Millennials Look to Cash In Their Travel Rewards to Help Make the Most of Expensive Holiday Trips
Travelers who use rewards credit cards are expecting to use some of their accrued points to cover pricey holiday travel this year. A higher share of millennials, who are most likely to say they’ll redeem rewards, are influenced by deals and offers than other generations, meaning travel companies can use strong messaging to compel them early in their path to purchase.
Winter is coming — and for many Americans, that means it’s time to book holiday trips. But inflation continues to strain budgets and many have less in cash and savings to cover trip expenses than they may have hoped. As a result, some are turning to alternative forms of payment, specifically travel rewards, to help keep costs down.
In a recent Morning Consult survey, more than half of rewards card users said they plan to redeem points or rewards for travel within 2022, with 30% saying they plan to do so in November or December. While there are many who plan to save their rewards for travel further in the future, the concentration in the late months of 2022 reflects consumers’ need to leverage alternative forms of payment in order to get through a holiday travel season that promises to be more expensive than in years past.
Millennials are active travel rewards card users
Travel rewards cards come in many forms, but there are two main categories — 1) general rewards cards that are branded by the financial institution, like Chase Sapphire or Capital One Venture, and can be used on services from multiple travel companies, or 2) co-branded cards that are specific to one travel company, like Delta Skymiles or Marriott Bonvoy. Co-branded cards are slightly less likely to be held by consumers, and for the most part those who have cards use them. One in 5 U.S. adults are general rewards card users, compared to 16% who use co-branded cards
This varies by demographic, though. Millennials are most likely to carry and use both types of cards: 1 in 4 said they use a general travel rewards card, 8 percentage points higher than baby boomers, while 1 in 5 said they use a co-branded one, compared with 16% of Gen Xers. And millennials are also more active than their older counterparts: More than half of millennial travel card users said they have redeemed points or rewards in 2022, and nearly as many said they plan on redeeming before the end of the year.
Points and rewards-based offers influence millennials’ travel plans
The ability to redeem points is not just an afterthought for millennial travel card users when they book a trip — it’s actually an important factor in determining the place and time they travel. When asked how they think about rewards in the context of planning, 40% said they actively look for points or rewards offers, and that it influences where and when they plan trips. In contrast, baby boomers are more likely to say they don’t think about rewards until they’ve decided on where and when to travel, if at all.
This approach makes sense for a generation that stands on weaker financial footing than their older counterparts, meaning that they have to think about price earlier in the path to purchase. Rather than choosing a destination and planning from there, millennials start with a blank slate and see what’s available — and, just as importantly, affordable. But lest brands think of this as just a deal-seeking exercise, it’s important to note that many millennials enjoy the gamification of rewards points, a mindset personified by one of the generation’s more well-known travel influencers, Brian Kelly — better known as “The Points Guy.”
To capitalize on millennial interest, travel brands should spotlight offers and deals in their communications to the generation’s cardholders. By reaching this generation in the inspiration phase of the path to purchase, companies can engage them and even shape their travel plans.
Millennials will cash in their points for rewards that enhance their travel experience
While covering base travel costs like airfare and accommodations are the primary in-category mode of redeeming points for all card users, millennials differ from their older counterparts in that they are more apt to use points to elevate their travel experience. They are more likely to express interest in upgrading to a premium flight or hotel room, or using banked points to cover the cost of amenities, add-ons or activities during their trip.
This tendency underscores a facet of millennials’ generational identity — that they define success through experiences rather than possessions.
Travel companies may primarily think about rewards redemption through the lens of fares and reservations, but having that option is table stakes for travelers. To further differentiate and attract the interest of engaged millennial travel card users, brands should offer nontraditional redemption options. This may seem counterintuitive for companies where ancillary purchases are a key driver of profits — such as airlines and hotels — but the ability to elevate experience may translate to better lifetime value for a customer who has had traded up and had a great trip as a result.
