It won’t be a surprise for anyone, this year people will travel much less. For many there will be the regret of having missed their vacations but for others there will be the realization of a nightmare: losing one’s status in one or several hotel and airline loyalty programs.
The loyalty program: anecdotal for some, a grail for others
Let’s be clear: at TravelGuys we think that except for very big travelers, loyalty programs in the travel industry are of little interest. Well, almost.
Being a member, yes! It gives you some benefits like free wifi here and there and simply accumulate points/miles to one day hope to get a free ticket or night.
To invest totally to hope for a status, no! In general, programs have 3 or 4 status levels and only the first 2 are interesting. Spending 10 nights at Accor for a welcome drink or 30 for a possible upgrade to a superior room is asking a lot from a “normal” customer and offering him little. No better at Marriott for the silver and gold. And in the airline industry it is even more stingy. In short, if you have less than 50 hotel nights per year and 12 long-haul flights in business on Air France, to become gold if you start from scratch, it takes a lot of effort and loyalty for not much.
On the other hand, some people, by necessity or passion, have made it their playground. With half a dozen long-haul business flights per year or 75/100 hotel nights, privileges are starting to come, especially in the hotel industry.
We might as well tell you that for 90% of these people holding Diamond, Platinum or even Gold status, the descent is likely to be very severe, even if some programs have a “soft landing” clause that allows them not to drop more than one level per year.
This is just a guesstimate, but I think that as things stand now, at least 75% of the highest statuses will not be kept (maybe a little less because in some cases the requalification period is not based on the calendar year).
There are more important things than statuses, right?
So as I write I agree that this is the least of the passengers’ and the industry’s worries. Today, the important thing for the players in the sector is how to keep their backs to the wall while waiting for the situation to pass, and some of them are going to lose a lot, especially in the airline industry. For the passenger it is to know that at the end of the ordeal he and his family will not have suffered.
Yes, but at some point you have to get the industry going again, fill hotels and planes as quickly as possible, talk to people who might still be a little afraid to travel just for fun.
And in this perspective, this clientele is essential! These are the people who, for work or pleasure, will be the first to travel again and far! These are the ones that a hotel group or airline does not need to convince to go to them rather than to the competition.
But what if the passenger in question has lost or is afraid of losing their hard-won status?
The status: between business and affect
This will amuse some, but the loyalty program, especially for high status holders, is an almost emotional link between the customer and a hotel group or an airline. It is this emotional side that makes them book without even looking at the competition, that they book directly and not through an online agency that ruins the margin of the professional.
The loss of status is like an emotional break, like being forced to sleep on the lounge sofa because the bedroom door closed. A real injustice because the status is not lost because of the client, not because he went a little too “elsewhere”, but because he was prevented.
So yes the relationship will be damaged but there are worse things. Even if you start the year without any profit, why not look at the competition because there is no longer any interest in going where you were loyal until now.
Another consequence: the client who has not lost his status that expires a little later but knows that he has no chance to keep it will postpone his travel intentions. “I have a potential 20 nights until the end of the year, I need 75, I might as well do nothing and save money anyway I start from scratch next year.”
I remind you that we are talking about captive clients who have the highest average expenditure per stay. To be precise of clients who were captive.
We are in the middle of business and affect and the two are linked. Put yourself in the shoes of a hotel or an airline: it is the clientele on which you will count to restart, if you start by disappointing the restart of the activity will be longer and you may have lost the best customers to a competitor. Double punishment because if I call them “high status” here, the sector calls them “high contribution”. You understand why?
Which strategy for the industry professionals?
The industry has taken the measure of the danger. At first glance, one might think that “fewer high statutes = fewer profits to distribute = fewer costs” but when one understands that we are not talking about costs but about investments, one understands that they is worried.
We have seen hoteliers from the start make special arrangements. For example, Marriott announced at the beginning of the crisis that the status of its Chinese customers would be extended by one year. In other words, even if they don’t do one night in a year they will keep their status anyway. But now it is everyone who is concerned.
But here is what the industry can do to avoid “losing” their high status and use it as a lever to restart activity once the crisis is over. These gestures are all the more important as they will be seen as a proof of attention and will even contribute to reinforce loyalty.
1°) Maintaining the statutes without condition
You had a status before the Coronavirus crisis, you can’t keep it, well we keep it. The most fair play gesture.
Another dimension to consider for programs that offer lifetime status is to include that status in the count and not as a marketing gesture.
Let me explain, it can happen that as a commercial gesture you are awarded/extended a status but it does not count in the number of years of holding the status that decides the award of a lifetime status.
For example, at Marriott, the years do not have to be consecutive, so an interruption has no other consequence than to postpone the lifetime status by one year. On the other hand, with SAS or Air France, which require 10 consecutive years, it is clear that the passenger who is reset to zero after 4, 5, 6 or 7 years will have no desire to start again from scratch and will be just as inclined to be unloyal.
2°) Lowering the thresholds
It may also be decided to lower the thresholds for achieving a particular status. It is said that Flying Blue will lower them by 25%. In my opinion, given the impact of the crisis, it won’t change much. Of course it all depends on the program and even the industry (it may be easier in the hotel industry than in the airline industry) but 50% would seem more appropriate.
3°) Extend the qualification period
Instead of having one year to maintain your status, you would have 15 or 18 months. But again, given the current situation and the lack of perspectives, I think that 24 months would be better…which brings us back to the first hypothesis of maintaining the statuses without conditions.
4°) Promotions and challenges
This is a practice that is sometimes used when a client is a little behind schedule. Temporary delay ? Switch to competition. To motivate him, he is told that over a given period of time, for example, all his stays in the hotel count double. Useful for boosting the stays of wait-and-see customers who don’t know if it’s worthwhile to run after a status.
5) Soft landing
This was mentioned earlier. Some programs already provide that you cannot lose more than one status level at a time, but others do not. For the latter, introducing it exceptionally or permanently would be a way to limit the damage.
6°) Nothing
Suicidal? Well, I think some will, especially in the airline industry.
Let’s keep track of it all and talk about it again once we get a clearer picture. But it is certain that once the storm has passed, airlines and hoteliers will not be able to let their loyalty program disappoint at least 75% of its members and start 2020 with almost no customers at its two or three highest levels.
Photo : desperate passenger by Ljupco Smokovski via Shuttertock
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