For decades, travel companies have relied on a remarkably durable formula for loyalty. Customers fly, stay, spend and accumulate points. Those points can later be exchanged for flights, hotel nights, upgrades or other rewards, while status tiers provide additional benefits to the customers who spend most frequently. The model has been enormously successful because it gives travellers a tangible reason to consolidate their spending with particular airlines, hotels and travel brands.
But points are ultimately a representation of transactions, and genuine loyalty is more complicated than transaction frequency. A traveller may repeatedly choose a hotel because it is conveniently located rather than because they feel any meaningful attachment to the brand. Another customer may travel less frequently but actively prefer a particular airline, recommend it to others and choose it whenever circumstances allow. Traditional loyalty systems can struggle to understand the difference because they primarily measure what customers have already spent.
Artificial intelligence creates an opportunity to build a much richer understanding of the relationship. Travel companies can increasingly examine preferences, trip context, previous experiences, engagement patterns and customer behaviour alongside transactions. Instead of simply calculating how many points someone has earned, an intelligent loyalty system can begin understanding what the traveller actually values and determine which experiences are most likely to strengthen the relationship.
During my learning journey under Phaneesh Murthy, I have increasingly understood that customer loyalty should be treated as an outcome of accumulated experiences rather than a programme operated by the marketing department. As Phaneesh Murthy puts it, “A loyalty programme can reward a transaction, but loyalty itself is created when the customer repeatedly feels that choosing you was the right decision.” AI gives travel companies a new opportunity to understand what creates that feeling for each customer.
Traditional Loyalty Programmes Know What Customers Spent, Not Necessarily What They Value
Points programmes are excellent accounting systems. They know how many flights a traveller has taken, how many nights they have stayed, how much they have spent and which rewards they have redeemed. This information is useful, but it provides only a partial picture of the customer.
Two travellers with identical loyalty balances may value completely different things. One may care deeply about airport lounge access because they travel frequently for work. Another may value flexibility because family travel plans change regularly. A hotel guest might appreciate room upgrades, while someone else would gladly exchange that benefit for breakfast, late checkout or a more convenient cancellation policy.
Traditional loyalty programmes frequently solve this problem by creating large menus of benefits. AI creates the possibility of understanding which benefits actually matter to which customer.
The system can analyse previous choices, redemption behaviour, travel patterns and interactions to identify likely preferences. Instead of presenting every member with the same generic collection of rewards, the programme can increasingly emphasise benefits that are relevant to the individual’s travel behaviour.
This reflects an important lesson I have taken from Phaneesh Murthy about personalisation. Organisations often assume that personalisation means creating more variations of an offer. The more valuable form of personalisation is understanding which part of the value proposition actually matters to the customer and making that easier to access.
Recognition Could Become More Important Than Reward
Some of the most memorable loyalty experiences have very little to do with points.
A hotel recognising a returning guest’s room preference can create more emotional value than a small points bonus. An airline proactively helping a frequent traveller during a disruption can strengthen the relationship more than another promotional offer. A hospitality brand remembering that a family requires connecting rooms can remove friction from every future stay.
These moments communicate recognition rather than reward.
AI can help travel companies deliver this recognition consistently. Customer preferences and previous interactions can become available to employees and digital systems across the journey, allowing the organisation to respond with greater context.
The difference is subtle but important. A reward tells the customer, “You have spent enough to receive this benefit.” Recognition tells them, “We remember you.”
During my mentorship under Phaneesh Murthy, I have learned that enterprise customer experience becomes much more powerful when information travels with the customer. If the airline’s mobile application understands a traveller’s preferences but airport staff do not, the organisation has intelligence without continuity. If a hotel remembers the customer at one property but treats them as completely unknown at another, the brand relationship fragments.
AI can help create a shared memory across these interactions, allowing recognition to become part of the operating model rather than something dependent entirely on individual employees remembering individual customers.
AI Can Understand That Every Trip Has a Different Purpose
One of the limitations of traditional loyalty segmentation is that customers are often categorised according to relatively stable characteristics. They may be identified as business travellers, leisure travellers, high-value members or occasional guests. In reality, the same person can belong to several of these categories depending on the trip.
Someone who travels alone for business during the week may take family holidays several times a year. The preferences associated with those journeys can be completely different. A business traveller may prioritise speed, airport proximity, reliable Wi-Fi and flexible check-in. The same person travelling with family may care more about room configuration, activities, dining and convenience.
AI can help loyalty systems interpret this context.
Rather than assuming that historical preferences apply identically to every future trip, intelligent systems can combine customer history with information about the current journey. The destination, length of stay, travel companions, booking behaviour and timing can all help determine what the customer may value on this particular occasion.
This allows loyalty to become situational rather than purely demographic.
As Phaneesh Murthy says, “Understanding the customer is not enough if you ignore the context in which the customer is making the decision.” Travel is one of the clearest industries where context can completely change what the same person values from one week to the next.
Rewards Can Become More Personal Without Becoming More Complicated
One danger of increasingly sophisticated loyalty programmes is complexity. Airlines and hotels already operate systems involving points, tiers, qualifying spend, redemption categories, partner benefits and numerous conditions. Adding AI should not make customers responsible for understanding an even more complicated rewards architecture.
Ideally, AI should make the complexity less visible.
