Contents

Introduction and Abbreviations

Introduction

Other relevant reports

Airlines K, Leisure Intelligence, June 2005

Definition

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Loyalty points multiply as consumers enjoy new ways to stockpile

Loyalty programs become a commodity are they all one in the same?

Opportunity for loyalty program membership growth remains

Airline industry remains unstable

Discount airlines cause turbulence

Loyalty programs of major carriers favored among majority

Younger consumers drawn to discount carrier loyalty programs

Treat me special: individualism reigns

Travel industry showing gains

The new face of business travel

Red tape generates customer frustration

Convenience becomes key 壮oft perk・for loyalty program members

Internet gives an edge to consumers

Future of loyalty programs

Market Factors

Overall travel trends

• Figure 1: Travel expenditures in the U.S., at current and constant prices, 2000-05
• Figure 2: Graph: Travel expenditures in the U.S., at current and constant prices, 2000-05

Trends in length of stay

Business vs leisure travel

Business travel

Companies: Thats in it for us?

Catering to business travelers

Small business travelers targeted

Leisure travel

Leisure needs differ by generation

Major travel loyalty sectors

Air travel

Introduction

Market size and overall trends

• Figure 3: Total U.S. scheduled airline passenger revenue, at current and constant prices, 1999-2004
• Figure 4: Graph: Total U.S. scheduled airline passenger revenue, at current and constant prices, 1999-2004

Air travel and loyalty programs

Customer satisfaction with the airline industry

Concern about stability of travel loyalty programs

Rental car company loyalty driven by flexibility, innovation

Focus on business travelers

Market size and overall trends

• Figure 5: Total U.S. car rental revenues, at current and constant prices, 1999-2004
• Figure 6: Graph: Total U.S. car rental revenues, at current and constant prices, 1999-2004

Hotels

Hotel travel segment trends

The Internet and travel booking

Online distribution channels changing the way consumers book travel

• Figure 7: Total U.S. retail sales of internet travel bookings, at current and constant prices, 2000-2005

Internet changing the way travel suppliers conduct business

Market Background

Loyalty Programs Overview

Customer loyalty defined

Loyalty programs why they started

Loyalty programs Structures, components and operation

Introduction

Components and enrollment

Hard and soft perks

Loyalty program customizing

CRM and database generation

Market differentiation and prediction

CRM: Customer service and satisfaction

Loosening ties and broadening options

Best price guarantees

The Internet and loyalty programs

Perks that promote

Unredeemed Miles

Overview

Number of unredeemed miles

• Figure 8: Total airline loyalty program unredeemed miles, 2000-2005

Airmiles as airline liability

Airmiles as airline asset

Trading airmiles

Difficulties of redeeming airmiles

Other redemption offers

• Figure 9: Total redeemed travel rewards, 1999-2004

Rewards for the high milers

Loyalty Programs by Sector

Introduction

• Figure 10: Top airline loyalty program providers, membership 2005
• Figure 11: Graph: Top airline loyalty program providers, membership 2005

Airline Global Alliances

• Figure 12: Top 3 airline global alliances, 2005

Star Alliance

SkyTeam

OneWorld

Discount airlines overview

• Figure 13: Name and type of frequent flyer programs, by discount airlines, January 2005

Airline loyalty programs

American Airlines

Program overview

Program partners and co-branding

Unredeemed miles liability

Company background

United

Program overview

Partners and co-branding

Online activities

Company background

Delta Airlines

Program overview

Partners and co-branding

Company background

Northwest Airlines

Program overview

Partners and co-branding

Company background

Continental

Program overview

Unredeemed points liability

Company background

US Airways

Program overview

Company background

America West

Program overview

Partners and co-branding

Company background

Southwest Airlines

Program overview

Company background

JetBlue

Program overview

Company background

Hotel Loyalty Programs

Introduction

• Figure 14: Top 5 Hotel loyalty program providers, membership 2005

Marriott International

Program overview

Company background

Accor Lodging

Program overview

Company background

Starwood Hotels & Resorts

Program overview

Partners and co-branding

Company background

Hilton

Program overview

Partners and co-branding

Company background

Cendant Corporation

Program overview

Company background

InterContinental Hotel Group

Program overview

Partners and co-branding

Company background

Carlson Companies

Program overview

Company background

Choice Hotels International

Program overview

Partners and co-branding

Company background

Hyatt Hotels

Program overview

Company background

Wyndham

Program overview

Company background

Car Rental Loyalty Programs

Introduction

Enterprise

Program overview

Company background

Hertz

Program overview

Partners and co-branding

Company background

Cendant Car Rental Group/Avis

Program overview

Partners and co-branding

Company background

Budget Rent a Car

Program overview

Partners and co-branding

Company background

Vanguard Car Rental USA

Program overview

Partners and co-branding

Company background

Dollar Thrifty Automotive Group (DTAG)

Program overview

Partners and co-branding

Company background

Internet travel companies

Travelocity.com

Orbitz

Priceline

The Loyalty Program Consumer

Introduction

Characteristics of loyalty program members

• Figure 15: Participation in frequent flyer programs, by demographics, January-September, 2004

