strictly private and confidential frequent travelers study total sample june 19, 2014

STRICTLY PRIVATE AND CONFIDENTIAL

Frequent Travelers Study

Total Sample

June 19, 2014

STRICTLY PRIVATE AND CONFIDENTIAL2

DETAILED FINDINGSTOTAL SAMPLE


• About eight in ten frequent travelers belong to a travel loyalty program, and there is significant overlap between airline and hotel program membership.

• One in three claim they’ve achieved elite status in at least one program each for air and hotel programs.

• Airlines are much more likely than hotels to be cited as these consumers’ primary travel loyalty program.

Travel Loyalty Program ProfileAmong Total Frequent Travelers

37

35

56

73

77

78BELONG TO ANY TYPE

PROGRAM

AIRLINE

HOTEL

CAR RENTAL

MEMBERS WITH ELITE STATUS

% of AIRLINE members

% of HOTEL members

Continued…

TOTAL SAMPLE – Travel Loyalty Program Behavior & Attitudes

4

22

52

TYPE of Program that is Primary Program

*

77% of ALL frequent travelers belong to an airline program; 52% of ALL frequent travelers say that their primary loyalty program in an airline program.

*

Loyalty Programs Membership

Q2abd


• Among these “frequent” travelers with $75K+ incomes, United and Delta are the airline programs with somewhat larger memberships, while Hilton and Marriott are the clear favorites among hotel programs.

Travel Loyalty Program Profile (Cont’d)Among Total Frequent Travelers

4

6

6

19

23

12

16

18

22United

Delta

American/US Air

Southwest/Air Tran

Hilton

Marriott

Starwood

IHG

Hyatt

PRIMARY AIRLINE PROGRAM

PRIMARY HOTEL PROGRAM

Continued…


Q2afg


Perceptions of Relative Value -- Hotel Points Versus Airline MilesAmong Travel Loyalty Program Members

• Airline miles are seen as a better value than hotel points. (Note that this perception holds true for all groups explored.)

Q2h

21

30

49

Hotel PointsAre Better

Airline Miles Are

Better

Both the Same


Total (821)


36

35

32

32

19

41

40

35

33

6

Overall Satisfaction with Key Travel Loyalty Programs (Rate 9,10)Among Members of Each Program

• About one in three travel loyalty program members express high satisfaction with their respective program overall. Satisfaction with hotel programs tends to be slightly higher than with airline programs. US Air tends to stand out for having the lowest member satisfaction.

Q3b

Airline ProgramsDelta SkyMiles (254)

Southwest Rapid Rewards (237)

United Mileage Plus (382)

American Aadvantage (186)

US Air Dividend Miles (68)

Hotel ProgramsStarwood (59)

Marriott Rewards (252)

Hilton Hhonors (253)

IHG Rewards (69)



PRICE OF ENTRY(High Stated but NOT High Derived)

TRULY IMPORTANT (High Stated AND Derived)

No restrictions/blackout dates on rewards redemptions

Points/miles never expireMakes it easy to redeem points/miles

No caps on the points/miles you can earn Obtainable rewardsMakes it easy to earn free nights/flightsCan earn free nights/flights quicklyPoints/miles are a good value

NOT IMPORTANT(Not High Stated or Derived)

HIDDEN MOTIVATOR(High Derived but NOT High Stated)

Flies to/ has hotels in locations where I want to redeem points/ miles Is easy to achieve elite statusBonus points/ miles after certain # stays/ flights within one year Makes me feel specialFlexibility to use points on hotels or airlinesFree night/ flight after a certain # stays/ trips within one yearExtra services during flights/ hotel staysRebate on points/ miles redemptions

LOW HIGH

STA

TED

IM

PO

RTA

NC

ELO

WH

IGH

DERIVED IMPORTANCE

Travel Loyalty Programs Derived vs. Stated ImportanceAmong Total Travel Loyalty Program Members

• A regression analysis was conducted to determine key drivers of overall satisfaction with travel loyalty programs. This measure of “derived importance” is then compared to “stated importance” to yield benefits that are stratified as shown below.



• Reflecting the overall patterns, hotel programs elicit higher satisfaction on all benefits/features than do airline programs. Yet within their spheres, the same benefits emerge as the most highly rated, all of which have to do with points/miles – ease of redemption, never expire, no caps, and flights/hotels where want to redeem.

