The Best Way To Explain the Science of Airline and Hotel Loyalty?

I’ve been trying to find a good real-world example to explain the science behind airline and hotel loyalty programs, and I think I’ve come across one that summarizes how these programs work, in a really unique example.

Before I go any further, I found this clip from The Real Hustle, a UK television show devoted to talking about scams and the ways you can avoid them. Now, what you’re probably thinking is that loyalty programs are like a scam – and yes, in many cases I think they are. But, more so, I think they fall into the lines of an addictive drug, training people to come back for more, spend more money, and then receive little to no benefit, based upon previously promised perks. Take for example Delta — while they’re promising more miles earned based on your spending, they’re also increasing the price of awards, limiting stopovers, and limiting partner availability, which, while enticing on the outside, almost seems like a scam to the loyal frequent flyer.

Take a look at this clip, the Jam Auction.

You’ll notice people paying money, getting a set of products, and receiving their money back. In the first several rounds of this, they’re making out like bandits – and most importantly, they’re coming back for more. When hotels and airlines offer promotions and perks getting you into the door, you’re likely to keep using them again, and again. Between mileage bonuses, free upgrades, the best rooms in the house, and complimentary food, there’s a lot of reasons for you to keep using them. Then, when the time is right, there is a devaluation, or, as we commonly know it in the loyalty industry “an enhancement” to change the program, or tweak it towards a certain group. Now that there’s already a based of loyal members, it’s difficult to switch programs, or business.

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Is this video a good representation of hotel and and airline loyalty programs?

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Comments

  1. says

    OK. I travel frequently but don’t hold many affinity credit card and my major experiences are with SQ, CX, VN for air and IHG, Hilton Honors and Accor for hotels. SIngAir is such a great airline that I almost don’t mind their vagaries in giving mileage, especially on other Star Alliance carriers. I have gotten several free flights in the past but now that I have accumulated enough for something good, I can’t find Saver Awards which would let me use many fewer miles than the Standard or Full.

    I love Sofitel and though Accor is sometimes arbitrary on their 2x 3x awards making you book within a certain period and not giving me a break if I already had a booking, I find being branded has gotten me so many upgrades from lowest price to huge suite, that I am hooked. GM’s will always write to others to introduce you and whenever we return to a property, we are always given Red Carpet treatment. Unfortunately, not many Sofitels have Club Floors which are given automatically to Le Club Platinum members.

    As for the other hotel groups, when we take a road trip we usually find that Hampton Inns give great value and anything free is just gravy.

    Unlike some, I’m not looking to squeeze out every last deal and I will stay at a favored hotel in some cities without regard for awards. You can establish a relationship with a particular property by making yourself known and returning from time to time. Mandarin Oriental has no rewards program but the one in Singapore has often upgraded us.

    I was thinking of trying to use my KrisFlyer miles and then maybe trying to use another carrier to accumulate for next time, but most US based carriers are so bad that the points/miles aren’t worth it.

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