Improving Customer Loyalty When Prices Rise: How Tiering and Bundling Protect Retention in Travel

Improving customer loyalty has become structurally harder in the global travel industry.

Across airlines, hotels, OTAs, and travel fintech platforms, prices are rising while customer tolerance for delayed or uncertain rewards is shrinking. Inflation, dynamic pricing, and repeated loyalty devaluations have reshaped how travelers evaluate value,  and in this environment, traditional loyalty mechanics alone are no longer sufficient to protect retention.

Global research now shows a widening gap between loyalty participation and loyalty belief. Customers continue to enroll in loyalty programs, yet they are increasingly skeptical of long-term point value, quicker to switch providers, and less emotionally attached to brands than in previous cycles.

Improving customer loyalty under these conditions requires structural mechanisms that stabilize perceived value when prices rise. Research across international travel markets consistently points to two such mechanisms: tiering and bundling.

Why Improving Customer Loyalty Breaks Down When Prices Increase

Multiple global studies show that loyalty erosion does not happen suddenly; it happens when value becomes harder to interpret.

BCG’s global loyalty research found that while the average consumer now belongs to more loyalty programs than ever, engagement and exclusivity continue to decline across regions. In the U.S., the average consumer holds more than 15 loyalty memberships, yet fewer than half meaningfully influence behavior. Similar trends are emerging in Europe as program proliferation accelerates.

McKinsey’s analysis of airline and hotel loyalty programs highlights a key driver: rising prices expose weaknesses in delayed-reward systems. When customers are asked to pay more today while the reward remains abstract or uncertain, trust erodes.

Improving customer loyalty in inflationary environments, therefor,e depends on:

• reducing uncertainty
• reinforcing value immediately
• and protecting emotional attachment when prices rise

Tiered and bundled loyalty structures directly address these pressures.

How Tiering Improves Customer Loyalty Through Behavioral Economics

Tiered loyalty programs remain one of the most effective mechanisms for improving customer loyalty in travel, not because of points, but because of psychology.

Behavioral research consistently identifies three forces at work:

Goal Gradient Effect

As customers move to higher tiers, engagement increases disproportionately. Studies show frequent travelers actively adjust behavior — including taking unnecessary trips — to cross tier thresholds. This effect strengthens retention by locking in future spend.

Status-Based Identity

Tiering transforms loyalty from a transactional relationship into an identity-based one. Elite status becomes part of how travelers see themselves — especially in airlines and hotels. Research in hospitality loyalty shows top-tier members concentrate up to 75–80% of their spend with a single brand, far higher than base-tier members.

Loss Aversion

The fear of losing status benefits is more powerful than the desire to gain new rewards. Customers work harder to retain elite access than they would to earn it from scratch, making tiered loyalty particularly effective at protecting retention when prices rise.

However, research also warns that poorly managed tier inflation undermines loyalty. When qualification thresholds rise faster than perceived benefits — or when elite perks are diluted — customers disengage rapidly. This dynamic has been observed repeatedly in airline loyalty backlash following program devaluations.

Improving customer loyalty through tiering therefore requires consistency, transparency, and meaningful differentiation at each level.

Why Bundling Is Critical to Improving Customer Loyalty During Price Increases

While tiering addresses emotional commitment, bundling protects economic perception.

Global research across retail, financial services, and travel shows that customers evaluate bundled value holistically rather than line by line. When benefits are packaged together, customers are more willing to accept higher prices — provided the bundle delivers tangible, usable value.

In travel loyalty, high-performing bundles commonly include:

• preferential pricing or member-only rates
• travel insurance and disruption protection
• comfort and convenience benefits (lounges, priority access)
• upgrades or experiential enhancements

Consumer research consistently shows that immediate, bundled benefits outperform delayed rewards in protecting retention during inflationary periods. Surveys indicate that over 75% of consumers would pay for a loyalty program if benefits were immediate and clearly valuable — a figure that holds across North America, Europe, and Asia-Pacific.

Bundling improves customer loyalty by:

• stabilizing perceived value
• reducing sensitivity to individual price increases
• and reframing loyalty as a service, not a rebate

Subscription Models: The Strongest Signal of Improving Customer Loyalty

Subscription-based loyalty platforms represent the most data-backed evolution of bundling in travel.

Case studies from international markets demonstrate that subscription loyalty:

• increases booking frequency by 2–3×
• reduces churn by double-digit percentages over multi-year periods
• and significantly increases customer lifetime value

Unlike points-based systems, subscriptions deliver value on day one, reinforcing trust before price sensitivity sets in. Behavioral research shows that customers who pay upfront are more likely to consolidate behavior to justify the investment — a powerful retention effect.

From an economic perspective, subscriptions also shift loyalty from a cost center to a revenue-stabilizing mechanism, allowing brands to reinvest in benefits rather than inflate points liabilities.

Improving customer loyalty at scale increasingly depends on this shift from earn-and-wait to join-and-access.

Tiering vs. Bundling Is the Wrong Question

Research consistently shows that the most resilient loyalty programs combine both.

Tiering excels at retaining high-frequency, high-value travelers through aspiration and recognition. Bundling excels at retaining mid- and low-frequency customers through immediate, understandable value.

Together, they:

• protect retention across segments
• reduce churn sensitivity during price increases
• and reinforce loyalty both emotionally and economically

This layered approach is now emerging as best practice across airlines, hotels, OTAs, and travel fintech platforms globally.

Improving Customer Loyalty Is Ultimately About Perceived Security

When prices rise, customers ask one question:

“Am I still better off staying?”

Tiering answers that emotionally.
 Bundling answers it rationally.

Research shows that loyalty survives inflation not when rewards increase, but when value feels protected.

Final Takeaway

Improving customer loyalty in travel is no longer about issuing more points or offering occasional promotions.

It requires:

• structural value reinforcement
• behavioral commitment mechanisms
• and loyalty systems that function even when prices rise

Tiering and bundling are not optional enhancements. They are retention defenses.

Brands that adopt them thoughtfully will retain customers not because switching is impossible, but because staying still makes sense.