Q3c * Hotel minus Airline Green box indicates significant difference

TRULY IMPORTANT – High Derived AND High Stated ImportancePRICE OF ENTRY – High Stated BUT NOT High Derived Importance HIDDEN MOTIVATOR – High Derived BUT NOT High Stated Importance


Total Programs Airline Hotel

Base: Belong To Specific Program And Rate It (821) (547) (229) Diff.*% % %

Points/miles are a good value 37 34 45 +11Makes me feel special 32 28 42 +14Makes it easy to redeem points/miles 45 42 54 +12Can earn free nights/flights quickly 32 30 38 +8Easy to achieve elite status 28 24 36 +12Obtainable rewards 39 36 45 +9Points/miles never expire 41 38 50 +12Makes it easy to earn free nights/flights 33 31 41 +10Extra services during flights/hotel stays 33 29 44 +15Flexibility to use points on hotels or airlines 33 30 40 +10Flies to/has hotels in locations where I want to redeem points/miles 51 50 57 +7Free night/flight after certain # uses within one year 29 25 39 +14Rebate on points/miles redemptions 25 24 28 +4Bonus points/miles after a certain # uses within one year 31 29 38 +9No restrictions/blackout dates on reward redemptions 37 32 47 +15No caps on points/miles you can earn 52 51 56 +5

AVERAGE 36 33 44 +11

Type of ProgramRatings of Travel Loyalty Programs on Specific Characteristics (Satisfaction Rated 9, 10) Among Members Rating ProgramIn Order of Derived Importance


• Compared to airlines overall, United generates weaker scores on nearly every attribute that is important to frequent travelers.

• Both Marriott’s and Hilton’s attribute scores are in line with those of hotels overall except on “earning free nights quickly” where Marriott has a clear edge over Hilton.

Q3cGreen/Red box indicates significantly higher/lower than rating for total airline programs combinedBlack box indicates total hotel programs rating is significantly higher than total airline programs rating

TotalPrograms Total United Southwest Delta American Total Marriott Hilton

(821) (547) (165) (66) (134) (89) (229) (66) (72)% % % % % % % % %

Points/miles are a good value 37 34 30 41 31 40 45 50 43Makes me feel special 32 28 17 29 30 38 42 50 40Makes it easy to redeem points/miles 45 42 41 58 34 45 54 53 54Can earn free nights/flights quickly 32 30 21 33 31 37 38 48 33Easy to achieve elite status 28 24 14 26 26 35 36 41 33Obtainable rewards 39 36 32 47 31 42 45 48 44Points/miles never expire 41 38 27 47 48 34 50 55 49Makes it easy to earn free nights/flights 33 31 28 35 29 31 41 45 39No restrictions/blackout dates on reward redemptions

37 32 23 47 34 36 47 44 46

No caps on points/miles you can earn 52 51 47 53 52 57 56 53 63

Airline Programs Hotel Programs

TRULY IMPORTANT PRICE OF ENTRY HIDDEN MOTIVATORHigh Derived Importance High Stated Importance High Derived Importance

AND BUT NOT BUT NOTHigh Stated Importance High Derived Importance High Stated Importance


Ratings of Travel Loyalty Programs on Specific Characteristics (Satisfaction Rated 9, 10) Among Members Rating Program (Important Characteristics)In Order of Derived Importance


4639

36343333

3130292827

2524

202019

1615

Total (1,012)

10

Beliefs About Travel Loyalty Programs (Rate 9, 10)Among Total Frequent Travelers

• Frequent travelers are expressing strong feelings that loyalty programs are not what they had been in the past. The only other characteristic emerging as widespread is a recognition that credit cards are the easiest way to accrue points.

Q4

The value of miles/points have been shrinking

Programs credit card is easiest way to accrue points/miles

Rules have been revised/only biggest spenders enjoy perks

Loyalty programs keep changing rules/harder to redeem

It's become more difficult to reach Elite status

It's difficult to move up 'tiers' -- qualifications too high

I like redeeming for things other than hotel stays/flights

Elite membership don’t guarantee perks like they used to

You have to 'game' the system to get most value from programs

Redemptions for groceries/gas/etc is helpful during tough times

Membership affords preferential treatment when you travel

Programs offer personalized rewards that are relevant to me

We travel more often because we can use our rewards

Applied for several cards for bonuses w/ diff. loyalty programs

Rewards are unachievable in most loyalty programs

I look for programs that have low requirements for Elite status

I spend more on travel than I would in order to get points/miles

It's easy to transfer points between hotel and airline programs



48

40

39

35

35

34

32

31

30

29

28

27

26

23

21

21

17

17

Total Members

(821)

Beliefs About Travel Loyalty ProgramsRate 9, 10

• Concern about the value of points/miles is evident regardless of loyalty program membership and irrespective of members’ elite status.

