Bonus Offer Outlook for 2011

What will we see for bonus offers from the airlines, hotels and other travel reward providers in 2011?. FFB provides this outlook on the bonus promotion side of the travel loyalty industry based on emerging trends and provides our predictions for the year. The year started off relatively slow with new bonus offers but as January progressed we began to see many new bonus offers being released in every shape and form. The offers came from all the well known providers but also from lesser known airlines and hotels that were not known to ever dole out bonus offerings or at the very least not very often. The outlook is broken down into the five main categories of bonus offers: Airline, Hotel, Car Rental, Credit Card and Other.

Airline
With the economy slowly starting to recover I believe that we will see less lucrative offers from the airlines in general and more so in the elite bonus offerings. Back in 2009 we saw a peak in elite status offers from many airlines particularly in the U.S. where many flights were counting double towards status or you only had to fly so many segments to receive status. With the economy warming up in 2010 we saw a lower amount of these offers then in 2009 but there were a couple of good ones that floated around earlier in the year (think US Airways). For this year we definitely won’t see as many as planes are flying more full and many airlines are actually turning profits now.

We will continue to see a whole host of route specific bonus offers where there is competition (eg Frontier and Alaska Airlines right now for flights between Denver and Anchorage) or where airlines are launching new routes and want to drum up business (eg American Airlines new Los Angeles –Shanghai service) These type of offers never change, we have seen them in the past and will continue to see them in the future.

Some airline programs to watch out for in 2011 are Air China’s Phoenix Miles and LAN’s LANPASS, both of these programs have become very active in the bonus offer market in the last few months. It seems like Air China is adding a new bonus offer every few days from their various partners. For the majors, American and Continental continue to offer many flight bonus offers for specific routes, Cathay was up there too in 2010 but so far they have been significantly quieter in 2011. We have had some surprises already in 2011 from some of the smaller airlines such as Germanwings who have run separate flight bonus offers in January and February. It has been nearly a year since they ran their last bonus mileage offer for flying with them. Garuda Indonesia was virtually inactive in 2010 with bonus offers but have pushed out two flight bonus offers in February with one of them covering their entire international network. I believe this will be the continuing trend in 2011, the lesser known and the low cost airlines of the world are starting to realize that they can create value with bonus offerings that are similar to what all the majors have been providing for years.

Another emerging trend, not so much for the airlines but for the offers themselves, will be in the various airlines social channels. I believe you will begin to see some bonus offers pop up that will only be available and/or promoted via Twitter and Facebook. Several airlines have already seen success in the social media channels for seat sales and drastically discounted tickets and there is no reason why they can’t or won’t apply this to their loyalty program promotions.

Hotel
For the past couple years it has been a virtual gold mine for bonus offers and free nights from most of the hotel reward programs. Hotels were not as full due to the economic situation worldwide and the chains needed to keep business coming their way, so the purse strings were loosened in 2009 with bonus point and free night offerings. The trend continued in 2010 and will continue in 2011 despite the slightly better look for the economy. The playing field in the hotel industry is way more vicious then the airlines and if a hotel reward program decided not to run some sort of system wide bonus each quarter like they have for many years straight.

The question is, what type of offers we will see in 2011?  So far, the majority of the programs have brought system wide offerings of bonus points or miles with only a few going the route of the free night award.  For the remainder of the year we predict that there will be a healthy mixture of both type of offerings. Bonus points/miles for stays will never go out of style and we will see lots of them, some will not be so lucrative while we will probably see a half dozen or so that will be extremely good. Hotels offering free night awards achieved greater popularity with their reward programs over the past two years with some very successful promotions from almost all of the major brands. Free night awards make an extremely good value proposition to the hotel programs as something to give out instead of bonus points. The reason is that the free night awards can provide a larger ROI over bonus points offers for a system wide promotion because of the restrictions they carry like a fixed expiry date which leads to more breakage then points, capacity control (weekends only, etc.) and potential revenues from the use of that free stay such as adding on extra paid days, food and beverage revenues, ancillary revenues (parking etc).

