There's never been so many loyalty schemes on offer to businesses and the individual traveller. Dave Richardson investigates the options
Anyone who remembers Green Shield Stamps in the 1960s and 1970s would probably agree that never has so much been collected in return for so little, as we licked the stamps and handed over books of the damned things to get the most modest of gifts. But they were an early example of rewarding consumer loyalty in Britain, and some people now have more loyalty cards than the number of playing cards in a pack.
American Airlines introduced the first frequent flyer mileage scheme, AAdvantage, in 1981, and Airmiles - a frequent buyer rather than frequent flyer scheme - first had people dreaming of faraway places 20 years ago. Hilton's HHonors was launched 21 years ago and similar schemes now proliferate in the airline and hotel sectors. But they can be a bone of contention between the individual and the company he or she works for. On one side is the harassed frequent traveller 'forced' to spend many days away from hearth and home, who fancies a free trip to make it up to the spouse. On the other side is the often dour procurement manager, who is looking to save money.
The good news for Mr or Ms Dour is that airlines (and, less often, hotel groups) are increasingly accruing rewards to the company as well as the individual. This is of particular interest to small and medium-sized enterprises (SMEs) unable to negotiate the same deals as large corporates, while larger companies, which have already driven down the cost of travel may be happy for Muggins from sales to live it up with a free flight or stay.
The conflict comes when a traveller in quest of perks goes 'off policy' in pursuit of them, meaning a company might not be able to hit its targets to qualify for specially negotiated rates. Travel management companies (TMCs) and other intermediaries may be caught in the middle.
Simon McLean, managing director of online TMC Click Travel, says: "There is no doubt that personal loyalty schemes such as BA Executive Club influence the buying decision of many people. On a daily basis we see people trying to bend their corporate travel policy so that they can get on a specific flight to earn reward points. Some corporates ban the use of such schemes, but it's difficult to control. Even though the TMC can refuse to record memberships on behalf of the corporate, the traveller can always provide them to the airline at a later date.
"There is also a viewpoint that people travelling on business often do so at the expense of personal, social and family time, so why shouldn't they benefit from the odd perk that club membership brings? We believe the best solution is to allow individual membership of schemes, but control their use through rigid travel policy compliance and monitoring."
He adds: "We find loyalty schemes rewarding the company a bit of a 'no-brainer' - why wouldn't you sign up? We urge all clients to sign up for every single one of them, even if they don't currently fly on any of the carrier's routes."
Simone Buckley, managing director of Capita Business Travel, says: "Airline corporate loyalty programmes are a great incentive for clients whose volume potential is low, or who fly to many different destinations on short-term projects. Wework with our clients to help them decide which programme fits their requirements. However, corporate loyalty programmes can in some cases steer travellers off policywhere individual cost centre or budget managers have been able to sign up without any real checks on eligibility. It's also important for travel managers to investigate what cards are commonly held by its travellers."
Hogg Robinson Group's (HRG)client management director, Stewart Harvey, has noted an increase in schemes which reward the company but thinks restrictions are now being imposed on lower fare categories: "Our corporate clients increasingly want the benefits to come back to themselves, but there need not be a conflict with the traveller. The corporate can appoint its preferred suppliers and then fine-tune the deal to recognise frequent travellers or improve their experience. But airlines and hotels are becoming more specific about the type of reward given, and what qualifies for it. Some fares or tariffs may be excluded from accumulating points, because loyalty schemes are now driven by intelligent data and linked to inventory control. Some ask why they should incentivise the traveller for following company policy."
The rise of low-cost airlines and their hotel equivalents can muddy the water, as very few operate loyalty schemes. One exception is Flybe, whose Spend & Fly card offers benefits, with a £250 spend producing one point - 16 points are needed for a return UK flight, and 20 points for one year's lounge access.
"Budget airlines and hotels don't need to recognise loyalty, as the range of services they offer is limited and they have a finely defined service offer available to everyone," says Harvey. "There's no question of trading up to a premium cabin on easyJet or an executive floor at Premier Inn."
Trevor Elswood, managing director of hotel booking specialist BSI, says loyalty schemes can still be a "sore point" for procurement departments.
"Some corporates give you a booking profile that excludes loyalty schemes, but as a sop to procurement departments some hotel groups provide added value such as room upgrades, reduced telephone costs and concierge services," he explains.
"Millions are spent targeting the frequent traveller, but a plateau has been reached in bringing them on board. So now hotels are working more closely with head offices, and procurement departments realise they must embrace loyalty schemes or risk losing control."
