Is there untapped potential in hospitality subscriptions?

At first glance, a travel subscription seems like a consumer dream – unlimited travel, discounted travel or travel perks? Where’s the sign-up sheet?

Obviously, leveraging appeal for travel subscriptions is more nuanced than that – especially with an abundance of free-to-join loyalty programs available at nearly every turn for leisure travelers and road warriors.

But the lesser-used model is starting to garner interest across the industry – including in the hospitality sector with programs launching in recent years such as Ennismore’s Dis-loyalty late last year, Citizen M’s mycitizenM+ in 2022 and Inspirato Pass in 2019.

“The surface of paid loyalty for travel has only just been scratched, as it accounts for less than 1% of global sales,” said Mike Putman, CEO of Custom Travel Solutions, a platform focused on loyalty. “The future looks positive, driven by an increased demand for personalized travel experiences and the convenience of having access to recurring benefits.”

But subscriptions have been slow to catch on, according to David Feldman, founder and managing partner of Catchit Loyalty, a strategic solutions firm.

“I would say that there is an increased ‘interest’ from brands in subscription programs or subscription offerings,” said Feldman. “I’m not sure that we have seen that translate into actual more subscriptions live in the marketplace ‘yet.’”

And some say travelers’ lifestyles now leave them more open to a subscription model.

Travel subscription solutions provider Caravelo, which primarily has worked with airlines but is looking to expand, sees social behavior triggering more subscriptions as travel becomes more integral to travelers’ lifestyles, said chief product technology officer JoseLuis Vilar.

The real value benefit … [is the] fact that members of premium programs typically have higher customer lifetime value.

David Feldman — Catchit Loyalty

Hospitality subscriptions’ “lifetime” value

The advocates of subscription programs are playing a long game.

“The real value benefit … [is the] fact that members of premium programs typically have higher customer lifetime value,” Feldman said. “These customers maintain your customer base. So it’s not just the membership fees, although, of course, they absolutely do generate revenue, but these customers themselves are also more valuable.”

“The subscription model offers the opportunity to leverage enhanced customer loyalty, stable revenue streams and resilience against market fluctuations,” added Custom Travel Solutions’ Putman. “The loyalty landscape has never been more ripe for programs that offer tailored solutions and benefits that offer a sense of belonging.”

What those programs look like varies – and plays into a travel brand’s audience.

“This is a relatively old concept, which started as a club or community of like-minded travelers paying a membership fee in order to get certain benefits,” Putman said. “As technology has evolved, the concept now enables the aggregation of multiple types of travel services and benefits in just one portal but also increases the possibility to tailor the subscription to certain niches.”

At CitizenM, for example, the hotel brand’s hospitality subscription MycitizenM+ has “all the perks of a loyalty program without the complications of levels and points to collect,” said chief brand officer Robin Chadha, who said some 25,000 members are enrolled in the program.

“During the pandemic, the team spoke to hundreds of these guests about what they find valuable and inspiring when they travel,” said Chadha. “This also coincided with a time when the concept of workplace was being reassessed within society. Consistently, the feedback was having ‘peace of mind’ and a ‘feeling of recognition’ [as] the two most sought after elements. This is what inspired the hotel group to create this membership community.”

For an annual fee of $120, MycitizenM+ subscribers receive a 15% discount on the lowest public rate offerings, guaranteed rooms as long as they are booked 48 hours in advance and other perks such as late checkout.

Meanwhile, Ennismore’s Dis-loyalty subscription program – which is launching in app form in the fall and plays off the idea of loyalty, encouraging travelers to explore new destinations amongst Ennismore’s 14 brands – is travel and food-focused.

“When you look at how Netflix changed how we consumed TV and how Spotify changed how we owned and listened to music, we wanted to do that for hospitality,” said Martina Luger, chief brand and culture officer at Ennismore.

The program, which costs $18 per month, gives members 50% off just-opened hotels for stays scheduled during the first three months after opening, 20% off first stays at more than 90 hotels across the globe, 10% discount on return stays, 10% reduction on food and drink and free barista-made drinks daily.

But the programs aim to do more than just offer discounts and perks.

“The hotel group has created a membership of people, and a membership of people who like to travel to citizenM,” Chadha said. “The membership model has created an existing community that goes beyond individual hotel stays and competitive pricing.”

The road blocks to hospitality subscriptions

While hospitality subscriptions could add a layer of profitability in the long term, creating one that works doesn’t come without obstacles.

To start, many well established hospitality companies may be constrained by legacy technology, Feldman said.

The unpredictable nature of travel demand is another problem, said Luger. “Businesses must navigate regulatory and pricing complexities across different regions and balance offering value to customers with maintaining profitability, on top of building and retaining customer loyalty in a highly competitive and variable market.”

The widespread presence of free-to-join loyalty programs is another challenge to paid subscription programs, even as they sometimes struggle to compete on their own.

“Despite the growth and scale in traditional hospitality loyalty programs, the program value propositions and reliability of benefits have become so diluted that these programs are facing significant challenges when it comes to guest ‘stickiness,’” said Feldman. “The truth is that it’s really easy for a guest to walk next door and stay at a competing property – especially when their primary brand is no longer really offering strong benefits to maintain their share-of-wallet.”

Because “switching” is so easy for travelers, the challenge for hospitality brands seeking to start and uphold a subscription program is to create a program that is rich enough in rewards to lure travelers to pay up front to join while minimizing the cost to providers, said Feldman.

What does the future hold?

It’s not entirely clear what the future of hospitality subscriptions holds.

Vilar pointed to the popularity of subscription programs that have become so intertwined with the way our society functions now. There’s Netflix, Amazon Prime, Disney+, Hulu, Walmart+, HelloFresh – we’re living in a subscription economy, to a degree.

He added that Caravelo sees that “all travel companies” in the future may have a transactional offering and a subscription offering and that those two will operate in a complementary manner. “This is a new trend and way to consume and consumers are ready for it.”

Luger believes the hospitality subscription sector is likely to evolve, eventually offering more personalized and flexible options to cater to frequent travelers, remote workers and those looking to have unique experiences. She also believes the industry could see related technology advance and expects partnerships to emerge across hospitality brands.

Lifestyle changes that resulted from the COVID-19 pandemic could play into the future of hospitality subscriptions too.

“I suspect we may see growth in the ‘work from hotel’ model as new work patterns settle down post-pandemic, and these do lend themselves to a subscription model,” said Feldman.

Chadha said CitizenM’s program is already playing into that angle.

“CitizenM recently added its new co-working program to the list of benefits travelers can receive from the mycitizenM+ membership,” she said. “The new launch was in response to the evolving needs of modern professionals, the hotel and lifestyle brand is expanding its innovative membership program to include coworking benefits across its portfolio of 34 hotels (and counting) worldwide.”

While it’s not certain exactly what the next chapter looks like, experts do think there is a future for the practice – and some believe that if hospitality players are interested, now is the time to jump in.

“We are nearing the end of the beginning of the travel subscription economy now, and anyone who’s serious about becoming a player must act quickly to not miss out,” said Putman of all travel subscriptions, on the news of Amazon’s Prime Day travel offerings for Prime members.