One Company Runs Every Airline And Hotel Dining Program — Here’s How It Works

I started earning frequent flyer miles in 1991 before a trip on American Airlines to Australia (back then they flew via Honolulu). I let those miles expire, and my current account only dates back 30 years.

Once I started traveling for work after college I became much more active in miles and points. I used to read all the marketing they’d send out in the mail (!) including the fine print. After each trip on United (I was based near Washington Dulles) I used to dial their 800 number to listen to the automated system update me on my mileage balance. I loved hearing that number grow.

In February 1996, Mileage Plus (there was a space between the two words back then) launched two dining programs.

• One was a Transmedia white label card packaged for United members, with a $9.95 annual fee.
  
• The other was for elites only, with no fee, run by Signature Group, a Montgomery Ward subsidiary (Dining a la Card).

These were the precursors to modern restaurant rebate programs. When I earned status with United in 1997 I immediately jumped on the dining program, where I’d earn 10 miles per dollar at participating restaurants. There was nothing better than picking up the tab for a group at lunch, or expensing a business meal, and pushing everyone to use one of the nearby restaurants in the program.

I even remember an early mileage bonus for dining at 3 participating restaurants in a specified period of time – and realizing no minimum spend was required – so I just just around to 3 restaurants one day, ordered a soda, paid and left.

It turns out that both United programs from the mid-90s are part of the same company today, and that one company runs nearly all of the rewards dining programs in the market.

• Airlines: United MileagePlus, American AAdvantage, Delta SkyMiles, Alaska Airlines Atmos Rewards, JetBlue TrueBlue, Southwest Airlines Rapid Rewards
  
• Hotels: Marriott Bonvoy, Hilton Honors, Wyndham Rewards, IHG One Rewards, and Caesars Rewards.
  
• Other loyalty: T-Mobile, Fetch, Bilt (in part), Rakuten, Fuel Rewards, Upromise, Neighborhood Nosh, and Upside.

Transmedia, iDine, and Rewards Network are one company lineage. I believe Pikes Peak American Corp. was renamed Transmedia in 1984. The original model was restaurant working capital financing tied to a dining membership consumer product.

Restaurants got cash advances in exchange for giving Transmedia meal credits. Consumers used a membership card to get 20%–25% off. A $10,000 cash advance typically bought the company $20,000 of food and beverage credits, expected to be recovered over 6 – 8 months.

In 1999, Transmedia bought Dining A La Card from Montgomery Ward’s Signature Group. That program used member credit cards to identify transactions, rather than a separate dining card. Transmedia switched to that method after the deal.

Then it launched iDine.com in 2000, rebranded as iDine Rewards Network in 2002, and shortened the name to Rewards Network in 2003. Sam Zell’s Equity Group Investments took a stake in 1997, and took Rewards Network private in 2010. TowerBrook acquired it in 2017. Rewards Network claims over 20,000 restaurants and 25 million enrolled cardmembers.

I loved Diners Club for 60 days to pay and for its transferable points program. Their ‘Restaurant Savings Program’ was iDine Prime at the end, until 2005 when they eliminated the perk. That gave you 20% back or more at participating restaurants.

The Rewards Network model is acquiring discounted dining from restaurants and bringing in diners by rebating part of that discount (often in the form of miles) to guests. They find those diners through white-label dining programs where they’re buying points from airlines and hotels and other consumer programs.

There’s basically two ways they work with restaurants:

• Marketing product. Restaurants pay nothing unless members spend. The restaurant is buying customer acquisition through the program.

• Funding product. Rewards Network prepurchases food and beverage on behalf of future members and gives the restaurant upfront capital. The restaurant “dines down” the balance when Rewards Network members spend. (In the larger “Premier Restaurant Funding” product, Rewards Network prepurchases total credit card receivables and remittance comes as a percentage of all card sales.) This is basically a loan framed as purchasing receivable.

Rewards Network claims members can represent 4%–6% of sales, and spend up to 24% more than other customers.

The most direct rival to the business was Dining A La Card, which Transmedia bought in 1999. Now it’s inKind and Seated. inKind purchased food and beverage credit from the restaurant, sells that credit to guests, and sends those guests to the restaurant. Seated uses rewards rather than discounts to bring in diners.

What’s interesting, though, is that the airline and hotel dining programs all seem pretty much the same because they’re all white labels of the same underlying product. Even Bilt works with Rewards Network and the vast majority of its ‘total merchant’ numbers just comes from Rewards Network-affiliated restaurants with little to no direct contact with Bilt. Bilt, though, also has its own dining product that’s separate from Rewards Network’s, and that’s where things become interesting.

• The restaurants that offer rewards through Rewards Network dining programs are.. mostly not very good. I don’t earn many points through these programs anymore because I don’t want to eat the food!

• It was striking when Bilt launched its dining program that the restaurants they featured were actually places I ate at, and wanted to go to. That wasn’t expected because the restaurants that need the loans Rewards Network offered, or to buy customers through deep discounts, needed these things for a reason. Why did the good places sign up early on with Bilt, of all things? They’re offering real marketing tools to reach customers, with customer preferences baked in and the ability to leverage Bilt’s other partners at a discount to offer guest premiums.

I actually think it’s interesting that Bilt is both partnering with Rewards Network and building out its own restaurant platform. In a sense this reminds me of their travel portal launch with Expedia. Expedia still provides Bilt with hotel inventory, but Bilt has been building its own direct booking pipeline, they have their own hotel commission tracking company now, and a Virtuoso partnership.

I can’t wait until Expedia and its non-loyalty eligible rates are no longer part of the platform – and until Bilt can ditch the also-ran restaurants in the Rewards Network ecosystem.