A survey by AirPlus International asked corporates about the importance of staff having airline loyalty cards, and 47 per cent of the UK sample rated them as important or very important - falling to 36 per cent for hotel cards.
"The results did surprise us, as we did not expect such a high percentage of travel managers who agreed on the importance of these programmes," says AirPlus spokesman Florian Gränzdörffer. "A corporate loyalty programme, such as Lufthansa's Miles & More, helps both sides. The traveller is motivated to use his or her card for all business related expenses, and the company will benefit from a best possible cost transparency and budget overview."
An example of how airlines are targeting both travellers and their head offices is bmi's Company Rewards loyalty scheme, which runs alongside its Diamond Club.
Members can redeem points in the form of an e-voucher to exchange for flights, cash or a charity donation, and bmi claims that none of its competitors offers this. Companies spending over £50,000 a year receive a 4 per cent annual cash bonus.
Kam Jandu, bmi general manager - UK sales, says: "Company Rewards has been a huge success since its launch in November 2007 and now has about 1,400 member organisations, which is already well ahead of target. Company Rewards can be used in conjunction with Diamond Club, the UK's most generous frequent flyer scheme. Rewards from both schemes can be redeemed on the same flight."
Another one to watch is KLM's BlueBiz scheme, which more than 2,500 UK companies have joined. Companies earn Blue Credits on flights their employees make on KLM or participating partners, while travellers still earn their own Flying Blue Miles. Christine Ourmieres, UK general manager of Air France KLM, says: "BlueBiz has proved a great success in providing a clear and coherent reward structure, that recognises the loyalty of smaller companies across the UK who may not travel so frequently.
"Serving the needs of SMEs is one of KLM's priorities thanks to its strong regional network, in addition to London. BlueBiz is a very positive tool for KLM's clients and works extremely well when promoting new routes."
Virgin Atlantic's corporate programme is called Flying Co. There must be at least two active employees who travel on business earning a total of at least 20,000 Flying Co miles a year - equivalent to five Upper Class round trips to Boston, or five Economy round trips to Johannesburg. Miles can be spent on rewards from flight upgrades to clubhouse access at Heathrow and Gatwick.
OnBusiness is the corporate loyalty programme of BritishAirways. The business earns travel points with every flight employees take, and employees also earn BAMiles if they are a member of the Executive Club.
Airline network Star Alliance offers Corporate Plus, which has grown strongly since its inception seven years ago. Figures for 2007 show a further 10 per cent increase with flown revenues rising from €2.2 billion to €2.4 billion, and the addition of Air China and Shanghai Airlines has proved popular with corporate customers. Christopher Korenke, VP commercial at Star Alliance, says: "This product brings great value to global corporations and their travel management. We bring the best offer to the table, compared to local and individual deals."
Hotel groups in general are less inclined to offer loyalty schemes to companies rather than individuals, and these operate separately from any corporate rates that may have been negotiated. Some are particularly tempting to the individual because of the range of rewards. Hilton HHonors members can earn and redeem points at more than 3,000 hotels worldwide, and almost 60 airline partners. Total HHonors points redeemed have more than doubled in the past four years, and point redemption is up around 24 per cent in the first half of 2008 compared to 2007.
Hilton claimed to have the first programme with no capacity controls or 'blackout dates' - periods when free rooms are not available - when it was introduced in January 2008.
InterContinental Hotels Group claims to have the world's first and largest hotel loyalty programme, Priority Club Rewards, with 37 million members. In the past four years members have recorded more than 115 million nights away from home. Its 'Any Hotel, Anywhere' scheme allows redemption at more than 500,000 hotels worldwide, including those of rival groups, anywhere the American Express card is taken.
"IHG recognises that young business travellers in particular have to stay in the hotels directed by their company," it says. "However, they may not see the hotel's reward programme as something of great relevance to them, as they would not necessarily choose to stay in the same hotels on leisure trips." IHG's BusinessClub offers company rewards such as team nights out and Christmas parties.
Whether you're an individual or a company, you deserve a reward for all that loyalty and expenditure. But perhaps no-one will reap a greater reward than Alan Watts, managing director of an electrical engineering firm in Middlesex. He is training as the first person in the world to become an astronaut using his frequent flyer miles as payment. He has earned two million Virgin Atlantic Flying Club miles, which will be redeemed on a trip to space with Virgin Galactic, hopefully in 2010.
Let's hope, like many companies' wandering employees, that he eventually comes back.
