6 Travel Industry Predictions for 2020

Dec 11, 2019

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With only a few weeks left in this decade, I’ve been reflecting on travel trends from 2019. A few developments and changes in particular took me by surprise:

  • United introduced several changes to its MileagePlus frequent flyer program. In April, the airline announced that as of Nov. 15 it would phase out its award chart in favor of dynamic pricing. Then, in September, the airline introduced PointsPlus, a new upgrade system to replace Regional and Global Premier Upgrades. Finally, in November, the airline announced an overhaul of the way elite members qualify for premier status.

  • Recently, LATAM and Delta announced a strategic partnership, which was shocking given LATAM’s membership in the Oneworld alliance (of which American Airlines is a part). This left American without a Latin American airline partner.

  • This year has also seen a surge in the demand for collaborative working environments. Remote work is becoming a bigger focus for freelancers and companies, and the lodging industry is starting to take note.

So what will the new year bring? Here are six things to look out for in 2020:

Higher, but tiered, welcome bonuses

Premium travel credit cards are (still) offering sky-high welcome bonuses, but with one relatively new catch: The bonuses are awarded in tiers, after customers meet high spending thresholds.

For example, the United℠ Business Card and The Business Platinum Card® from American Express both offered tiered incentives at the start of 2020.

Awarding customers with big welcome offers costs credit card issuers money, and perhaps the issuers want to see a better return on their investment. Not everyone can put $25,000 on a credit card within six months.

Through a tiered welcome offer, issuers could also be trying to create the habit in customers of using the card every single day — beyond just that big initial offer.

It's safe to say that if the numbers from these welcome bonuses align with issuer expectations, we’ll be seeing a lot more of these types of tiered bonuses in 2020.

With LATAM leaving Oneworld, American will seek other partnerships in Latin America

After Delta’s announcement that it acquired a 20% stake in LATAM, American Airlines released a statement saying that the departure of LATAM will not be impactful, given that the carrier provided AA with only an incremental amount of revenue. Clearly, American Airlines was doing damage control to reassure flyers that LATAM’s departure would not have a material impact on the airline’s reach.

However, Oneworld is already the smallest of the "big three" airline alliances (12 member airlines after LATAM leaves), and LATAM’s departure leaves American without a partner in Latin America. Furthermore, if LATAM joins SkyTeam, the alliance will have a very strong presence in the region given that it already counts AeroMexico as a member.

In 2020, I expect American Airlines to either seek a partnership with another Latin American carrier or schedule more flights to supplement its reach and maintain its competitive position in the region.

United’s changes will shake things up

Given the numerous changes announced and implemented by United this year, it will be interesting to see how everything evolves. All told, United will have a new upgrade system, a new system of earning status and a dynamic award chart.

On one hand, the PointsPlus system should make it a lot easier for Premier Platinum and 1K elite members to get upgrades. On the other hard, it may become more difficult for those with status to retain it (or those trying to earn it from scratch). This is because earning status will no longer depend on miles flown and dollars spent.

To qualify for elite status in 2020, you'll need to earn a combination of Premier Qualifying Points (PQPs) and Premier Qualifying Flights (PQFs) or only PQPs. United will also do away with the PDQ waiver for international addresses, which will make it more difficult for some members to attain status.

The removal of the award chart could make it more difficult to find saver award space as well. On the flip side, it could make it easier for Premier Platinum or 1K elites to get cleared upgrades. It’s possible that in the new year we will see a lot of Premier Platinum and 1K elites discussing how happy they are with the new upgrade system.

If that were to happen, we would likely see the other side of the coin as well: those who lost status complaining about the lack of discounted awards. No matter what, 2020 will be interesting for United elites.

Mileage running will become more difficult

Given that airlines are shifting to a system that confers elite status based on money spent rather than miles flown, going for a mileage run at the end of the year to retain status may become a thing of the past.

American and Delta both award status based on the amount of money spent and the number of miles flown. Although United used to grant status in the same way, distance flown has been replaced with a new system. I predict that Delta and American will start to explore their options as well.

The industry will cater even more to remote workers

Remote work is becoming more popular than ever, and hostels, hotels and co-working spaces are responding to that. According to a Buffer.com survey on remote work, 44% of remote workers travel while working between one week to one month per year, while 25% of respondents travel while working for over one month of the year.

Remote work allows companies to save money on office space, while providing employees with an opportunity to spend less time commuting. Telecommuting benefits employers as well as employees; this is one trend that shows no signs of stopping.

For example, Israeli-founded startup Selina offers creatively designed shared (and private) living accommodations while also providing co-working space access. The company launched in 2014 and now has over 60 locations, including in Panama, Colombia and Portugal. (I’ve stayed in Selinas in Lisbon, Buenos Aires and Panama City and have loved co-working from those beautifully designed spaces.)

Hotels like Sheraton are also starting to design communal spaces that cater to co-working in order to attract new demographics. Without a doubt, the travel industry is taking note of a new culture of employment. In 2020, I think we'll see even more offerings catering to a new type of worker/traveler.

Airlines will try to become more environmentally sustainable

With society becoming more conscious of how its consumption patterns (particularly air travel) impact the planet, I predict that global airlines with significant shareholder influence will try to implement positive environmental changes in 2020.

Last year, United pledged to reduce its own carbon emissions by 50% by 2050. In May 2019, United expanded its commitment to powering more flights with biofuel. In addition, United reported that it has "become the first airline globally to use sustainable aviation biofuel on an ongoing daily basis."

Another big topic of discussion is the environmental impact of plastic. In June 2019, Delta announced the removal of plastic wrapping from its in-flight amenity kits, replacing it with sustainable products. I expect sustainability to become an even bigger discussion in 2020.

The bottom line

With 2020 quickly approaching, it will be interesting to see what new trends the travel industry will bring. Given the changes with United, Delta and American Airlines, we expect to see a shift in loyalty programs between frequent flyers. One thing is for certain: It will be another exciting year in the travel space.

How to maximize your rewards

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