[Phocuswire]  Supporting sustainability in travel loyalty

This story was originally published by PhocusWire. Read on their site here.

Travelers continue to prioritize eco-friendly options when planning and booking trips, even amid rising prices and tighter travel budgets. And the travel industry is responding to this demand, as evidenced by surges in new developments like sustainable aviation fuels and increased interest in initiatives like the Sustainable Hospitality Challenge, currently entering its final round in the Hague.

But is travel technology doing enough to make sustainable choices easy for travelers and present the right sustainability options to them through their preferred booking channels? Not yet, as many travelers still don’t know where or how to find more sustainable options despite travel brands’ best efforts. 

This extends to travel loyalty programs and travel rewards. Anecdotally, you might be able to think of a hotel loyalty program you belong to offering a credit for green-friendly on-premises behaviors, like reusing towels or opting for less-frequent housekeeping services. Or the opportunity to purchase carbon offset credits when booking a flight through your frequent-flier program. But do the travel loyalty programs you belong to consistently offer reward points for making more sustainable choices – something 42% of travelers want?

If you welcome those options, you’re not alone. According to our report, Booking, Personalization, Sustainability, and Payments: The Tipping Point for Travel Loyalty in 2023, 65% of consumers would be more likely to book a trip through a specific loyalty program if it offered more sustainable choices or if they received bonuses or incentives for booking climate-friendly services. Additionally, 36% of millennials and 44% of Gen Z said they would be more likely to book a trip through a loyalty program if the provider contributed a portion of its revenue to sustainability causes or organizations. Despite this well-articulated demand, our report found that only 32% of travel loyalty programs offer sustainability-related redemption options, and 15% do not incorporate sustainability into their programs at all.

What’s the source of this disconnect? Surely, travel loyalty programs want to be able to offer their members redemption options that encourage them to book. They must recognize that the path to program growth runs through younger generations of members and aligning their rewards structures with their priorities is in their best interest.

Eliminating the technological barriers to sustainability

When it comes to supporting sustainability, the hurdle for many travel loyalty programs is a technological one. Most programs offer the “big three” travel booking options: air, hotel and car. There are well-established inventory channels for these options, well-known suppliers, and there are many plug-and-play booking engines available that can support them out of the box.

But sustainability-related options, like lifestyle rewards, can be outside of many loyalty programs’ wheelhouses, so to speak. For travel brands in particular, non-travel rewards can seem to be extraneous to their core competencies, and they tend to allocate limited IT resources toward supporting their direct brand offerings and strategies. Without the in-house technical skill (or time or budget) to create new reward categories, establish new links to supplier inventory or present sustainability rewards to members in a cohesive, connected booking process, these loyalty programs will stick to the status quo.

This is one reason why of the loyalty program professionals we surveyed for our report, only 7% are planning to introduce carbon offset or other sustainability features to their rewards portfolio in the next 6-12 months. For many loyalty programs, building out these capabilities would require an investment of time, money and expertise for what would be perceived as only incremental returns.

Meeting member expectations with a sustainability-enabled tech partner

As indicated by the consumer sentiment captured in our report, this would be shortsighted. Forty-eight percent of 18–34-year-olds considered sustainable travel very or extremely important to their travel decisions, in contrast to 13% of the 55+ age group. A 2021 Phocuswright study iSeatz contributed to confirms this trend among the most valuable travelers as well, finding that 30% of high-status travel loyalty program members, who tend to travel frequently each year, rate sustainability as extremely important when making their travel decisions. And a PhocusWire article from last year indicates that most travelers are interested in sustainability and outlines a variety of tactics loyalty programs can use to incorporate sustainability into their offerings.

Loyalty program providers that don't give the appropriate amount of attention to sustainability are not only mortgaging their future but risking alienating their most valuable members.

Technology should not be a barrier to loyalty programs stepping up their sustainability efforts to both meet demand and better align with members' values. By partnering with technology providers that have deep relationships across multiple travel and lifestyle touchpoints, loyalty programs with limited resources can create more memorable experiences for new and old customers alike. A full-service loyalty technology provider can also source suppliers that offer sustainable travel options, allowing programs to incorporate a wider variety of sustainability-related redemption choices within the rewards framework. Demonstrating their support for reducing environmental impacts can only help loyalty programs engage, retain and grow their memberships in a sustainable way.

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