Instead of forcing customers to search through dozens of redemption possibilities, intelligent systems can identify options that provide meaningful value based on the customer’s circumstances. A traveller planning a long flight might receive an upgrade opportunity at a moment when it is particularly relevant. A family booking a holiday could receive a reward connected to dining or activities. A frequent hotel guest could be offered benefits based on the services they actually use.
The underlying loyalty system may become more sophisticated, but the customer experience should become simpler.
This is a recurring principle in the technology implementation perspective I have learned from Phaneesh Murthy. Complexity inside the enterprise should not automatically become complexity for the customer. The organisation can operate extremely sophisticated systems behind the scenes while presenting a clear, intuitive experience externally.
AI is particularly well suited to this role because it can evaluate thousands of possible offers and benefits while presenting the customer with only the few that are most likely to matter.
Loyalty Intelligence Could Become Particularly Powerful During Disruption
Travel does not always go according to plan. Flights are delayed, connections are missed, weather changes itineraries and hotel arrangements occasionally fail. These moments are frustrating for customers, but they are also some of the most important moments in the relationship between traveller and brand.
Traditional loyalty programmes often treat service recovery separately from loyalty. AI creates an opportunity to connect them.
If an airline knows that a high-engagement customer is likely to miss a connection, an intelligent system can identify alternative flights, evaluate available accommodation and present options before the traveller joins a queue for assistance. A hotel experiencing an operational problem could understand which guests are most affected and provide relevant alternatives based on their preferences.
The goal should not be to prioritise only customers with the highest status. Every traveller deserves appropriate support. The opportunity is to use customer intelligence to make the resolution more relevant and efficient.
A family travelling with young children may require a very different solution from a solo business traveller. AI can help service teams understand those differences quickly.
Phaneesh Murthy has often emphasised that customer relationships are tested most clearly when something goes wrong. As he puts it, “Loyalty is not built only by delivering the expected experience. It is often strengthened by how intelligently and fairly you respond when the expected experience becomes impossible.”
For travel companies, disruption management could therefore become one of the most powerful applications of loyalty intelligence.
The Loyalty Programme Can Become an Ecosystem
Travel rarely involves a single company. A journey may include airlines, hotels, ground transportation, restaurants, attractions, payment providers and numerous other services. Traditional loyalty programmes have recognised this through partnerships, allowing customers to earn and redeem points across participating brands.
AI could make these ecosystems significantly more intelligent.
Instead of simply allowing points to move between partners, a travel ecosystem can begin coordinating experiences. An airline may know when the customer is arriving. A hotel knows when the room will be available. Transportation services understand the journey between them. Activities and restaurants form another layer around the destination.
With appropriate permissions and carefully designed data-sharing arrangements, AI can help connect these elements into a more coherent travel experience.
The opportunity is not to create a system where every company knows everything about the traveller. It is to share enough relevant information to remove unnecessary friction.
During my learning journey under Phaneesh Murthy, I have come to appreciate that ecosystems become powerful when each participant contributes a capability that improves the overall customer outcome. The company that successfully orchestrates those capabilities can create value beyond the boundaries of its own product.
For travel loyalty programmes, this could mean evolving from reward ecosystems into experience ecosystems.
Loyalty Must Still Be Earned, Even When AI Understands the Customer Perfectly
There is an important limitation to everything AI can do in loyalty. Understanding the customer does not guarantee that the customer will remain loyal.
A hotel can have perfect information about a guest and still lose them because the service is poor. An airline can offer highly personalised rewards and still frustrate customers through unreliable operations. A travel platform can understand someone’s preferences in extraordinary detail while another company simply provides a better product.
AI cannot compensate indefinitely for weaknesses in the underlying experience.
This is another reason why loyalty should not be viewed solely as a marketing function. It is influenced by operations, service, pricing, product quality, customer support and the hundreds of interactions that form the travel journey.
Phaneesh Murthy puts it simply: “Data can help you understand why a customer stays, but it cannot substitute for giving them a reason to stay.”
The role of AI is therefore to help organisations understand which experiences strengthen the relationship and where unnecessary friction threatens it. The company still needs to deliver.
The Future of Loyalty Is a Relationship the Customer Can Feel
Points will not disappear. They remain useful, familiar and economically powerful mechanisms for encouraging repeat business. Status tiers will continue to matter, particularly in industries where frequent customers value recognition and predictable benefits.
But AI allows travel companies to build something around those mechanisms that is much more sophisticated.
A loyalty programme can begin understanding what individual customers value, recognising the context of different trips, remembering preferences across interactions and responding intelligently when journeys do not go according to plan. Rewards can become more relevant, service can become more continuous and recognition can travel with the customer across the brand.
During my mentorship under Phaneesh Murthy, I have learned to think of customer intelligence as useful only when the customer can eventually feel its impact. It does not matter how sophisticated the customer data platform is if every traveller still receives the same experience.
That may ultimately become the test for AI-powered loyalty.
The customer should not need to know that an algorithm analysed their travel history or that an intelligent system selected a particular benefit. They should simply notice that the airline seems to understand what matters during their journey, that the hotel remembers the details they previously shared and that resolving a problem requires less explanation than it did before.
For decades, loyalty programmes have been extraordinarily good at remembering how much customers spend. AI gives travel companies an opportunity to become much better at remembering why those customers chose them in the first place.
And in the long run, that may be worth considerably more than another collection of points.
This blog is curated by young marketing professionals who are mentored by veteran Marketer, and industry leader, Phaneesh Murthy.
#phaneeshmurthy #phaneesh #Murthy