• Not surprisingly, elite members maintain stronger beliefs about their programs than do non-elites.

Q4

The value of mile/points has been shrinking

Program credit card is easiest way to accrue reward points/miles

Rules have been revised/only the biggest spenders enjoy perks

It's become more difficult to reach Elite status

Loyalty programs keep changing the rules/harder to redeem

It's difficult to move up 'tiers' -- qualifications too high

Elite membership doesn't guarantee perks like they used to

You have to 'game' the system to get most value from programs

I like redeeming for things other than hotel stays/flights

Membership affords preferential treatment when you travel

Redemptions for groceries/gas/merchandise helpful in tough times

Programs offer personalized rewards that are relevant to me

We travel more often because we can use our rewards

Applied for several cards for bonuses with diff. loyalty programs

I look for programs that have low requirements for Elite status

Rewards are unachievable in most loyalty programs

I spend more on travel than I would to accrue points/miles

It's easy to transfer points between hotel and airline programs

Elite Non-Elite Total

Members MembersNon-

Members

(479) (342) (191)

% % %

49 45 40

44 35 34

39 39 27

37 32 28

39 30 27

34 34 27

40 21 19

36 23 23

36 23 31

39 16 17

33 20 31

35 15 20

34 13 18

30 12 9

28 11 14

26 15 13

24 8 9

24 7 6Black box indicates significantly higher than Non-Members Green box indicates significantly higher than Non-Elite Members


12


Total Total

(1012) (1012)AVERAGE # OVERNIGHT TRIPS OVERALL 7.84

% %

Share of Trips by Air 60 Share of Trips

Share of Air Trips by Airline Business 42

United 27 Leisure 58

Delta 21 Share of Hotel Stays

American 14 Hilton 27

Southwest 12 Marriott 22

US Airways 9 IHG 12

J et Blue 4 Hilton Hyatt 6

Share of Trips Marriott Starwood 5

Domestic 82

International 18

Travel ProfileAmong Total Frequent Travelers

• Frequent travelers have taken, on average, 8 trips which required a hotel stay in the last 12 months.

• Most of the trips were domestic and made by air, most commonly via United and Delta airlines. They tend to be more for leisure than business purposes.

• Hilton and Marriott account for nearly half of the hotel stays on those trips.

CARD OWNERS – Travel Profile

Q1d, 5abc, 6ac


Total Total(1012) (1012)

% %Average # Cards Owned 3.39 Amount Charged per Month

1 10 Total $3,2002 26 Business $1,0003 26 Leisure $2,2004+ 38 Revolving Behavior

Types of Cards Owned Pay all cards in full 69General Travel 51 Revolve 31Cash Back 49 Cards Owned & Used For Business Airline 48 Any 44

Hotel 23 Airline 19

Fee Structure of Cards Owned General Travel 17

Any Fee 56 Cash Back 12

Fee only 18 Hotel 8Both 38No fee only 44

Any NO Fee 82

• Frequent travelers own about 3 general purpose credit cards, and they are spread across general travel, cash back and airline cards and to a lesser extent hotel cards. More than two in five use at least one card for business purposes.

• A fairly large proportion own cards that maintain fees and nearly everyone has at least one card that carries no fee.

• Monthly charges amount to over $3,000, with twice as much charged for non-business as business expenses.

• Only one-third of frequent travelers claim to revolve on their credit card payments.

Credit Card Ownership ProfileAmong Total Frequent Travelers

Q1ef, 7ab, 7c1-2, 7e

TOTAL SAMPLE – Credit Card Ownership & Attitudes


5134

1312

9876

2918

107

549

2520

145

4822

139

1313

85

2416

56

4222

85

321

246

105

126

10544432

14

General Purpose Credit Cards Owned/Primary CardAmong Total Frequent Travelers

• General travel, cash back and airline cards are each considered the “primary” credit card by one in four frequent travelers. Within general travel cards, Bank cards are more likely to be cited than are American Express cards.

