The travel industry has historically been linked to free points programs.
We are now seeing the beginnings of something very new for travel, namely the fall of these free programs in favor of “fee-4-VIP” loyalty models using what I call, the Amazon Prime formula:
Formula : 1 ANCHOR benefit + 2 complimentary benefits = a successful fee-based membership program
This shift to fee-4-VIP membership can shift a traditional industry from one that faces seasonality challenges, revenue volatility, and commission craziness to one that establishes a stream of predictable recurring revenue and increased customer loyalty.
Travel companies want recurring revenue and customer loyalty.
Consumers want value and convenience.
Subscription models, when done right, tick those boxes.
Here are a few other trends related to travel and subscription commerce.
1. Consumer sentiment related to travel in ’23 is positive. As demand increases, Alaska Airlines and others who’ve launched innovative subscription offerings are hopeful these programs will capitalize on that market sentiment.
2. New subscription programs are indicative of a travel company’s desire to create consumer “lock-in”, where members look to the company they’re paying into as a “member” before searching for alternatives.
3. These new travel subscriptions, whether from an airline, hotel or otherwise are innovative and unique. If nothing else, the amount of media attention they receive moves the needle on brand awareness.
While a lot of these programs aren’t likely to be profitable off the bat, CEOs will be watching consumer behaviour carefully to analyze not only usage vs. breakage, but also lifetime value of each subscriber.