Leading data and analytics company GlobalData has observed that although subscription services have disrupted almost every industry, the customer-centric model holds the potential to transform the travel industry.
Following a decline caused by the COVID-19 pandemic, subscription services are forecasted to grow as travel subscriptions, whereby travellers pay a recurring fee to receive benefits, represent an effective way to build brand loyalty.
“More and more businesses are moving away from the traditional product economy to the subscription economy,” commented Hannah Free, Travel and Tourism Analyst at GlobalData. “Subscription models have the potential to completely transform an industry that faces challenges such as seasonality and growth-decline cycles by ensuring a relatively stable revenue stream.”
An example of this is Spanish travel company eDreams ODIGEO’s Prime subscription, which was reported to have reached two million members only six months after it hit the one million mark in May 2021.
There is evidence that there has been a shift from traditional loyalty points to subscriptions. According to GlobalData’s Travel and Tourism patent Analytics, there has been an increased patent activity for subscriptions rising at a compound annual growth rate of 10.4 percent between 2017 and 2021. This growth was found to continue even throughout the pandemic. As the world shifts into post-pandemic recovery mode, travel companies investing in subscription services will emerge in a strong position to attract tech-savvy and deal-loving travellers.
Some businesses incorporate subscriptions to their array of revenue streams, while others adopt subscription services as a foundational offering. Nonetheless, the pandemic has accentuated the need for a more predictable and periodic revenue stream for companies in the travel industry.
“Subscriptions represent a compelling way for travel companies to create lasting relationships where engagement typically ends after a one-off transactional purchase,” concluded Free. “The subscription model is well placed to capitalise on increasing consumer demands for personalisation, while the value and convenience enjoyed by members have the potential to outweigh a monthly subscription or membership fee.”