Q7a n=1012

ANY GENERAL TRAVEL CARDBANK GENERAL TRAVEL

Capital One Venture Rewards

Total Chase Sapphire

Chase Sapphire

Citi Card

Citi Thank You

Barclay Card

AMERICAN EXPRESS GENERAL TRAVEL

Amex Gold/Platinum

American Express Gold

American Express Platinum

Blue from American Express

ANY CASH BACK CARD Discover

Chase Freedom

BankAmericard Cash Rewards

True Earnings Card from Costco and Amex

ANY AIRLINE CARD United

United Mileage Plus Visa

United Mileage Plus Explorer

American Airlines Citi AAdvantage

American Express Delta SkyMiles

Southwest

Southwest Airlines Rapid Rewards Plus Visa

23

8

5

6

5

40

24

6

5

15

7

6

2

1

1

2

12

6

1

1

ANY HOTEL CARDS

Marriott

Marriott Rewards Visa Signature

Citi Hilton

American Express Hilton Honors

ALL OTHER CARDS

Other Bank

Chase Slate

Citi Card

Store Cards (any)

Gas Cards (any)

Primary Card Total Own


STRICTLY PRIVATE AND CONFIDENTIAL 15

• Given their dominance as frequent travelers’ primary travel programs, it is not surprising that airline programs have elicited a higher level of associated credit card acquisition from their members than have hotel programs.

• United has been much more successful than other programs in generating card acquisition among its membership.

Penetration of Loyalty Program Credit CardsAmong Program Members

7

9

13

16

16

18

23

29

43United (42%)* (426)

American/US Air (45%) (452)

Delta (45%) (458)

Southwest/Air Tran (37%) (373)

Hilton (48%) (490)

Marriott (43%) (440)

IHG (20%) (201)

Starwood (23%) (235)

Hyatt (23%) (232)

* % of respondents claiming to belong to program


Q7a


• A regression analysis was conducted to determine key drivers of overall satisfaction with credit cards. This measure of “derived importance” is then compared to “stated importance” to yield benefits that are stratified as shown below.

STA

TED

IM

PO

RTA

NC

ELO

WH

IGH

DERIVED IMPORTANCE

Credit Cards Derived vs. Stated ImportanceAmong Total Frequent Travelers

PRICE OF ENTRY(High Stated but NOT High Derived )

TRULY IMPORTANT(High Stated and Derived)

No foreign transaction fees No annual fee (47%)Travel related benefits Bonus points when first acquire the cardExtra cash back on travel & everyday purchases Extra reward points on travel related purchases

Flexibility to redeem points for anything I wantLow APR/interest rate (23%)Extra reward points on everyday purchases (19%)Purchase protection on new purchases for limited time No travel related restrictions such as blackout dates

NOT IMPORTANT(Not High Stated or Derived)

HIDDEN MOTIVATOR(High Derived but NOT High Stated)

Recognizes elite/ premium status High credit limitCan transfer reward points to airline/ hotel partners Direct access to customer service repPriority check-in at airport security lanesAirline lounge accessExtra reward points on entertainment related purchases Access to exclusive events and experiences offeredFree Wi-Fi at hotels or on airline

HIGHLOW

( ) = % Rank benefit among 3 most important



Ratings of Credit Cards on Specific Characteristics (Satisfaction Rated 9, 10)In Order of Derived Importance

• Each type of card has its own unique sets of associated benefits vs. the average card as boxed below.

Box indicates significantly higher than total cards rating

TOTALCARDS

Total Airline

TotalGeneral Travel

Total Cash Back

Total Hotel

(2256) (633) (497) (501) (223)

% % % % %

OVERALLSATISFACTION 44 40 47 47 44

High credit limit 45 44 49 47 44No annual fee 50 25 49 68 42Bonus points when first acquire card 38 58 36 26 52Extra reward points on travel related purchases 33 41 36 28 42Flexibility to redeem points for anything I want 33 28 45 40 30Low APR/interest rate 28 25 32 31 22Extra reward points on everyday purchases 33 30 37 46 33Purchase protection on new purchases 36 35 41 38 36Direct access to customer service rep 30 28 37 30 30No travel related restrictions (blackout dates) 29 34 37 22 41Recognizes elite/premium status 25 37 25 18 38No foreign transaction fees 30 37 36 24 32Travel related benefits 30 34 35 28 35Extra cash back on travel & everyday purchases 30 27 34 42 25Can transfer reward points to airline/ hotel partners 25 28 34 20 33Priority check-in at airport security lanes 21 32 21 16 21Airline lounge access 20 31 22 15 21Extra reward points on entertainment related purchases 27 28 34 29 27Access to exclusive event/experience offers by cc co. 23 25 31 23 24Free Wi-Fi at hotels/on airline 19 22 22 17 34

TRULY IMPORTANT – High Derived Importance AND High Stated ImportancePRICE OF ENTRY – High Stated Importance BUT NOT High Derived ImportanceHIDDEN MOTIVATOR – High Derived Importance BUT NOT High Stated Importance


Q8bc


TOTAL SAMPLE – Credit Card Ownership & Attitudes: Max Diff Exercise

Max-Diff is a technique which measures consumers’ preferences across multiple items.

