• by Tanya Gazdik , May 13, 2009

For the first time in loyalty marketing history, the number of memberships in airline frequent flier programs has been surpassed by memberships in credit card reward programs, according to the 2009 Colloquy Loyalty Census.

The report reveals that credit card reward program memberships outnumber frequent flyers, 422 million to 277.4 million. Industry experts generally identify American Airlines' creation of the AAdvantage program in 1981 as the first loyalty program launched.

Despite being outpaced as of late by the credit card companies, loyalty marketing programs run by airlines and hotels and other travel industry companies have actually been helped by the recession, according to the report. With customers increasingly concerned about saving pennies any way they can, the lure of a free airline ticket or hotel room holds even more appeal.

"The travel industry pioneered the modern loyalty program," said Colloquy Partner Kelly Hlavinka, who co-authored the report with Colloquy Editorial Director Rick Ferguson. "As first movers, they have the accolades -- and the bruises -- as constant reminders of what was started in 1981. Since travel loyalty programs were launched in another acute recession, it's fitting that this current recession should present another major turning point for the future of airline and hotel loyalty programs."

Membership in travel and hospitality industry loyalty reward programs has climbed to 556 million, according to the study, which measured the scope of U.S. loyalty marketing in 2007 and 2008. Airline frequent flyer memberships were up 9%, while hotel reward programs rose 26% and gaming programs grew a whopping 37%.

Hlavinka said airline and hotel loyalty operators face a new challenge, given the ubiquity of loyalty programs in so many other sectors like financial services and retail. "After all, we have found [in the 2009 census] that the average U.S. household has enrolled in over 14 loyalty programs, yet participates in only about six of them," she said.

The recession may lead non-believers in the hotel finance departments to cast a skeptical eye on loyalty programs, which could result in a short-term reduction in program funding by some big players, according to the report. "[But] the industry is united in its belief that reward programs continue to offer the best platform for retaining profitable customers," according to the report. "When the rebound occurs, pent-up demand for business travel will see hotel program operators leading the charge to build value-added customer relationships."

Cincinnati-based Colloquy tracked cruise line and car rental programs as a separate travel sector category for the first time in its 2009 Census, tabulating membership at a total of 10.7 million.

The Colloquy 2009 Loyalty Census covered 13 industry sectors. The census tabulates program memberships, not unique individuals. Total membership in U.S. loyalty reward programs is 1.8 billion, compared to 1.3 billion in 2006 -- an adjusted growth rate of nearly 25%.