What will it take to make a subscription-based business model work in travel?
Subscription-based business models are gaining traction in all types of verticals, from fashion and FMCG to streaming on demand, fitness and beauty.
Subscription models sit at the intersection of customer loyalty and revenue, guaranteeing repeat business for as long as a customer is locked in. A subscribed customer has a greatly increased customer lifetime value (CLV) and an inherently closer, ongoing relationship with the brand they subscribe to – making the benefits of the model obvious.
But can subscriptions work for every single industry – including ones where purchases are made much less frequently, like travel? Over the past couple of years, the idea of travel subscriptions has attracted increased interest, with Skift naming subscription travel one of its Travel Megatrends for 2020, calling it the “next frontier of loyalty”.
When the Covid-19 crisis hit the travel industry, ideas for innovative revenue models were put on hold in favour of simply surviving. But as the impact of the crisis has eased and businesses have once again turned their eyes to the long-term future, travel subscriptions are gaining momentum again – with some brands believing they will be key to the new era of travel that emerges from the crisis.
At virtual travel conference Phocuswright Europe Online 2021, Lorraine Sileo, Senior Analyst and Founder at Phocuswright Research, chaired a panel to discuss whether and how subscription models could work for travel. Her guests, Kanika Soni, Chief Commercial Officer at Tripadvisor, and Lennert De Jong, Chief Commercial Officer at CitizenM Hotels, discussed the subscription packages launched by their respective brands, why now is the right time to launch subscriptions in travel, how subscriptions can improve customer loyalty in travel, and how travel companies can make subscriptions pay off.
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