This week’s musings, reflections and observations about travel affiliate marketing…

1. I think Delta’s second quarter financial results underscores the point I made in last week’s ‘TITIT’ column that U.S airlines that offer travel affiliate programs are, in general, more profitable.

Delta Air Lines (DL) reported a net loss of $257 million in the quarter ended June 30th.  This included special items (e.g., $58m charges related to its acquisition of Northwest Airlines, fuel hedge losses of $390m); excluding these items, DL would have made a net profit of $191 million.  In the corresponding period of last year, DL made a $137 million net profit excluding $1.3bn special charges which were largely related to goodwill impairment (though it should be noted that the Q208 figures reflect Delta standalone results only).

Contrast DL’s performance with that of American Airlines, which reported a net loss of $390 million for the same quarter.  Both airlines are subject to many of the same industry dynamics, including the pricing volatility associated with jet fuel, labor issues, the troubled U.S. economy, the precipitous drop in passengers and associated pressures on airfare yields.

It’s on the distribution side of their business which is where one of the major differences between the carriers lies, for although each competes for customers using various off-line and online channels, while Delta offers a travel affiliate program, American continues to ignore the affiliate channel.

As I noted in last week’s column, perhaps it’s time that American ‘wakes up and smells the travel affiliate roses’.   Do you agree?

2. I think Tom Nutley’s idea to launch a private members’ club in London exclusively for top travel executives is a terrific idea, one which I believe will be hugely successful with travel suppliers and travel affiliates alike.

The former chairman of Reed Travel Exhibitions is set to open The Travel Club (as the members-only club will be officially known) at the British Navy and Military headquarters in tony St James Square, Piccadilly in late September.  The Travel Club will feature accommodations, meeting rooms for product launches, conferences, seminars, restaurant and bistro, three bars, library, spa, gymnasium and a secluded courtyard.

Commenting at the official announcement ceremonies, Nutley said: “The travel business is best conducted face to face… There is no central focus for management or the industry, an exclusive and inclusive place where under one roof you can conduct business in a relaxed, convenient environment, hold meetings, conferences, product launches, socialize or network.”

Nutley pointed out that the Club is not meant just for London-based travel execs, but rather membership is extended to (and would benefit) travel executives from around the world:  ”Thousands of executives who fly into London or travel from elsewhere in the UK have no choice but to head for just another hotel. This is not an ideal business solution…how much better is it to have a drink in a bar with people from the same industry, with the same problems and challenges and then go on to have a decent dinner and a comfortable bed for the night?”

TravelDividends couldn’t agree more with Nutley’s observations, as over the years, we have spent countless days conducting business in London; having access to a private club like this would have been a godsend from both a productivity and comfort perspective.

Annual membership costs £895 (approximately $1,500) for those living or working within 50 miles of The Travel Club, going down to £645 (about $1,060)for people living or working beyond 50 miles and £250 (or $412) for those hailing from outside of the UK.   A one-time initiation fee is also £250, but this will be waived for anyone joining by September 25.

Click here for more information about The Travel Club.

3. I think some of the findings from Colloquy Consulting’s new research on loyalty marketing and rewards programs are real gems that travel affiliates should take note of.

The consultancy’s report, After the Meltdown: Consumer Attitudes and Perceptions About Loyalty Programs in the Post-Recession Economy, which sought to understand U.S. consumer attitudes and perceptions about customer loyalty in the recession economy, reveals that:

  • Travel industry loyalty marketing and rewards programs have seen a 31.2% decline in active participation since 2007
  • This 31.2% drop translates into the winnowing of the general population’s activity in travel related loyalty programs, dropping the number of active programs per user from 2.18 programs in 2007 to 1.5 in 2009
  • Colloquy suggests that these travel-specific results indicate that customers are consolidating their spend with fewer hotels and fewer airlines as the travel-whenever-you-want-for-business “bubble” has burst, and road warriors no longer are able to earn elite status in multiple programs

Colloquy also sees a consumer spending shift away from the travel sector – in which both business and leisure travel have seen traveler cutbacks – while concurrently noting a surge toward retail categories, particularly in the everyday spend categories of grocery and fuel.  Moreover, they found that just 48% of respondents would be disappointed if their travel rewards program was discontinued; this is a lower disappointment rate in comparison to any other financial services or retail program.

From our perspective, Colloquy’s findings suggests that travel affiliates should review their product portfolio to assess how well aligned it is to both the evolving needs of their customers as well as how the travel affiliate can strategically exploit their customer’s growing indifference to travel supplier loyalty programs.

TravelDividends always looks forward to hearing from our readers…if you have any comments, thoughts or suggestions about today’s ‘Things I Think I Think’ column – or on any other travel and affiliate marketing issue – please pass it along to us.  You can contact us by email; we’ll make sure to get back to you ASAP.  Thanks!

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