Summer travel rewards spending gains weight in travel payment choices

Summer travel rewards spending is playing a larger role in how consumers choose trips and pay for them, even as airlines and hotels report cost and demand pressures. American Airlines said premium passenger unit revenue rose 13.4% from a year earlier and domestic passenger unit revenue increased 10.6%, while Wyndham Hotels & Resorts reported a 2.2% rise in U.S. RevPAR despite a 1% decline globally.

The figures point to a travel market in which consumer demand has held up more firmly than some corporate earnings drivers. American faced higher fuel expense, according to its results, while Wyndham’s international performance was uneven enough to weigh on global revenue per available room. RevPAR, or revenue per available room, measures room revenue across available inventory and is a standard hotel industry gauge of pricing and occupancy together.

Rewards and co-branded credit cards are becoming a bigger part of that spending decision. American said AAdvantage enrollment rose more than 30% year over year, above the record growth it reported in the first quarter. Spending across the airline’s Citi co-brand card portfolio increased 8%, according to American’s earnings materials.

American Chief Commercial Officer Nat Pieper described loyalty as a central piece of the carrier’s strategy on the company’s July 23 analyst call, saying its final strategic pillar is to “lead in loyalty.” He also told analysts that premium demand “continues to be strong,” as American expanded lie-flat and premium economy capacity at nearly twice the pace of Main Cabin capacity.

How are rewards changing summer travel spending?

Rewards can influence both what consumers buy and how they pay. A co-branded card lets a traveler earn points through routine purchases, so the value of a future flight or hotel stay can be linked to household spending long before a booking is made.

PYMNTS Intelligence reported that 70% of consumers changed a purchase after seeing an offer or reward, while 43% switched payment methods to obtain one. The research also found that consumers using credit card installments were mainly motivated by the ability to earn loyalty points or cash back, and that shoppers use preferred cards to align purchases with the rewards they value most.

Hotels are seeing a similar connection between loyalty membership and revenue strategy. Wyndham said Wyndham Rewards has exceeded 126 million members. In its earnings materials, the company listed credit card products, strategic partnerships and affiliations among ancillary revenue sources it plans to pursue alongside deeper engagement with its loyalty program.

Wyndham’s U.S. RevPAR gain came from both higher occupancy and a higher average daily rate, according to the company. That combination suggests the domestic hotel business was able to draw more guests while also charging more per occupied room, even as global RevPAR declined.

For airlines, hotels and card issuers, the competition now extends beyond fares and room rates. A traveler can weigh destinations, brands, loyalty balances, card rewards and installment features in the same purchase process.

Fuel prices and weaker international lodging demand can still pressure corporate results. Rewards do not remove those costs, but American’s loyalty and card growth, Wyndham’s focus on ancillary revenue and PYMNTS Intelligence’s consumer data show travelers are assessing more than the headline price when they spend on summer travel.

This story draws on original reporting from PYMNTS.