Exploring the Untapped Potential of Hospitality Subscriptions: A Game-Changer for the Travel Industry?

At first glance, a travel subscription might seem like a dream come true for many consumers. Unlimited travel, discounts, or exclusive perks—what’s not to love? However, the appeal of travel subscriptions is more nuanced, especially considering the abundance of free-to-join loyalty programs available to both leisure travelers and frequent flyers.

While loyalty programs are commonplace, the concept of a paid travel subscription is relatively underexplored in the hospitality sector. This trend, however, is beginning to change with the introduction of new programs like Ennismore’s Dis-loyalty, CitizenM’s MycitizenM+, and Inspirato Pass, each offering unique benefits tailored to their target audiences.

According to industry experts, the potential for paid loyalty programs is enormous. Currently, these programs represent less than 1% of global travel sales, but the future looks promising as travelers increasingly seek personalized experiences and convenient access to recurring benefits. Mike Putman, CEO of Custom Travel Solutions, believes that the surface of paid loyalty in travel has only just been scratched, with much more to come as demand grows.

Despite the buzz, subscription models have been slow to gain widespread adoption. David Feldman, founder of Catchit Loyalty, notes that while interest in subscription offerings is rising, there hasn’t been a significant increase in active subscriptions within the market. This hesitancy may be due, in part, to travelers’ evolving lifestyles, which are now more open to the idea of a subscription model.

Companies like Caravelo, which primarily work with airlines, see social behavior driving more subscriptions as travel becomes more ingrained in people’s lives. JoseLuis Vilar, Caravelo’s Chief Product Technology Officer, suggests that subscriptions offer a long-term value proposition by creating a higher lifetime value for customers who subscribe to premium programs. These customers tend to be more loyal and provide a stable revenue stream, which is crucial for businesses looking to weather market fluctuations.

The subscription model also allows hospitality brands to offer tailored solutions that foster a sense of belonging among members. This concept, while not new, has evolved significantly with advances in technology, enabling brands to aggregate various travel services and benefits into a single portal, customized for specific niches.

For instance, CitizenM’s MycitizenM+ subscription offers members a range of perks, including discounts, guaranteed room availability, and late checkouts. The program was developed in response to feedback from frequent travelers who valued peace of mind and recognition during their stays. Similarly, Ennismore’s Dis-loyalty program, set to launch as an app, encourages members to explore new destinations across multiple brands, offering substantial discounts and daily perks.

These programs aim to build a community of like-minded travelers who see value beyond just the monetary savings. They foster a sense of belonging and offer experiences that resonate with members, making the subscription more than just a transactional relationship.

However, implementing a successful subscription model in hospitality isn’t without challenges. Legacy technology systems can hinder the development of new programs, and the unpredictable nature of travel demand adds another layer of complexity. Businesses must navigate regulatory and pricing issues across different regions, all while maintaining profitability and building customer loyalty in a competitive market.

Moreover, the prevalence of free-to-join loyalty programs presents another hurdle. These programs, despite their scale, often struggle to maintain guest loyalty due to diluted value propositions and unreliable benefits. With competition so fierce, travelers can easily switch to a competing property if their primary brand fails to deliver strong benefits. To counter this, subscription programs must offer rich rewards that justify the upfront cost to travelers while minimizing expenses for providers.

Looking ahead, the future of hospitality subscriptions is still unfolding. The popularity of subscription models in other industries—think Netflix, Amazon Prime, and Disney+—indicates that society is becoming increasingly accustomed to this way of consuming services. Caravelo predicts that in the future, all travel companies will likely offer both transactional and subscription options, working in tandem to meet diverse consumer needs.

As the hospitality industry continues to evolve, personalization and flexibility will likely become key components of subscription offerings, particularly for frequent travelers, remote workers, and those seeking unique experiences. The COVID-19 pandemic has also influenced these trends, with new work patterns potentially driving the growth of “work from hotel” models that naturally align with subscription frameworks.

For brands interested in capitalizing on this emerging trend, now is the time to act. The travel subscription economy is still in its early stages, and those who move quickly could secure a significant competitive advantage. With the right approach, hospitality subscriptions could become a cornerstone of the industry, offering stable revenue, enhanced customer loyalty, and a wealth of opportunities for innovation and growth.