Why is Travel the Only Industry That Has Really Embraced Credit Card Rewards?

Discussion / Conversation Forum
1

With so many reward programs across various industries, why is it that travel is the only sector that allows you to accumulate points on purchases outside of their own via credit cards?

As nice as it is, and although we can redeem in other ways, we all know those redemptions don’t really compete with the value you get when redeeming for travel.

Is it just the nature of their business? Can they afford to ‘give away’ seats, hotels, etc.?

2

It’s a combination of factors:

  1. Business/leisure travel allows them to ‘give it away’ to price-conscious consumers at a miles price while still charging full fare to business travelers.
  2. Air and hotel have a relatively low marginal cost for unsold seats or rooms, while other industries consider opportunity costs more heavily.
  3. Travel is aspirational, motivating people to aim for rewards over cash back.
3

@Rayne
Absolutely. The marginal cost in the airline and hotel industry is much lower compared to restaurants, healthcare, etc.

4

@Rayne
Another factor is timing. People tend to bank travel rewards for years, creating an interest-free loan for the companies until redeemed.

5

@Rayne
That was super insightful.

6

There’s a psychological component too. It’s easier to overspend for a vacation than for something equally valuable but less enticing.

7

Amanda said:
There’s a psychological component too. It’s easier to overspend for a vacation than for something equally valuable but less enticing.

Good point!

8

Listen up, porn industry!

‘Welcome to the new Pornhub Mastercard® World Elite! The more you spend, the hotter the content you unlock!’

/S

9

Jagger said:
Listen up, porn industry!

‘Welcome to the new Pornhub Mastercard® World Elite! The more you spend, the hotter the content you unlock!’

/S

An introductory 6.9% APR would be okay in today’s market.

10

@fabian
Lol, it’s 6.9% APR if you watch 100+ hours a month, otherwise it’s 69%.

11

History plays a role. American Airlines invented loyalty programs, and cobranded cards with Citi made it explode.

12

Taron said:
History plays a role. American Airlines invented loyalty programs, and cobranded cards with Citi made it explode.

There’s definitely a theme between this and the OnlyFans MasterCard comment.

13

@Raven
Haha! :+1:

14

Many industries have rewards programs; it’s not unique to travel.

15

FaithJones said:
Many industries have rewards programs; it’s not unique to travel.

Amex Platinum is essentially a card that gives you $100 to spend at Saks.

16

Dynamic pricing is crucial. Points in other industries often equate to a specific cash value, diminishing their allure. Travel points can fluctuate in value significantly, making them feel more valuable.

17

@VirtualCard2
Interesting thought. It adds a gamification element to points accrual/spending, which people love.

18

What other industries really have a points system?

19

Vernon said:
What other industries really have a points system?

Trucking. I earn points for fuel at Loves, TA/Petro, etc.

20

Travel is often funded by businesses, making it easier for companies to offer rewards since it’s a high-ticket item.