How is travel adapting to the subscription economy?

In summer 2022, evidence emerged for post-COVID travel recovery and some returns to profitability. The pandemic gave the industry
unanticipated time to re-evaluate everything from business models to
operations, processes and technologies, all the way to go-to-market strategies.
Travel entities had time to take a fresh look at how they could best serve
their customers in ways that met their current and emerging demands.

One opportunity that gained traction during this time was subscription services. 

Demand for subscription services
exists across all age groups, but younger consumers who have grown up with and
have become accustomed to subscription services (Netflix was founded in 1997;
Amazon Prime in 2005; Spotify in 2006) sign up more readily.

, U.S. consumers lead the way, with an average of five retail
subscription services per household. As
reported by Kantar
, 85% of U.S. households now have at least one video
subscription service. Other countries with active participation in subscription
services include Canada, Germany, the U.K. and Austria.

Compared to 2021, the
global subscription e-commerce market is forecast by The Business Research
Company to increase by more than 64% by year-end 2022. In addition to convenience,
other benefits cited for online shopping, which buoys subscription services,
include reduced reliance on store visits, lowered costs of traveling to stores,
the absence of crowds and a satisfying customer experience.

So, why not travel,

Subscriptions can be
broken into five types:

  • Software subscriptions
  • Boxed products or kits
  • Recurring delivery of necessity products
  • Accessibility, such as to Disney+, Peloton or Apple
  • Membership

In the travel category,
subscription offerings generally fall into these two types:

  • Access – This could be
    access to exclusive places, services, upgrades and/or amenities. An example of
    a travel access subscription would be Priority Pass, which provides flying
    travelers access to airport lounges worldwide.
  • Membership – This
    usually involves discounts, benefits, content and/or specific assistance. A
    long-time example of a travel membership company is AAA, formerly known as the
    American Automobile Association.

Sometimes the two types get blurred, in that
access-based subscription businesses can also call their users
“members,” and some also offer broader discounts or other
membership-like features. Some businesses’ entire product is their
subscription, while other businesses offer a subscription product or service as
a bolt-on to their core product.

Phocuswrigtht’s report, How Is Travel Adapting to the Subscription
?, covers 14 subscription-centric travel brands and ten
bolt-on subscription products, with a deep-dive into innovations and cautions
in the space.

Are travel subscriptions here to stay?

Find out in this report available to Phocuswright
Open Access subscribers.

Leave a Comment

Your email address will not be published. Required fields are marked *