Even as inflation soars, driving travel costs higher, domestic and overseas travel demand hasn’t subsided. Our data supports this: a recent survey we conducted in August 2023 of American consumers who belong to a travel loyalty program found that 71% intend to travel more in 2024, compared to just 55% in 2023.
These findings align with long-term trends that show global travel and tourism on an upward trajectory worldwide. According to the World Travel & Tourism Council, they project international travel to rise from $9.5 trillion generated in 2030 to $15.5 trillion in 2033, representing 11.6% of the world’s economy. Given the ongoing expansion in the travel sector, brands with a travel loyalty program have a singular opportunity for growth.
However, with the travel market increasingly crowded at every level, brands must go out of their way to differentiate and elevate the booking experience that they offer within their loyalty programs. It requires a deep understanding of travelers’ booking behaviors and the factors that motivate their preference for one brand over another.
This brings us to the booking experience, particularly comparing the interactions travelers have with Online Travel Agencies (OTAs) versus bookings made through a loyalty program. OTAs tend to have a considerable leg up in efficiency and breadth of options... after all, travel booking is their entire business. How can organizations bridge this gap and encourage more direct booking via their loyalty programs?
How OTAs Have Dominated the Travel Industry
What aspects of the OTA experience are compelling for consumers? Identifying these factors will help brands to attract more consumers to their platforms.
Consider these statistics that illustrate several current trends amongst consumers:
- 83% of travelers prefer to book their travel online (StratosJets)
- 30% of U.S. respondents prefer to book their flights with an OTA, and 32% prefer to book hotel reservations via an OTA (per an upcoming iSeatz survey)
- 57% of travelers said they were likelier to book with an OTA than before the pandemic (Phocuswire)
- 57% of U.S. travelers believe brands should tailor information based on their behaviors (Think With Google)
- 50% of U.S. consumers said it is extremely or very important to them to receive offers from their travel loyalty program that are personalized to their needs (according to iSeatz’s research)
- Nearly one in two U.S. millennials are members of travel loyalty programs (Insider Intelligence)
- 39% of travelers express loyalty to a particular brand (Travel Agent Central)
It’s widely recognized that OTAs hold a strong position because of their offerings. They simplify finding and comparing inventory from multiple travel suppliers before booking, often providing more choice – and therefore more perceived value – than in-house loyalty programs.
In other words, OTAs excel in three critical areas: convenience, speed, and presenting an attractive deal - and it’s where they lead the travel industry.
In 2023, economic factors are what drive consumers toward OTAs. According to Expedia, 60% of consumers consider getting the right price the most crucial feature of the online booking experience.
New Battlegrounds as New Technology Emerges – How Brands Can Reach Customers Today
Not only do loyalty programs have to compete with the convenience and perceived value of OTAs, but there’s also a disconnect between brands and consumers. For example, in our survey report, The Tipping Point for Travel Loyalty in 2023, just 52% of respondents said their loyalty program delivers what they value the most.
That said, there’s still plenty of opportunity for brands to nurture dedicated loyalists. Even in 2023, 43% of consumers increased spending on the brands they care about.
Loyalty is there to be won, but it requires rethinking customer expectations and how technology can be used to integrate that to create a seamless booking experience.
Here are the three areas that travel businesses must prioritize to stay competitive and meet evolving consumer demands.
#1. Personalization
Personalization is a trend that has hit every industry. But personalization has historically meant offering a few different deals and applying them to broad customer segments. That’s not enough today.
Travel has entered the era of hyper-personalization. According to Mastercard, 90% of consumers expect organizations to know their interests. With the rise of machine learning and artificial intelligence programs, it’s never been easier to harness the vast amounts of data businesses already have.
Crucially, it’s not just about analyzing past behaviors and current trends. It’s about personalizing the experience in the moment to identify and offer opportunities for the traveler to enhance their trip beyond what they are currently searching for - whether that is a dynamic recommendation based on what the traveler needs at their destination, or additional redemption opportunities for dining and entertainment options while on their trip, the best loyalty programs can harness that customer’s data and offer them what they didn’t know they needed.
And this feature isn’t a bonus. Customers expect it.
Our research has found that 75% of customers also found that receiving more personalized offers will save them money on travel - and that 68% want personalized offers for discounts on core travel purchases. But brands aren’t responding, with only 38% of firms providing personalized offers.
#2. Offers and Value for Money
As shown above, OTAs make value a core part of the booking experience. But loyalty programs, by virtue of being closed user groups, can often offer discounts that OTAs cannot. It’s not the only tool at their disposal, but value is absolutely a dimension of their offering that travel loyalty programs can leverage. And in 2023, when saving money is the primary driver of value for many consumers, they should.
Our research shows that 49% of consumers consider driving cost savings as key to loyalty, and 65% said they would engage more with their loyalty programs if deeper discounts were given to them within the booking experience.
Program members have to be able to access the value; however, our research has shown that 62% of travelers find booking through loyalty programs frustrating. The reasons for this vary widely, including:
- 24% couldn’t find enough options for their trips.
- 20% didn’t understand the redemption rules.
- 19% hated being unable to book and pay without being redirected to another platform.
- 16% couldn’t book everything in one place.
Other cited reasons included poor customer service, clunky websites, and inability to pay how they wanted.
All this shows is that while cost may be the primary motivator and the way to draw people in, it won’t count for much if your platform delivers a lackluster customer journey. To surpass OTAs, brands must elevate the booking experience in their loyalty programs.
#3. Extensive Inventory
A good place to start is by expanding the options made available to members. Nearly one in four travelers complained about a lack of deal options when booking via a loyalty program.
The OTA market leader, Booking.com, boasts over 28 million listings worldwide. It also combines this convenience with attractive deals and packages. It can be hard for travel loyalty programs to compete with OTAs’ listings by quantity, meaning they need to compete on other metrics, such as personalization, overall value, and user experience.
What Makes a Seamless Booking Experience in 2023?
We’ve explored what motivates today’s travelers and how OTAs have become the go-to option for travel bookings. But that doesn’t mean there aren’t opportunities for individual brands to take back market share through their loyalty programs.
Based on our research, key components of a competitive travel rewards program must include:
- Options: Travelers want to comparison shop and do it as part of a single platform.
- Personalization: We live in a busy world, and travelers don’t want to spend hours finding the perfect accommodation.
- Value: Providing value is critical for increasing engagement. This can take the form of discounting or value-added services.
- Simplicity: Travelers want an all-in-one platform where they can book all the options they want, efficiently. Additionally, they want to have multiple payment method options, whether that’s credit card, debit card, PayPal, Apple Pay, Google Pay, or even less common options like crypto.
- Problem-Free Experiences: Customers don’t want to ask questions or talk to a support team. They want the answers in front of them, including how the loyalty program works and the best service for them.
At iSeatz, we provide a loyalty-as-a-service platform that integrates many of these capabilities into a seamless and personalized booking experience.
Despite appearing challenging, many opportunities await brands eager to reclaim traveler loyalty and drive more bookings through in-house loyalty programs via compelling offers and experiences.
To read more iSeatz insights, you can access our latest report, The Tipping Point for Travel Loyalty 2023: Holiday Travel Trends, and sign up to receive notifications for future reports here.
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You can also learn more about iSeatz by reaching out to marketing@iseatz.com.