How is travel adapting to the subscription economy?

In summer 2022, evidence emerged for post-COVID travel recovery and some returns to profitability. The pandemic gave the industry unanticipated time to re-evaluate everything from business models to operations, processes and technologies, all the way to go-to-market strategies. Travel entities had time to take a fresh look at how they could best serve their customers in ways that met their current and emerging demands.

One opportunity that gained traction during this time was subscription services. 

Demand for subscription services exists across all age groups, but younger consumers who have grown up with and have become accustomed to subscription services (Netflix was founded in 1997; Amazon Prime in 2005; Spotify in 2006) sign up more readily.

According to PYMNTS, U.S. consumers lead the way, with an average of five retail subscription services per household. As reported by Kantar, 85% of U.S. households now have at least one video subscription service. Other countries with active participation in subscription services include Canada, Germany, the U.K. and Austria.

Compared to 2021, the global subscription e-commerce market is forecast by The Business Research Company to increase by more than 64% by year-end 2022. In addition to convenience, other benefits cited for online shopping, which buoys subscription services, include reduced reliance on store visits, lowered costs of traveling to stores, the absence of crowds and a satisfying customer experience.

So, why not travel, too?

Subscriptions can be broken into five types:

• Software subscriptions
• Boxed products or kits
• Recurring delivery of necessity products
• Accessibility, such as to Disney+, Peloton or Apple Music
• Membership

In the travel category, subscription offerings generally fall into these two types:

• Access - This could be access to exclusive places, services, upgrades and/or amenities. An example of a travel access subscription would be Priority Pass, which provides flying travelers access to airport lounges worldwide.
• Membership - This usually involves discounts, benefits, content and/or specific assistance. A long-time example of a travel membership company is AAA, formerly known as the American Automobile Association.

Sometimes the two types get blurred, in that access-based subscription businesses can also call their users "members," and some also offer broader discounts or other membership-like features. Some businesses' entire product is their subscription, while other businesses offer a subscription product or service as a bolt-on to their core product.

Phocuswrigtht’s report, How Is Travel Adapting to the Subscription Economy?, covers 14 subscription-centric travel brands and ten bolt-on subscription products, with a deep-dive into innovations and cautions in the space.