience’s specific needs.
Accessing valuable data, such as the type of bookings being made—whether it’s family experiences or luxury breaks—allows partners to make informed decisions based on the benefits, including meal deals or family hotel discounts. Not just another car rental deal or airport lounge access but a member offer that is personal to them. By drilling down on demographic data, tailored benefits can be offered, for example, 30+ travel benefits that include everything from lifestyle travel.
Building a successful program that retains members and drives this key revenue generator, whether external or internal, requires integration into the overall customer experience journey. This journey is driven by spending habits, lifestyle preferences and a personalized understanding of individual values, i.e., what incentivizes the individual. You need to drive customers to make the personal choice to engage with your brand actively, and flexibility is the key.
Loyalty programs work when you know your customers, what they want and when to make the offer.
Mike Putman is CEO/founder at Custom Travel Solutions.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.