How the travel industry can take advantage of the booming new membership economy
Travel companies are being continuously marred with escalating distribution and advertising costs, high competition in the market while their margin is on the decline.
As distribution costs continue to rise because of OTAs, travel providers (hotels, airlines, car rentals and cruise lines) are challenged to win back business from third-party intermediaries and produce more bottom line profit for owners. Global travel brands are paying big shares of their already slim margins while giving up control of retail rates to merchant OTAs. Also, according to a report published by Adgooroo in 2014, there has been a 40 per cent increase since 2012 in Pay Per Click cost in advertising in travel industry which clearly shows that the heightened competition has driven up the prices for keywords. Leading travel brands are forced to pump huge amount of money in advertising, with decreasing value.
To combat the loss in revenue, travel companies have invested in Loyalty Programmes but these customer rewards have been severely criticised as short-lived, cheap promotional activities, giving something for nothing. On an average, a customer participates in 10 different Loyalty Programmes with decreasing value for each programme as a result. Major airline companies have come up with Frequent Flyer Programmes to attract and retain customers, however this is nothing new anymore, nothing that differentiates them.
So, the question that arises is: How do travel companies earn the loyalty of customers and deliver outstanding benefits without losing margins? One possible answer is: Building loyalty with your customers through a bespoke travel club. According to latest industry reports, Membership Economy is the new currency for business growth in 2016. One of the many examples is- The Hilton Select Programme by Hilton Hotels. Hilton Select is members only savings programme offered by the most recognised hotel brand in the world and its huge success is a testament to that.
According to Robbie Kellman Baxter, author of The Membership Economy, companies who are able to obtain and retain members will be the ones that thrive. Members are a powerful source of regular reliable income and travel companies that service and retain members have a financial and marketing advantage over others.
Personalisation of service is a huge trend among Millennials. A travel club brings that personal touch in travel services directly to your customers. Developing a travel club could be one of the smartest and most profitable business decisions your company can make.
Here are a few benefits of starting your own Travel Club:
- Create a new recurring revenue stream through monthly memberships and sales
- Create and maintain customer loyalty as customers keep buying travel from you
- Generate leads from existing travel club members and by advertising the travel club on your website
- Attract new customers and retain existing customers by selling travel club as part of a rewards programme
- Cross-sell other services or products.