Subscriptions have seeped into nearly every consumer industry, from television to tacos. There are even services that help subscribers cancel all their subscriptions. But there is one industry that has fallen significantly behind: travel.
can change.
The market for travel subscriptions is expanding to include cheap flights, airport lounges, luxury accommodations, and high-end credit cards.
“Subscription models can add a great deal of predictability to an industry that can be very thorny,” says Amy Konari, vice president of the Joint Institute of Zuora, a think-tank focused on the subscription economy.
Travel purchases tend to be one-time and transactional. The airline and hotel loyalty programs are meant to promote loyalty and benefits, but only travelers who fly (and pay) often can reap the rewards. Subscriptions can turn this concept on its head by offering these benefits up front.
“The subscription model allows you to access those premium perks by paying directly,” Konari says.
Will customers move on to this idea? Travel brands are rushing to find out.
Cancel subscriptions
Alaska Airlines toe-to-toe in subscription waters in March with the launch of “Flight Pass.” Starting at $49 per month, subscribers can book one major round-trip flight every two months for a penny plus a fee of around $15. catch? Flights must be direct, booked within a limited time frame, and most importantly, fly between certain airports in California, Nevada, and Arizona.
Confused?
“Communication has been the big challenge,” says Alex Corey, general manager of business and product development at Alaska Airlines. “It was hard for people to realize that this might not be designed for them. If I go to my favorite store and it doesn’t meet my needs, I’ll say, ‘Hey, do it this way.'”
Rather than trying to be everything to every traveler, the Alaskan subscription focused on a tight spot: younger Californians with plenty of roaming and schedule flexibility. So far, just under half of the subscribers are Millennials or Generation Zers, according to Alaska.
It’s a niche product, sure, but Alaska is confident it can appeal to a certain type of West Coast traveller.
“Califorians travel 3.5 times more within their state than do residents of other states,” Corey says, explaining why the airline chose the state as the basis for proving its idea.
And Alaska focused on the lowest possible entry point, starting at $49 a month to make a flight subscription seem doable to just about anyone.
“We wanted to compete with an Uber or a bar ride,” Corey says.
Meet the needs of the Bedouins
On the other side of the price spectrum, luxury travel platform Inspirato offers a subscription service for vacation rentals and upscale hotels starting at $2,500 per month.
That’s $30,000 a year for the opportunity to book high-end accommodations around the world. This may seem like a huge bill for a vacation budget, but it probably makes more sense for remote working nomads who are looking to travel as often as possible.
However, the Inspirato subscription also comes with a long list of caveats and exclusions. Pass holders can only book one flight at a time, reservations are on a first-come-first-served basis, and many rooms and homes are only available during off-peak seasons.
Less spending digital nomads can opt for Celina, a co-living and co-working subscription service that combines the cost of accommodation, office space, and reliable Wi-Fi into one monthly bill. Subscribers can navigate Selena’s cosmopolitan destinations and take advantage of surfing lessons, yoga lessons and other wellness activities.
These services offer one potential customer benefit that is difficult to quantify: simplicity. Instead of searching through hundreds of vacation rental listings, subscribers can make one monthly payment and choose from a range of vetted options.
Konari says simplicity alone won’t cut it. Consumers are wary of adding another monthly bill to their long list of active subscriptions and need to know they’re getting a good deal.
“As we become more familiar with these models, we have a high standard of what we expect in terms of value,” Konari says.
What is the new old again
Travel subscriptions are not a new idea. JetBlue Airways introduced an unlimited “All You Can Jet” airline route in 2009. The promotion received a lot of attention but it did not translate into a sustainable business model.
Successful travel subscription services already exist. Premium travel credit cards offer travelers benefits such as airport lounge access for an annual fee. And services like TSA PreCheck and Clear allow travelers to bypass normal safety lines.
But a new wave of subscriptions comes with one big difference – privacy. Rather than trying to be a travel Netflix, with something for everyone, the new services offer niche offerings for specific demographic groups.
Not everyone wants to travel within California every two months or take surfing lessons in Belize in a co-working space. But for those who do, these subscriptions can provide a valuable way to travel without the hassle. Or they can go the MoviePass route.
“I think what we do is unique,” Corey says. “I hope it spreads.”
Related link
NerdWallet: Is the Alaska Air Pass a good deal? https://bit.ly/nerdwallet-is-alaska-airlines-flight-pass-a-good-deal
