Want to get on board with travel subscriptions?
Subscriptions have seeped into nearly every consumer industry, from TV to tacos. There are even services that help subscribers cancel all their subscriptions. But one industry has notably lagged: travel.
That could be changing. The market for travel subscriptions has started to expand and includes cheap flights, airport lounges, luxury accommodations and high-end credit cards.
“Subscription models can add a lot of predictability to an industry that can be very spiky,” said Amy Konary, vice president at the Subscribed Institute by Zuora, a think tank focused on the subscription economy.
Travel purchases tend to be one-off and transactional. Airline and hotel loyalty programs aim to promote loyalty and benefits, but only those travelers who travel (and pay) a lot can reap the rewards. Subscriptions could turn this concept on its head by offering these benefits upfront.
“The subscription model lets you get access to those premium perks by paying directly,” Konary said.
Will customers take to this idea? Travel brands are rushing to find out.
Subscriptions take off
Alaska Airlines dipped a toe into the subscription waters in March with the launch of its “Flight Pass.” For a price that starts at $49 per month, subscribers can book one round-trip main cabin flight every two months for one penny plus $15 in fees. The catch? The flights must be direct, booked within a limited time frame and, most importantly, fly between particular airports in California, Nevada and Arizona.
Confused? “Communication has been the big challenge,” said Alex Corey, managing director of business development and products at Alaska Airlines. “It’s been hard for people to appreciate that this might not be designed for them. If I went to my favorite store and it didn’t meet my needs, I’d be
like, ‘Hey, make this this way.’”
Instead of trying to be everything for every traveler, Alaska’s subscription has focused on a narrow niche: younger Californians with plenty of wanderlust and schedule flexibility. So far, nearly half of subscribers are millennials or Generation Zers, according to Alaska.
It’s a niche product, to be sure, but Alaska is confident that it can appeal to a particular kind of West Coast traveler.
“Californians travel 3.5 times more within their own state than residents of other states do,” said Corey, explaining why the airline chose the state as the proving ground for its idea.
And Alaska focused on the lowest-cost entry point possible, starting at $49 per month to make a flight subscription seem feasible to almost anyone.
“We wanted to compete with an Uber ride or a bar tab,” Corey said.
Catering to nomads
On the other side of the price spectrum, the luxury travel platform Inspirato offers a subscription service for vacation rentals and highend hotels starting at $2,500 per month.
That’s $30,000 per year for the opportunity to book highend accommodations around the world. That might seem like a huge bill for a vacation budget, but it’s potentially more reasonable for remoteworking nomads looking to travel as much as possible.
Yet Inspirato’s subscription, too, comes with a long list of caveats and exceptions. Pass holders may book just one trip at a time, bookings are on a first-come, first-served basis and many rooms are available only during off-peak seasons.
Less spendy digital nomads can choose Selina, a co-living and coworking subscription service that combines the cost of accommodation, office space and dependable Wi-Fi into one monthly bill. Subscribers can bounce between Selina’s global destinations and take advantage of surfing lessons, yoga classes and other wellness activities.
What’s old is new again
Travel subscriptions aren’t a new idea. JetBlue Airways introduced an “All You Can Jet” unlimited flying pass way back in 2009. The promotion received plenty of attention but didn’t translate into a sustainable business model.
And successful travel services already exist. Premium travel credit cards offer perks such as airport lounge access for a yearly fee. And services like TSA PreCheck and Clear let fliers bypass security lines.
But a new wave of subscriptions is coming to travel with one big difference — specificity. New services are providing niche offerings to specific demographics.
“I do think what we’re doing is unique,” Corey said. “I hope it catches on.”