Subscription services to transform travel industry: GlobalData

Shift from traditional product economy to subscription economy
2022-04-23
/
/ New Delhi
Subscription services to transform travel industry: GlobalData

GlobalData’s Travel and Tourism Patent Analytics reports that a total of 7936 patent publications related to subscriptions were made in 2021 (Photo: Jeshoots/unsplash)

Data and analytics company GlobalData says subscription services may possibly transform the travel industry following decline caused by Covid-19.
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According to GlobalData though subscription services have remained relatively nascent in the travel industry, it has altered almost every other industry.

The leading data and analytics company notes that the customer-focused model’s popularity is likely to rise as travel subscriptions, through which travellers will typically pay a monthly fee to receive benefits. Benefits such as discounted prices and personalised travel content, will represent a compelling way for businesses to build brand loyalty.

More and more businesses are moving away from the traditional product economy to the subscription economy. The subscription economy refers to the increasing presence of subscription-based businesses in today’s ecommerce landscape as opposed to the traditional pay-per-product model. 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,” says Hannah Free, Travel and Tourism Analyst at GlobalData.

One example of this is the Spanish travel company e-Dreams Odigeo’s prime subscription which has  reportedly reached 2 million members just six months after hitting 1 million in May 2021. More niche and targeted subscriptions are entering the market from the likes of Inspirato, Regenerative Travel and Bidroom.

Increased patent activity for subscriptions growing at a compound annual growth rate of 10.4 pc between 2017 and 2021, further demonstrates the shift from traditional loyalty points to subscriptions.

GlobalData’s Travel and Tourism Patent Analytics reports that a total of 7936 patent publications related to subscriptions were made in 2021, with growth continuing even throughout Covid-19. Travel companies investing in subscription services will likely emerge from the pandemic in a strong position to attract the tech savvy and deal finding travellers.

7936 patent publications related to subscriptions were made in 2021, with growth continuing even throughout Covid-19

Some companies have integrated subscriptions to their mix of revenue streams, while others will proceed to market with it as a foundational offering. Regardless, Covid-19 has highlighted the need for a more predictable and recurring revenue stream for travel companies as the likes of Bookings Holdings and Expedia Group saw their revenues drop more than 50 pc year-over-year in 2020, when travel came to a virtual standstill.

“Subscriptions represent a compelling way for travel companies to create lasting relationships where engagement typically ends after a one-off transactional purchase. According to GlobalData’s Q1 2021 Consumer Survey, 35 pc of global respondents consider time-saving a key factor driving purchase, while 46 pc consider time-saving nice to have, but not essential. The subscription model is well placed to capitalize on increasing consumer demands for personalisation, while the value and convenience enjoyed by members has the potential to outweigh a monthly subscription or membership fee,” Free adds.

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