Global loyalty and rewards program industry outlook in 2023

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Loyalty programs have turned into a major cost-saving tool for many consumers around the world. With cashback benefits and points, which can be redeemed on future purchases, the demand for loyalty and reward programs has grown significantly amid the current macroeconomic environment.

With inflationary pressures expected to affect consumer spending and budget, the demand for such programs is projected to further increase in H1 2023. Consequently, PayNXT360 expects major brands and retailers across industry verticals to launch new and revamp existing loyalty programs from the short to medium-term perspective. This will keep driving innovation and a competitive landscape in the global loyalty and rewards program industry over the next three to four years.

Revamped loyalty programs with more value offerings are gaining widespread adoption among Australian

The loyalty program industry in Australia is one of the most competitive globally. With customer acquisition difficult in the country, firms are making significant changes to their loyalty program to make them more lucrative for customers.

• Velocity Frequent Flyer, the loyalty program offered by Virgin Australia, has made significant changes to its loyalty offering over the last 24 months. With airline partnerships, membership innovation, and revamped business strategy, the loyalty program offered by the firm is now the third-largest loyalty program in the country.
• As part of its strategy to drive the growth of its loyalty program, the firm forged alliances with retailers such as 7-Eleven, thereby rewarding customers with points when making purchases at the stores. The firm also partnered with Rocket Travel to launch a new booking platform, which also offers loyalty points and redemption at over 400,000 hotels, among other benefits.
• As of December 2022, the loyalty program had amassed more than 11 million members in Australia. With over 2,000 members joining the program every day, the firm is expected to keep recording strong growth in its customer acquisition in H1 2023. The popularity of the loyalty program can be seen from the fact that several thousand members have joined the program from its nearest competitor.

The change in business strategy, which makes the loyalty program resonate better with customers, has driven the growth of the loyalty program for Virgin Australia. From the short to medium-term perspective, PayNXT360 expects more firms and brands to make major changes to their existing loyalty program to better cater to the changing needs of their customers globally. In December 2022, JetBlue Airways, one of the leading airlines in the United States, also made major changes to its frequent flyer program to drive adoption and growth.

Hoteliers are launching new loyalty programs and revamping the existing ones to offer more benefits to travelers globally

The travel and hospitality industry has recorded strong growth in H2 2022 and the trend is projected to further continue in 2023, amid the pent-up travel demand after two-years of pandemic-induced restrictions. To capitalize on the growing travel and hospitality industry, hoteliers are launching new loyalty programs which offer more value and benefits to their members.

• In November 2022, Radisson Hotel Group announced the launch of a new loyalty program, which will provide members with more benefits, including in-stay privileges F&B discounts, and other experiences.

In addition to launching new programs, firms are also making revamp to their existing offerings. InterContinental Hotel Group (IHG) revamped the terms and conditions of its loyalty program and also invested significantly in its marketing efforts. The results of this push are evident as the firm recorded a growth of 30% year over year in new enrollments. A total of 11 million new members joined the program in 2022.

Over the 12 months, hoteliers have recorded strong growth in their loyalty memberships. Marriott International reported 164 million members in Q1 2022, which increased to 173 million members by September 2022. Furthermore, six out of ten bookings for the firm were made by Bonvoy members. Hilton also experienced significant growth in its new enrollment, with loyalty program members increasing to 133 million, representing a growth of 15%. Choice Hotels also added another 10 million members to its loyalty program in 2022.

Supermarket loyalty programs are projected to gain strong momentum amid rising inflation in 2023

Globally, central banks have continued to hike interest rates consistently in H2 2022, in their effort to curb inflation. However, with inflation being at multi-year highs, consumers are finding it difficult to purchase everyday products, as inflation has had a severe impact on their monthly budget. Amid the growing inflationary pressures, consumers are demanding loyalty programs from their retailers and supermarket chains.

• Across Europe and the United States, there has been a number of new loyalty program launches in 2022, while some major retailers have also revamped their existing programs to offer benefits that cater to the current macroeconomic environment. The Fresh Market in the United States and Tesco in the United Kingdom are some supermarkets that have launched new programs and benefits for their shoppers.

With central banks projected to keep raising interest rates in H1 2023, PayNXT360 expects more supermarkets to launch loyalty programs globally at least from the short to medium-term perspective.

To know more and gain a deeper understanding of the global loyalty programs market, click here.