True travel subscription services are rare but increasing

In a world where virtually everything is available as a subscription – a daily coffee at your favorite chain, clothing, furniture and even services for pets – then why should travel be any different? 

While a decade or more ago such a concept would have seemed impossible to pull off in travel, this long since has not been the case with UsingMiles.com introducing its first plan for travelers back in 2011. Since then any naysayers have been proven wrong as nowadays carriers such as United, Frontier, Alaska and British Airways and hotels such as CitizenM and Selina are offering similar services.

But can such services really generate revenues or are they just a marketing stunt? Next time you see Dana Dunne, CEO of eDreams, you might want to ask him that question. The company has already amassed four million paying subscribers to its Prime service since launching in 2017, and it now generates a whopping 40% of the company’s revenues.

For subscription providers, the benefits might not be so obvious, but consider that aside from the revenues generated from all those monthly fees, there’s also the potential to upsell and cross-sell subscribers other services. Because you have their brand loyalty and you also have a lot of data on them, selling them extra stuff is a whole lot easier.

Meanwhile, within the travel technology sector – where most businesses aspire to become a software-as-a-service provider because the recurring revenues are bankable when it comes to a sale – a successful subscription service travel company, tech or otherwise, is a very appealing idea in principal. In short, the owners can get a higher sale price than a conventional, pay-as-you-go competitor. 

At WayAway, we run a subscription service too, called WayAway Plus, and we’re fascinated by this whole ecosystem of fellow subscription services, some of them competitors but many of them potential partners. So we decided to conduct research into the space, primarily focused on the United States market, and you can download the full report here.

One of the first challenges we ran into as part of our research was how to define a “subscription.” What counts and what doesn’t? For our purposes, we decided that a lot of what looked like potential travel subscriptions on the surface actually weren’t: For example we excluded PS LAX and TSA PreCheck. 

For those that made the grade, we then decided to categorize them into three types: content, for example providing guides and tips; actual products or services, like a certain amount of stays at a hotel or flights on an airline; and discounts and cash back, for example, in our case where we offer real cash back on every purchase for subscribers to WayAway Plus.

Looking at things on that basis, we discovered that only 49 such services exist in the U.S. Despite the passage of a decade and subscription services becoming so ubiquitous in our daily life, why might that be? One explanation might be that if you look at the wider economy, subscriptions only make up a small percentage of the average consumers’ monthly disposable income spend, so there’s nothing to indicate that travel is somehow different.  

Nonetheless it really does seem that, relatively rare as they are, subscription services are here to stay. But how many such businesses could our sector sustain? Have we reached saturation? 

Our research showed that most of the new travel subscription services appeared in only the past couple of years – in other words, we’re in the middle of a boom, and there’s nothing to indicate that it is going to stop anytime soon. 

One of the most popular and fastest growing categories for travel subscriptions is discounts and savings. According to a Q1 2021 consumer survey, 35% of global respondents consider time-saving a key factor driving travel subscription purchases, while 46% consider time-saving nice to have, but not essential. Services in this category aim to streamline travel through savings and curated deals, and users are responding enthusiastically.

Travel content subscriptions are growing fast too, often combined with exclusive deals and concierge services. After COVID, travelers face way too many new questions and content-based services are just on time with huge expertise.

Hotels and accommodation companies represent the freest market segment, with the lowest competition. In a June 2021 study analyzing the share of hotels worldwide offering or willing to introduce subscription programs, only 27% of participants were considering implementing subscription memberships, while 28% had no such plans.

To a significant extent, technology has been a big driving factor in the success – and growth potential – of travel subscriptions. Particularly the development in recent years of technology making it easier than ever to sign up for a service in just one click (and, more importantly, pay for it in one click too for a recurring charge). The form-filling and admin before would have put the vast majority of people off.

Meanwhile as people become more familiar with subscription services in general, particularly younger generations who’ve never known any difference as they age and start to spend more on travel, we see more potential for travel services to be marketed in this way.

As part of our research, we interviewed Iñaki Uriz, founder of Caravelo, which provides subscription services to travel companies, and he said, "We're seeing a clear growth trend, and recent articles from industry observers confirm it too." 

Based on everything we have seen, we believe that travel subscription services will very likely continue to grow – with ever more innovative products and services offered by companies – and that years from now we'll look back in the post-COVID era as the period when the real growth began.