3 Travel Trends CUs Can Leverage to Add Value to Their Credit Card Reward Programs

National banks dominate the world of credit. According to a 2023 survey of credit-seeking U.S. consumers, close to 70% of active-card users rely primarily on credit cards issued by a national bank, while only 8.3% turn to credit-union-issued cards. And despite the historical tendency to offer lower interest rates than big banks, credit unions only open about 4% of new credit card accounts, Forbes reported. These two figures are concerning when you consider that credit unions have a 16% market share for primary bank accounts, according to a PYMTS study, pointing to a long road ahead for credit unions that want to increase the footprint of their credit card programs.

One reason national banks have had so much success in attracting consumers – even those who otherwise prefer to bank with a credit union or community bank – is their full-service rewards programs. In fact, a better rewards program was cited as one of the top reasons consumers were most likely to sign up for a new card, according to a JD Power study. Of all the rewards available to consumers, travel is seen as the most desirable and has the most potential to maximize conversions.

A recent survey we conducted in late 2023 of over 2,000 American consumers found that travel remains a hot commodity. Despite the impact of inflation and the threat of travel disruptions that dominated headlines in 2022 and 2023, consumers don’t seem deterred. Our survey found that 63% of consumers planned to take an additional one to four trips in 2024 compared to 2023, with nearly 40% of millennials and Gen Z planning to take three or more trips in the coming year.

A solid travel rewards program is non-negotiable if credit unions are serious about increasing their credit card market share, increasing member credit card spending, and competing against larger financial institutions. But at a time when so many institutions already offer travel, credit unions must also ensure their travel rewards and program options are aligned with current consumer interest.

Three key trends were revealed in our survey that could enhance credit union member loyalty programs and significantly impact how they deliver value. What’s very interesting about these trends is that they are relatively simple to implement – at least for programs with the right technology infrastructure.

1. Advanced Planning Is on the Rise

Compared to the period between 2021 and early 2023, when people were hesitant to plan travel months in advance due to potential cancellations and disruptions, today’s traveler is looking much further ahead. Just over 80% of consumers now plan trips over a month in advance, with most organizing travel two to six months ahead of time, signaling a sense of optimism around the travel experience.

Members of credit card loyalty programs, particularly those earning over $100,000 per year, are more likely to be “planners” than those who don’t fit into either of those categories – which means that credit card travel programs should strongly consider widening their windows for travel deals and discounts. For instance, instead of offering spring break deals in the New Year, they might already be looking ahead to summer and aligning their offer to accommodate this cohort. There is evidence that planners are dissatisfied with their current programs, with 61% expressing their frustration that they can’t find enough trip options.

Most importantly, there is no one-size-fits-all approach, which is why credit unions must have a dynamic program structure powered by a loyalty booking platform that can present different options to different member segments based on their desires.

2. Generational Preferences Matter

While 80% of U.S. consumers travel for pleasure, millennials and Gen Z, the two generations driving the travel boom, are more likely to mix leisure and business travel than their older counterparts. Why is this important? Travel rewards programs must adapt the travel options their reward programs offer to appeal to this demographic. That means thinking outside the box and offering more in the way of dining or tours and activities – rewards that members can use outside of their work hours or to extend their work trip over the weekend, for instance. Or, for a consumer who wants to work remotely for an extended period, it could mean offering alternative accommodation options to a standard hotel room.

Younger travelers also differ from other generations in that they are slightly more likely to book flights and hotels through their bank or credit card travel booking site and have a greater tendency to visit their loyalty programs first for travel planning. For these generations, however, direct booking and online travel agencies remain their favored options. Nonetheless, these findings indicate that millennials and Gen Z are willing to shop around. Credit card loyalty programs that offer them more value for their travel dollars than an online travel agency stand a good chance of converting these cohorts.

Again, dynamic technology plays a significant role in this ability to convert. Millennials and Gen Zers who choose to redeem their rewards and purchase travel from their credit card reward program will look to them for guidance to help them make informed decisions. Tools like price comparison charts, price predictors and calendar heat maps add significant value to the booking experience.

3. Consumers Want a Better Booking Experience

Ultimately, the first two trends feed into the last: Consumers demand a better booking experience from their travel rewards providers. Nearly three-quarters of financial services companies now offer travel rewards, and almost all have travel booking capabilities. Despite this, just 51% of consumers turn to their loyalty programs first when booking travel.

This imbalance between offer and demand can be pinned on two factors affecting consumer perception: The inability of travel reward sites to offer their members travel recommendations and a lack of travel options that they find valuable. Loyalty providers are aware of these challenges. Another iSeatz survey from 2023 found that 38% of loyalty program managers struggle with providing travel options that appeal to and are valued by their members, while 43% said their inability to offer travel recommendations was their biggest challenge. And once again, the lack of adequate technology is at the heart of this problem.

That’s why credit unions must own both the travel rewards and booking experiences – which is entirely possible with a purpose-built platform sourced from a technology provider specializing in travel loyalty. With this type of technology powering their loyalty structure, credit unions can more easily adapt their programs to members’ evolving needs and preferences, make travel a more integral part of their credit card offerings, and compete with some of the larger banks currently capturing the attention of millions of travel-hungry consumers.

Andy Hermo is the Chief Commercial Officer at iSeatz, a travel loyalty technology and digital commerce solutions provider based in New Orleans, La.