The advantage of Max-Diff, as opposed to having respondents rate the appeal of each item on a standard rating scale, is that its scores demonstrate greater discrimination across the items as well as between respondents on the items. Additionally, the Max-Diff questions are simple to understand, and since respondents are making choices rather than expressing their opinion on a numeric scale, there is little potential for scale use bias.

In the current research, 18 unbranded credit card offerings were evaluated. Respondents were shown a subset of four credit card offerings, one subset at a time, and asked which one card they would MOST likely acquire and which one they would LEAST likely acquire. The combinations of offerings were designed so that each one was shown across the different subsets an equal number of times.

Results from the exercise are shown as overall preference scores based on a 0 to 100 point scale, as well as by rank order of preference.

Max-Diff Concept Evaluation

STRICTLY PRIVATE AND CONFIDENTIAL19Continued …

TOTAL SAMPLE – Credit Card Ownership & Attitudes: Max Diff Inputs


Appeal Score/Top 3 Rank/Top Rank of Specific Credit Card OfferingsMax-Diff Exercise

• Overall, results suggest that fee structure is the key driver of overall appeal of the offerings presented --no fee and low fee cards receive the highest appeal scores and top ranks, while high fee cards receive the lowest scores and top ranks. Within this framework, however, the Chase Slate card is LESS appealing than other no fee cards…while the Chase Southwest Premier card is MORE compelling than its pricing would suggest.


Appeal Top 3 Top

Feature Bundle Score Rank RankBRAND TYPE

Bank Cash Back (0/ 0) Chase Freedom 69 59 34Amex Everyday (0/ 0) Amex Everyday Card 68 56 6

Airline Rewards (0/ $95) Chase United Explorer 67 31 12Hotel Rewards (0/ $85) Marriott Premier 66 24 4Hotel Rewards (0/ $45) Marriott Signature 62 18 8Bank Travel (0/ $59) Capital One Venture 62 13 2Bank Rewards (0/ $95) Chase Sapphire Preferred 57 4 5

Airline Rewards ($99/ $99) Chase SW Premier 55 16 2Bank Low Interest (0/ 0) Chase Slate 49 29 2

Airline Rewards (0/ $95) United Concept 2 47 4 6Airline Rewards (0/ $150) United Concept 1 32 5 2Airline Rewards ($150/ $150) Chase SW Premier V2 31 8 1Airline Rewards (0/ $150) United Concept 3 30 3 1

Amex Gold Rewards (0/ $175) Amex Premier Rewards Gold 18 5 0Airline Amex Rewards ($150/ $150) Amex Platinum Delta 13 1 1Amex Plat. Rewards ($450/ $450) Amex Platinum 11 8 0

Hotel Rewards ($395/ $395) Ritz Carlton 10 6 0Airline Rewards ($395/ $395) Chase United Club 6 1 0

Shown to consumerFEE

(Yr1/ Ongoing)


23

Marriott Signature/Hotel Visa Rewards (0/$45)

Marriott Premier/Hotel Visa Rewards (0/$85)

Ritz Carlton/Hotel Visa Rewards ($395/$395)

Chase United Explorer/Airline Visa Rewards (0/$95)

United Legacy Concept 1/Airline Visa Rewards (0/$150)

United Concept 2/Airline Visa Rewards (0/$95)

United Concept 3/Airline Visa Rewards (0/$150)

Chase SW Premier/Airline Visa Rewards ($99/$99)

Chase SW Premier V2/Airline Visa Rewards ($150/$150)

Amex Plat Delta/Airline Amex Plat Rewards

($150/$150)

Chase United Club/Airline Visa Rewards ($395/$395)

Chase Freedom/Bank Visa Cash Back (0/0)

Chase Slate/Bank Visa Low Interest (0/0)

Chase Sapphire Pref/Bank Visa Rewards (0/$95)

Capital One Venture/Bank Visa Travel (0/$59)

Amex Premier Gold/Amex Gold Rewards (0/$175)

Amex Everyday/Amex EveryDay Rewards (0/0)

Amex Platinum/Amex Platinum Rewards

($450/$450)


Perceptual Map of Appeal of Specific Credit Card OfferingsBased on Max-Diff Exercise

• A map of appeal confirms that the key differentiator in the max-diff exercise is fee structure, with low and no fee cards residing on the right side of the map and higher fee cards on the left. Within each sphere, the cards break down further based on fees, rewards and benefits offered.

strictly private and confidential frequent travelers study total sample june 19, 2014

Documents

primary loyalty program

primary program

hotel program membership

respective program

airline members

hotel members

hotel programs starwood

better airline miles