Bank data shows travel to recover faster than expected
Ascenda, the technology company that makes banking rewarding, revealed consumer confidence in travel is returning quickly according to leading indicators from its bank solution TransferConnect, the world's largest global exchange for frequent traveller miles and points.
TransferConnect facilitates the exchange of rewards currencies between financial services brands and a broad set of major airlines, hotel chains, super apps and retailers worldwide. The network enables banks across 40 markets to connect with 50 major merchants and delivers access to real-time points transfers for 1.2 billion consumers worldwide.
The newly published data is the first of its kind ever released in the industry and showcases how rewards currency exchange volume from banks into frequent flyer schemes has compared against airline Revenue Passenger Kilometers (RPKs) over the past 18 months. The analysis provides unique insight into how the multi-billion dollar bank rewards value chain has been impacted by the pandemic and where travel recovery is heading in coming months.
When COVID-19 first brought global travel to a standstill in March 2020, bank consumers naturally ceased to transfer their accumulated points into frequent flyer miles. Both RPKs and rewards transfers plummeted more than 80% during a 60-day period.
However, customers continued to earn bank rewards unabated on their everyday card spend as the pandemic unfolded, with growing points balances waiting to be redeemed.
The year 2021 then brought the turning point, as news of global vaccination progress unleashed pent up travel aspirations and prompted a reinvigoration of bank point conversions into frequent flyer schemes. Since March 2021, that transfer activity has accelerated its recovery materially ahead of passengers carried.
The effect is consistent across geographies and especially pronounced in the US market, where the volume of bank points exchanged into frequent flyer miles has actually surpassed pre-pandemic levels from April 2021 onward and is still continuing its upward trajectory.
In addition to these strong signals of returning consumer confidence in air travel, the analysis also reveals that hotel chains have capitalized on the pandemic to sustainably grow their share of global rewards currency transfers.
Following the onset of the crisis, transfers into hotel points had naturally gained relative share as consumers were forced to opt for local vacations. Hotel points represented less than 10% of currency transfer volume in 2019, increasing three-fold in March 2020 to 30%. What's most remarkable, however, is that the behavior change has persisted into 2021, even during the recent months of recovery, indicating that the chains have sustainably grown their level of engagement with loyalty program members.
Sebastian Grobys, Chief Commercial Officer at Ascenda, said: "As the pandemic unfolded, the world's eyes were glued to plummeting operating statistics published by airlines and travel industry bodies across the world. Since then, there have been many attempts to analyse the slope of the recovery curve and make predictions about the future, for example looking at forward booking patterns.