Consumer FFP enrollment, by airline

• Figure 16: Participation in specific frequent flyer programs, January-September, 2004
• Figure 17: Participation in multiple frequent flyer programs, cross-tabulation, January-September 2004
• Figure 18: participation in specific frequent flyer programs, by race/ethnicity, January-September 2004
• Figure 19: Participation in specific frequent flyer programs, by age, January-September, 2004
• Figure 20: Participation in specific frequent flyer programs, by household income, January-September 2004
• Figure 21: Participation in specific frequent flyer programs, by region, January-September 2004

Vehicle rental for business or personal usage

• Figure 22: Rental of vehicles for business and/or personal use, by demographics, January-September, 2004

Enrollment in specific car rental clubs

• Figure 23: Participation in specific car rental clubs, January-September, 2004
• Figure 24: Participation in multiple car rental clubs, cross-tabulation January-September, 2004
• Figure 25: Participation in specific car rental clubs, by race/ethnicity, January-September 2004
• Figure 26: Participation in specific car rental clubs, by age, January-September, 2004
• Figure 27: Participation in specific car rental clubs, by household income, January-September 2004

Summary

Hotel frequent guest programs

• Figure 28: Enrollment in hotel/motel frequent guest program, by demographics, January-September, 2004

Consumer Attitudes to Loyalty Programs

Introduction

Enrollment in travel loyalty and rewards programs

• Figure 29: Enrollment in travel loyalty and rewards programs, June 2005
• Figure 30: Enrollment in travel loyalty and rewards programs, cross-tabulated by type of programs, June 2005
• Figure 31: Enrollment in travel loyalty and rewards programs, by age, June 2005
• Figure 32: Enrollment in travel loyalty and rewards programs, by household income, June 2005
• Figure 33: Enrollment in travel loyalty and rewards programs, by marital status, June 2005
• Figure 34: Enrollment in travel loyalty and rewards programs, by region, June 2005

Number of leisure and business trips in past 12 months

• Figure 35: Number of leisure, personal or business trips in the past 12 months, June 2005
• Figure 36: Number of leisure, personal or business trips in the past 12 months, by gender, June 2005
• Figure 37: Number of leisure, personal or business trips in the past 12 months, by age, June 2005
• Figure 38: Number of leisure, personal or business trips in the past 12 months, by household income, June 2005
• Figure 39: Number of leisure, personal or business trips in the past 12 months, by presence of children, June 2005
• Figure 40: Number of leisure, personal or business trips in the past 12 months, by marital status, June 2005
• Figure 41: Number of leisure, personal or business trips in the past 12 months, by region, June 2005

How reward points are used, attitudes about future value of points

• Figure 42: How reward points are used, June 2005
• Figure 43: How reward points are used, by business travelers, June 2005
• Figure 44: How reward points are used, by age, June 2005
• Figure 45: How reward points are used, by household income, June 2005
• Figure 46: How reward points are used, by region, June 2005

Frequent flyer programs: attitudes about redemption, blackout dates and price vs loyalty

• Figure 47: Attitudes about frequent flyer programs, June 2005
• Figure 48: Attitudes about frequent flyer programs, by business travelers, June 2005
• Figure 49: Attitudes about frequent flyer programs, by gender, June 2005
• Figure 50: Attitudes about frequent flyer programs, by age, June 2005
• Figure 51: Attitudes about frequent flyer programs, by household income, June 2005

Location trumps loyalty for hotel choice

• Figure 52: Hotel location or frequent guest program most important factor, June 2005

Use of credit card to earn travel points

• Figure 53: Use of co-branded credit card to earn travel miles, June 2005
• Figure 54: Use of co-branded credit card to earn travel miles, by age, June 2005
• Figure 55: Use of co-branded credit card to earn travel miles, by household income, June 2005

Conclusion

Future & Forecast

Future Trends

The U.S. economy

The fate of the airline industry

New fees may offer loyalty clubs opportunities to cater to upper tier members

Soft perks will have an increasingly important role

Personalization and flexibility key to building loyalty

U.S. Travel trends

Leisure travel

Business Travel

Internet travel research and booking

Alliances and partnerships

Sorting through sameness

Credit card alliances

New alliances

Generating more loyalty through loyalty club membership

Market forecast

Total unredeemed airline loyalty program miles

• Figure 56: Forecast of total unredeemed airline loyalty program miles, at current and constant prices, 2005-2010

Forecast factors

Appendix: Trade Associations

Appendix: Research Methodology

Consumer Research

Sampling & Weighting

TechnoMetrica TechnoExpresssm

ICR Surveys EXCEL

Simmons National Consumer Surveys

Greenfield Online

Presentation & Definition

Further Analysis

Trade Research

Informal trade research

Formal trade research

Desk & Internet Research

Sources

Definitions

Forecasts

Appendix: What is Mintel?

Mintel Group

Mintel Reports

Mintel Premier

Mintel ECLIPS

GNPD

Menu Insights

Comperemedia

Brokertrack

Mintel Services

Applied Research

Mintel Consulting

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