With the recent announcement that Expedia has made a bid to purchase Orbitz, the world of online travel agencies (OTAs) is shrinking. Dramatically. If the deal goes through (it likely will), there will be two major OTAs left standing – Expedia and Priceline. And while consumers still have plenty of choice regarding where to purchase their travel (hotel direct, airline direct, etc.), the bigger question for those of us in the loyalty world is…where will customer loyalty go?
Priceline has already made a preemptive move in its recent announcement that it’s acquiring Rocketmiles, a loyalty program which gives airline miles or points to members who book hotels through its site. Some significant frequent flier programs participate including American Airlines, Southwest, and JetBlue – and the Rocketmiles site boasts that members can earn up to 80,000 miles or points annually, just through hotel bookings.
The awards do appear to be generous, but vary across programs. For example, in a search for a midweek 2-night stay in New York City, the miles that could be earned in American Airlines’ program ranged between 2,000 and 8,000 miles. Choose the Grand Hyatt New York and you’ll earn 7,000 miles for your two nights. Contrast that with the Hyatt’s own Gold Passport® program, you’ll pay the same as Rocketmiles, but you’ll only earn 500 American Airlines miles. On Expedia, you’ll pay $50 more per night and earn 2,029 Expedia plus rewards points, but no airline miles.
This brings us back to our original question, where will customers go? Priceline has, so far, indicated that they will operate Rocketmiles as a separate entity, as they have done with other acquisitions such as OpenTable, Booking.com, and Kayak. But if Priceline’s hotel network can broaden the offering on Rocketmiles while maintaining the generous mileage awards, a very powerful program may emerge that will, no doubt, catch the eyes of mileage junkies everywhere – and make Priceline a formidable competitor against both hotel direct programs and the last of the major OTAs, Expedia.
Our advice? Hotels and, well, Expedia should be sure to keep their eye on customer loyalty. Check in with your customers regularly. Make sure you understand their wants, needs, and motivations when it comes loyalty programs. And watch out, Rocketmiles may just be the sleeper that the loyalty enthusiasts everywhere have been waiting for…giving Priceline a big boost in a shrinking world.
Interested in learning more about rewards programs? Check out our whitepaper on “Designing the Right Rewards Program for Your Business.”