Posted by Z

Following last week’s blog on our love-hate relationship with airline loyalty rewards, I thought it would be interesting to keep looking at other elements of the loyalty value chain. So today’s blog is focused on the online travel agency (OTA) market. How can we earn more rewards by using them, how do they rank and how might blockchain and REM Loyalty compete in this space?

Now I know plenty of people that won’t use OTAs. They will only book directly with the airline site. Sometimes that can make sense and there could be special offers and bonus rewards available that aren’t on the OTA sites. But OTAs offer extra choices that can reveal good old-fashioned better value (more competition) AND have the added advantage of double dipping. You can get rewarded by the OTA and collect frequent flyer miles with the airline. You can’t do that with hotels (because they won’t give you loyalty rewards if you book on 3rd party sites) but with airlines you can. So that gets us to the pointy end faster and flying flat which is a good outcome. The question becomes which OTA will us there faster with fewer restrictions.

Firstly, by way of background, since the internet created the environment to make OTAs flourish, there has been a whole lot of consolidation. That’s impacted competition a lot. Did you know that Expedia, Inc owns Travelocity, Orbitz, Hotels.com, Hotwire, Venere, CheapTickets, Trivago, Wotif and CarRentals.com?  It also owns a slate of search engines that directs to any of these brands within the family.

But wait you say, there are other big sites like Booking.com, KAYAK.com, Priceline.com, Agoda.com and RentalCars.com, right? Yes, there are, they are all owned by the Priceline Group (which also owns OpenTable).

The final and third conglomerate is TripAdvisor. It owns BookingBuddy, CruiseCritic, Family Vacation Critic, FlipKey, GateGuru, Independent Traveler, SeatGuru, SmarterTravel, Tingo, TravelPod, VirtualTourist and Viator.

Wow. That’s a tough field to compete in. In case you weren’t already aware of the oligopoly out there in travel, consider yourself informed. It doesn’t mean that there isn’t good information and fair pricing on each of these companies, but it probably does mean they’re stuck in existing operating models. Let’s look at what they offer. First: the airlines.

The graph below shows the earn rate in loyalty points using the most favorable rates available. For example, some of these brands offer double points if the customer uses their App instead of their website (rest assured that I’ve gone that route in effort to double my points). On the other hand, in the case of Orbitz, you cannot earn more than $50 a year in rewards. That’s a significant limitation, but I’ve left it at 1% because most people don’t spend close to $5,000 a year on airline tickets.

The difference with REM Loyalty is that it offers twice the leading rate (Orbitz) and with no cap on the maximum amount of points one can earn. It is just shy of 7X the earn rate of Expedia. Now let’s look at where we sleep when we land and how we get that bigger room.

Hotel bookings are dominated by the likes of Booking.com and Hotels.com and these are competitors in the online market of three players. Their reward offerings are reasonably similar. For instance, Hotels.com offers your 11th night for free and the free night is calculated based on your average spend from the previous 10 nights you stayed. Booking.com has a genius loyalty program (in effect after you stayed 5 nights) which tends to offer 10% off from hotels of their selection which technically is better than an eleventh night free even though the array of choices is somewhat restricted. No graph is needed for this comparison. REM Loyalty offers a 10% reward rate with no limitations, Booking.com offers you 10% with restrictions and Hotels.com comes in at 9.1%. Agoda offers 4%-7% and is part of the Booking.com Priceline Group.

REM Loyalty is able to offer customers higher rewards because it is built on the blockchain and enjoys the efficiencies that come with the technology. And its lifestyle rewards ecosystem offers rewards that spans across home, ride-sharing and global travel as it generates synergies amongst its clients. The differences continue – REM tokens never expire, can be transferred for free, allows bookings for anyone (no membership required, and can be converted to cash (fiat) anytime you like on an exchange. Try that with other rewards.

Let me know if you have any comments, drop me a line at z@remloyalty.com or join our conversation at https://t.me/REM_Loyalty