Why You May Subscribe to Your Next Vacation

The travel industry is increasingly adopting the subscription pricing model.  What types of products and services are travel-related companies offering?  What are the potential benefits of the subscription model in the travel industry?

 

Subscription to Discounts

Certain subscriptions programs offer access to discounts that are not available to the general public.  For example, for $99 per year, Tripadvisor offers reduced hotel and activity booking rates and perks like rental car upgrades.  Scott’s Cheap Flights offers services from $49 - $200/year for alerts on economy and first-class flights.

 

The draw of the subscription services is that these discounts are not listed on the travel firm’s website for the general public.  The providers of the deals require that they only be distributed to membership organizations.  Subscribers, in essence, are paying for exclusive travel prices that cannot be found elsewhere.

 

Airline Subscription Programs

Some airlines are now offering subscription programs that provide access to a fixed number of flights as well as services such as free Wi-Fi and checked baggage.  For example, Alaska Airlines offers credits to travelers who agree to pay a monthly fee to fly a fixed number of roundtrip flights.  The cost of the subscription varies based on the level of booking restrictions. 

 

United Airlines’ offerings include subscriptions for Club membership, premium seats, checked baggage, and free Wi-Fi.  With United, you can either pay cash or with miles.

 

Other subscriptions offer deep discounts for flights. For example, Spirit Airlines has a “$9 Fare Club” that costs $59.99 per year for access to deep flight discounts.

 

Hotel Programs

Hotels have also joined the fray and are offering subscription packages that include unlimited stays, priority rooms, discounts on food and drink, access to co-working spaces, and wellness classes.

 

While several subscription models focus on offering access to discounts, others focus on providing exclusive, high-end experiences.  For example, Inspirato offers a $2,500/month package that offers unlimited stays at its offering of high-end resorts.

 

Targeting Work-From-Homers

Other hotels, such as InterContinental, Marriott, and Accor are offering “work from hotel” packages to provide restless remote workers a change of scenery.

 

Why Travel Is Joining the Subscription Club

Travel subscriptions offer the same potential benefits as other subscription services, such as recurring revenues, ability to create customer loyalty, potential to target new customers or revenue streams, and additional data which can be used to customize product and pricing options.  These benefits may be helpful for travel during economic downturns when consumers often reduce discretionary spending.

 

How may individuals gain potential exposure to companies offering subscription models?

 

The Fount Subscription Economy ETF (SUBS)

The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees

and expenses, generally correspond to the total return performance of the Fount Subscription

Economy Index.  The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.

 

SUBS invests in companies that offer subscription-based pricing models, including those in the travel industry.

 

 

For a list of fund holdings, please click here.

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Bong-Geun Choi Chief Economist

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