As the US begins its return to normality, many citizens have a pent up desire to travel. Financial services companies must understand that this desire is driven by leisure travellers, not business ones, meaning the best immediate course of action for the company to be successful is to tailor their service to the leisure traveller. What this includes is understanding every aspect of what makes a vacation – not only just the components of the trip but the booking experience too: everything from planning to purchasing to departing must be accounted for.
Travis Markel is the Chief Experience Officer of arrivia, a travel technology company that provides travel loyalty, booking and marketing solutions to consumer-facing companies that want to deliver exceptional value to their customers, uncover new revenue streams, and drive growth through exciting travel rewards and member benefits.
With nearly three decades of travel industry experience and a deep understanding of the customer experience, Markel is an accomplished leader in corporate and loyalty travel, business acquisition and integration, client commercial development. He has previously worked serving leading financial institutions and banking brands at Corporate Travel Management and Connexions, where he was a core member of the Connexions/cxLoyalty leadership team that built the industry’s largest travel loyalty offering for global banking and travel programs.
Here, Markel explains how financial services brands can optimise their rewards programs to focus on leisure travellers and bridge the business travel gap:
In the late spring and early summer, as Americans got vaccinated and unleashed a year of pent-up desire to
vacation, sightsee and just get out of the house, it seemed like the travel rebound was well and fully on the way.
The spread of the delta variant may crimp some plans, but the demand surge is real. More than 80% of US
respondents to a TripAdvisor survey plan to take at least one overnight leisure trip this year, and 34% are
planning at least three trips. A survey of US travellers conducted by our team at arrivia revealed similar findings: 80% of travellers feel “very comfortable” travelling by air right now, compared to 19% who are apprehensive and just 1% who aren’t comfortable flying at all amid ongoing covid fears.
Look closely at those statistics and you’ll find that they don’t mention business travel at all. That’s because travel demand right now is being driven almost entirely by leisure travellers. This is good news for most financial services companies whose travel rewards programs are oriented toward leisure; they’re likely already feeling a positive surge in activity and points redemptions. But on the other side of the coin, these same companies may have a revenue gap due to persistently reduced business travel spending on their main card rails.
The solution is simple: lean into the leisure travel rebound.
There is an opportunity for financial services companies to fill the gap left by the more gradual recovery of
business travel by optimising their loyalty and rewards programs for the leisure traveller. After all, loyalty members spent a year accumulating benefits without an outlet to use them, and now have thicker wallets and more opportunities to defray the cost of a vacation using their loyalty currency. But to capture more of this cohort’s spending, financial services companies need to emphasise value and deliver the flexibility and options these travellers want.
A Long Road to Recovery
If the opportunity to grow through leisure travel spending is great, then so is the gap left by business travellers. According to the latest poll by the Global Business Travel Association (GBTA), 86% of companies have cancelled or suspended most or all international business trips, while 50% have suspended or cancelled domestic trips. That translates to a steep decline in corporate travel spending. McKinsey found that total global business travel expenses contracted by 52% in 2020, while managed corporate-travel spending in the United States dropped 71%, or $94billion.
Credit card issuers that counted on this spending activity for a significant percentage of transactions need to find a way to make up for that ongoing shortfall. And that means catering to a leisure travel segment that is looking for flexibility and value in a dynamic travel environment.
Creating Value at Every Turn
Historically, leisure travellers have been significantly more value-conscious than their business travel counterparts. This year, in the shadow of the pandemic, this trend is even more pronounced. Leisure travellers have been conditioned to expect steep discounts from travel providers desperate to attract customers; meeting this expectation for value is key for financial services travel loyalty programs through the recovery.
Fortunately, travel rewards programs have built-in tools to meet that expectation: their points systems. 63% of consumers say they are saving their credit card points so they can go on a vacation once they feel comfortable travelling. In that same American Express survey, a third of consumers indicated that they will likely use more travel credits or points to pay for all or part of a trip this year. In other words, post-pandemic leisure travellers are turning to their travel rewards programs for value.
Expanded Options, Expanded Horizons
To make the most of this advantage, financial services companies should supplement their transactional loyalty value proposition with a renewed focus on both the functional and emotional components of loyalty. That means transparency around earning and redemption options, high-value discounts, and experiences that demonstrate to the leisure traveller that the brand understands the things they care about and wants their trust.
For business travellers, planning a trip is often a simple matter of logistics. For leisure travellers, trip planning is a much more extensive, emotional process. They like options, and visualising how the components of a trip will come together to form a vacation. If financial services brands can capture leisure travellers’ attention during the planning process, they’ll be able to capture more of their travel spend within the loyalty ecosystem. But to do that, they need to give them all of the options they crave.
The “big three” – air, hotel and car rental – are omnipresent options in travel rewards programs. Fewer financial services companies offer the ability to book cruises, experiences, or alternative lodging. Leisure travellers are familiar with OTAs that act as one-stop shops for all of their vacation needs; if a rewards program’s booking platform doesn’t offer the same convenience and breadth of options, they’re likely to take their booking elsewhere.
Travel loyalty programs can deliver more value by creating a vertical experience, including transport, stays and activities. They can facilitate the planning experience that leisure travellers appreciate by offering complimentary travel content alongside the big three, creating a more holistic planning and booking process.
Completing the Journey
It is entirely possible for financial services brands to optimise their loyalty and rewards programs to fit the needs of the leisure traveller, they just need the right partners and travel providers to do so. They need to create and demonstrate value by expanding redemption options and leveraging closed user group pricing to make discounts stand out amid rising publicly available prices. They need to flesh out their booking options to compete with one stop travel shops that leisure travellers are used to. And they need to focus on experiences, not only components of the trip, but also the cardholder’s booking experience, and how everything from planning to purchasing to departing comes together to make a vacation.
By embracing these principles, financial services companies can turn their loyalty programs into growth engines, and position themselves to thrive once business travel recovers in full.