The online travel agent (OTA) space is highly competitive, and undergoing consolidation down to two key players: Booking Holdings (e.g booking.com, Priceline, Cheapflights and OpenTable), and Expedia Group (e.g. Expedia, Orbitz, Travelocity, and VRBO), and they are battling it out for market leadership.
In the 2021 America’s Best Loyalty Programs published by Newsweek, Priceline VIP beat out the Orbitz Rewards with a score of 9.1 vs 8.5. This article digs into the loyalty program design aspects for each to understand why and provide insights to assist practitioners in their efforts to improve their Loyalty Program kpi’s.
Priceline VIP has carved out a unique niche by delivering deep discounts through a booking experience where the selection is "opaque" (for hotels, user only knows quality rating, features, general location, not precise hotel). For that flexibility, they receive a very deep discount, which feeds the deal hunter mentality of their customers. Priceline VIP takes that approach to the next level, by offering the most savings and greatest hotel inventory to those members who book most frequently. Other benefits include escalating Express Deal coupons of 5% up to 10% for every booking which can be applied to their next reservation.
Orbitz Rewards is the ultimate utility, and their loyalty program is no different. However, the magnitude of savings is meager, up to 2% on flights and up to 4% on hotels which is not compelling. There is a persistent effort to shift customers to the app, adding an extra 1% of savings for app users. While they tout member’s only promotions, few if any are available.
Loyalty Lever 2: Sentiment Builders
Priceline VIP provides a strong recognition play, with those who book more trips getting more access to their greater savings. They offer four tiered loyalty program levels: Base, Blue, Gold and Diamond, for those who have completed 25 trips. Savings increase up to 50% off the the highest tier, and the expanded hotel inventory from 15K up to 45K hotels. Rental car and add on deals escalate, and Top members who have completed 5+ trips receive priority service.
Unlocking these extra savings tiers and inventory is a strategic way to use their assets and build loyalty among their best users. However, one of the challenges is that they receive many negative reviews from infrequent travelers who get tripped up in the legalese of their offer restrictions. The result is highly visible disputes between consumers, travel suppliers and Priceline and no clear pathway to resolution given Priceline’s poor customer service. This is a serious issue and it’s why this brand and program will only appeal to a niche audience of games-players.
Orbitz Rewards offers a smattering of benefits for levels similar to Priceline. The main benefit of note is VIP properties, which receive top reviews, are vetted by Orbitz and also may offer special benefits to members. While it’s a potentially great benefit, it doesn’t appear that this benefit gets much notice among members.
Priceline VIP engages their treasure hunters with all kinds of deals, and ways to find more savings. However, once the sale is made, they often disengage with customers and avoid interaction. Social pages are littered with unanswered complaints and horror stories of bookings gone wrong, with a common refrain being "no unaccountability!".
Orbitz Rewards incentivizes users to download the mobile app with a higher reward %. This is part of a larger strategy by Orbitz to insert itself into the traveler’s journey. Once the app is downloaded, it enables the delivery of real time rewards during the trip itself, making Orbitz much more relevant. Bemefits include things like free baggage if you submit a picture, pet fees, etc.
Easy to Use Program
Ease of use is another key element of program evaluation, because research has universally shown that most programs are too complicated and members therefore lose interest.
While the Priceline brand experience is by no means simple, the loyalty program is straight-forward -- applying the deeper discounts and availability automatically. However, the program is still plagued by the need for much greater support during the experience.
Orbitz’s Orbucks add up behind the scenes, though they have introduced an outstanding feature that reinforces program awareness by showing all rates with the Orbucks savings applied.
Despite the brand challenges, our evaluation also shows Priceline VIP prevailing, though by only a slight margin.
LoyaltyLevers Take
From a tactical standpoint, Priceline has taken an innovative approach to leveraging their core asset of savings and prioritizing available inventory towards its better customers. This creates a strong value proposition for users, and it builds more than just transactional loyalty among its members. However, the program greatest strength is also its greatest weakness, and they must find a way to handle the customer experience better.
Orbitz provides rewards that are a nice bonus, but not compelling or differentiating. Their approach of offering curated hotels through VIP, and working towards accompanying the traveler through-out their journey, is a smart and ambitious strategy. If they can offer more widely applicable benefits, they will quickly surpass the competition.