New ways of travelling and digital innovation fuel the shift to a membership economy

Industry experts have called for hoteliers to take note of the significant transformation of travel toward a membership economy. Driven by tech innovation, changes in traveller behaviour and an inversion from transactional to relational interactions between brands and consumers, the membership economy is helping hospitality providers face uncertainty in the travel landscape.

The new travel frontier

At an I MEET HOTEL Summit on 31 May, organised by Bidroom, the world’s first membership-based travel platform, speakers agreed that the rise of digital nomadism and the blending of work and leisure were two critical trends hoteliers need to understand and consider now.

The number of digital nomads in the US alone has risen from 7.3 million in 2019 to 10.9 million in 2020 and then standing at 15.5 million in 2021, according to Kunal Bharti, Global Sales, Distribution & CoLive at Selina. Selina’s booking platform has built a strong global community and ecosystem for digital nomads and remote workers, a testament to this trend.

Moreover, Minh-Tam Ngo, Strategic Designer at Lufthansa Innovation Hub noted that 55% of travellers said they are planning to travel for 14+ days for future leisure trips while 60% plan to take fewer trips a year.

What does this mean for hoteliers? Gina Richmond, SVP of Commercial Partnership at Planet, argued that ways of optimising revenue need to be completely rethought. For instance, the blend of leisure and business travellers may mean there’s no need to segment these categories in the future, while the rise of longer stays and higher spending habits may require a new pricing strategy.

The new digital age

At the same time as these seismic shifts are happening in travel, digital transformation is changing the way consumers interact with brands. Digital customer interaction in Europe has been accelerated by three years post-Covid, according to Lufthansa Innovation Hub, with the travel industry experiencing the sharpest uptick in digital adoption (25% growth).

AirAsia’s app was cited as a great example of travel companies redesigning their customer experience, expanding user touchpoints to forums and inspiration threads, as well offering travel, e-commerce, and financial services. Since it relaunched, its monthly downloads have increased by 92%. Hopper was another forward-thinking brand mentioned at the event, which has surpassed Airbnb and Booking.com in app downloads by offering financial services to generate new revenue streams.

Minh-Tam Ngo commented that travellers are more empowered with new digital services at their fingertips, particularly when it comes to financial technology. Customers who use Klarna’s ‘buy now, pay later’ credit products when booking travel have a 20% higher booking value, and travellers are willing to spend on average 36% more per trip, and 49% more on ancillaries with flexible payment options. Flexible payment options also raise traveller confidence as they minimise travel uncertainty and refund hassle.

The continuing rise of the membership economy

The shift towards a membership economy has been accelerated by these trends in travel and digitisation. “Customer relationships have now moved beyond one-off transactions”, said Minh-Tam Ngo, “and personalised, unique experiences are the preference.” Marcin Wesolowski, Director of Operations at Bidroom also added that creating lasting relationships with consumers is key, and it’s time for the hotel industry to reset its idea of loyalty.

According to speakers at the event, paid subscriptions such as TripAdvisor Plus, Citizen M, and the Bidroom Travel Club are now the ‘new loyalty programs,’ whose recurring revenue models can help weather the storm of fluctuations or crises in the travel market.

Marcin Wesolowski pointed out that 70% of businesses said they thought membership and subscription models were the future commercial model of their industries, as long as they had the three key factors that kept people subscribed: a need for a tool, a love of the content and saving of money. The travel industry is no different. Bidroom’s paid membership, for example, aims to deliver the best, curated hotels for members at a lower cost and with extra perks.

Ultimately, subscription-based services can enact positive change in the hotel industry. In Bidroom’s example, they do not charge an extortionate commission like other OTAs, which would not be possible without being part of the membership economy. Marcin argued that this sustainable distribution model, more partnerships and a zero friction user experience were the way forward for companies to expand potential customer bases and hoteliers to increase revenue and attract more travellers to their properties.