What will be the programs to watch out for? The independents. 2011 will be the year of independent hotel loyalty programs. Don’t get me wrong, the majors will still be king and not go out of style but this will be the year to watch for programs like Stash Hotel Rewards, Voila Hotel Rewards and Global Hotel Alliance’s Discovery program. These programs are making inroads in the hotel loyalty industry and are the perfect place for those looking to breakaway from the norm.

I also have to discuss residency restrictions, those of you who have read my work for awhile know this is my pet peeve. In reality, there are very few hotel programs that restrict their bonus offerings to certain areas, actually there have really only been two that do this, Best Western and Choice Hotels, the latter of which has been getting better. The first promotion of the year for Choice Hotels is available to most of their worldwide audience with only a few restrictions so I won’t harp on them like I have in the past. BW on the other hand continues to offer their system wide promotions to the North American market only. For a chain that likes to promote themselves as the world’s largest they sure don’t seem to focus on the majority of the world’s population. Granted they have lots of individual hotel bonus offers in Europe and Asia but why can every other chain offer system wide bonuses to members in these areas and not BW? The question remains to be answered.

Car Rental
Car Rental offers will remain the same in 2011 as they have in 2010, 2009, 2008 and so forth. The only offer that has stood out so far has been from Sixt where they awarded bonus airlines miles in several programs for booking a car via their iPhone or iPad apps. Much like the airlines I believe the only change we may see here is more offerings via the various car rental companies social channels.

Credit Card
Sign up bonuses for credit cards have exploded over the past 18 months or so in the United States. Several card offers made it up to 100,000 bonus miles for receiving the card and reaching a certain spend level within a predefined period of time. Based on current offerings from credit card providers we may not see any offers that high in 2011 although many cards in the U.S. are still offering and will continue to offer very respectable bonuses in the 30,000-60,000 mile/point range. Where we will see an increase in the amount of miles offered for credit cards is outside of the U.S. as the the big bonus sign up trend reaches into other worldwide markets. We have already seen it happen in Australia, Canada, the United Kingdom and Germany with bonuses reaching up into the 50,000 – 60,000 mile/point range and we should see it happen in more markets around the world this year particularly in other European countries and in Asia.  Latin American and African programs will lag significantly behind as many card offers remain under the 10,000 mile/point level, that is if any bonus is even offered.

Transfer bonuses continue to be a good source of miles especially for American Express Membership Rewards members in the U.S. and to a lesser extent Diners Club Club Rewards members. With offers ranging from 15% up to 80%, this is a good way to top of accounts in the major U.S. programs or for those residing in the U.S. who frequently fly one of the many international airlines that you can transfer Membership Rewards points to. A good example of this is El Al which tends to have 15-25% bonus Matmid Points on American Express transfers several times a year. The one big promotion outside of the U.S. that should return is for Canada’s RBC Visa Avion to British Airways. This 50% bonus may even return this spring as it has occasionally in the past but will most definitely return in the fall like it has every year.

Other offers

All other bonus earning opportunities will continue at a regular pace. Bonus miles for using certain merchants at a loyalty programs online shopping mall, for purchasing, trading or gifting miles, or for dining out will not change. The most popular of these lately has been the bonus offers on the purchasing of miles with some airlines like U.S. Airways offering up to 100% bonuses this past year. The bonuses on these transactions will continue although I have a hard time believing we will see them reach that 100% level as there are already rumblings of U.S. Airways taking a revenue hit on all the miles that were purchased. The trend for bonus miles on purchases is expanding beyond the U.S. market in 2011 with it emerging in places like India where Kingfisher is offering a 20% bonus on mileage purchases.

In general, this year should continue to be a great year for bonus offers from many of the airline and hotel programs with many of the trends that emerged in the U.S. starting to take place Worldwide. Social Media, if you haven’t heard is playing a major role in everything right now although frequent flyer and guest programs have lagged a bit behind in using them as a primary function for pushing out bonus deals. This will change in 2011 as we will definitely see more mileage/point specific offers via SM channels since the FFPs/FGPs will need to play catch up to their parent companies general marketing and sales efforts. A good example of this is American Airlines, which just launched Twitter and Facebook pages for the AAdvantage program on February 1, 2011!  But for those programs that don’t embrace the social media evolution you will always have Frequent Flyer Bonuses to keep you up to date on all the bonus offer promotions for 2011 and beyond.

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