21 November 2017

Speaking out


Can travel go the Netflix way?
September 2017 2579

Find us one person who wouldn’t mind convenience, there isn’t one.

Taking convenience a step ahead, and adding a lot of goodies and choices to the offering, brands like Netflix and Amazon have created subscription bases that are bigger than the UAE’s population many times over. We are talking about subscribers in the range of 60-100 million. That is a lot of assured returns on investment.

Is there an opportunity staring at our colleagues in the travel industry? Has this model of low base fees, compounded with the margins of scale been explored enough? If a travel industry insider doesn’t, will Amazon move into subscription-based travel services next? The possibility cannot be ruled out.

Critics of the idea will cite several reasons why the model cannot apply to travel professionals. One, most customers are not regular users of travel services, at about an average of three annual travel plans do not make a subscription model fly. But travel is but one aspect of the service offering, city tours, local attractions, dining, visa and insurance services can always be bundled to spruce up the subscription offering.

We are here to take the hassle out of travel or leisure getaways and provide attractive value for all of the above at a few clicks. This is what Amazon Prime means to the loyal base of millions of customers.

The other aspect of the model is what is there for the travel business, are there feasible and sustainable opportunities to grow the business around subscriptions. Benefits of flexibility, ability to scale up or down, reduce on overheads do apply, and we would love to see home grown-brands taking the leap in this category.

The merit is there for all to see, the subscription model offers the travel industry benefit of recurring revenue leading to customer retention and greater clarity over the value of each customer. For corporate customers, and operators of Mice tours, a fixed cost of travel is much better for managing expenses, so a subscription model travel service works perfectly for their needs.

There are a few sporadic example that we can look into, United Airlines offers subscriptions that removes the need to pay for checked bags and value added seats, this makes sense for frequent flyers. Fly as much as you want for a fixed monthly rate sounds like a dream, but that is what Surf Air allows members. TravelPass offers the benefits of subscription to frequent flyers while airlines can easily modify the terms and integrate the subscription service in their customer service platform. A traveller can opt to fly unlimited or a fixed number of trips within a defined period of TravelPass usage.

Take for example, Whim, the world’s first ever all-inclusive mobility service. Whim, an app based on the Finnish MaaS (Mobility as a Service) concept, gives people instant access to virtually every kind of transport, from brand new cars to taxis, buses, trains and bike share. It takes care of everything, from finding the best way to get there to ticketing and payments. That’s exactly what MaaS is all about – fulfilling all people’s mobility needs in one place. This could easily extend to travel services, offering on-demand access to a wide selection of travel services based on members-only privilege, for a subscription fee.

“Whim will change the way we move forever,” says Sampo Hietanen, the CEO and Founder of MaaS Global, the Finnish startup behind Whim, and the father of the MaaS concept. “It’s the 21st century equivalent to the Model T, which gave people the freedom to go wherever and whenever they wanted. In today’s world, Whim will be better than your own car.”

Whim offers both monthly mobility packages and travel on a pay as you go basis. The app syncs with the users’ calendar, helping plan journeys in advance. Still, it can also be used to go places at the press of a button – literally on a whim.

Another interesting new entrant that is chasing customer loyalty with an attractive monthly subscription package, is FinalPrice. To get negotiated deals on flights, car rentals and hotel bookings, subscribers pay an annual fee of $99, in exchange TTN understands, the savings per transaction could be as much as 30 per cent. There could be space down the line for a travel concierge to enter this subscription space and curate the best deals for a fixed fee. Isn’t that what travel consultants are supposed to do anyway?





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