Travel subscription models: what do online travel sellers need to know? Part II

Posted 26/11/2021 by Matthew Chapman

Have you read in the travel trade media stories about online travel sellers launching variations of a subscription model?

Recently we interviewed our Chief Technical Officer, Matthew Chapman, for a two-part series to find out more on this topic.

If you missed that you can read the first instalment here.

 

Q: How do I go about signing up and collecting the payments from the user?

MC:  Whilst on the surface that might sound complicated or risky, the reality is that there are many companies set-up to provide just that. Stripe is perhaps the most famous, but if you Google ‘subscription payments service providers’ you´ll find many. We’d happily recommend our favourites.

 

Q: Many of these subscriptions seem to have a loyalty or cash-back element to them. How does that work?

MC: The loyalty or cash-back element works much the same as you might expect for a credit card, with points or cash-back being earned according to the purchase you make. Some of those are based on the type of product you buy, and others based on the value. In some cases we’re seeing a combination of those, with ‘accelerated points’ on offer for purchasing ancillary extras or upgraded rooms.

 

Q: What kind of users sign-up for such services? Are they different from the usual customers we might expect?

MC: We are perhaps still in the early days for this, but logic would state that those signing up are more likely to be higher volume travellers as otherwise they wouldn’t see value in it. Nonetheless, to a significant extent it depends on what kind of model you are offering. If the traveller feels they are paying for access to something exclusive or heavily discounted, they might see value in signing up just to make one big purchase – for example a couple going on honeymoon or someone planning a once-in-a-lifetime trip. Our experience is that these subscriptions tend to lead to higher-value purchases for the seller.

 

Q: For the UK market, how does this work from an ATOL perspective?

MC: This is where it starts to get a bit more complicated. Purchases paid for via cash or debit card yes would be treated under the same UK ATOL regulations. But purchases paid for via points or other similar alternative forms of payment would not. We would recommend considering professional legal advice before venturing down that route.

 

Q: Is there an opportunity for TMCs here?

MC: In my opinion this is perhaps where the biggest opportunity lays. Why? Because the customers that are going to get the best value out of this are regular travellers, and that’s perfect for business travellers. Plus, corporate buyers are keen to gain the best value for money, understandably as that’s their job, and if someone can create a TMC that gives transparency on pricing to pass on all the savings to the traveller that will be popular.

 

Q: Should businesses consider doing this just to diversify and attract new customers, even if it is not very profitable?

MC: Ultimately anything that helps you to attract new customers and earn their loyalty is something that you should always be seriously considering. It might well be of minority interest, but with billions of travellers in the world that could mean many millions out there might consider your service. As a means to gain their custom and then loyalty, then you might like to consider it like offering first time users a discount code or some kind of extra for free. It really could just be a marketing exercise, yes.

 

Q: Can Vibe help me on this journey?

MC: Very much so. Already we are working with Ultimate Travel Club to power their booking technology. Contact us today and we can take you through all the points you need to consider before making a decision. We certainly recommend that all online travel sellers out there give this some basic thought, it’s not for everyone but shouldn’t be ignored outright

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