Can Netflix model be applied in Travel?

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  • September 13, 2016

What is Netflix Model?

Netflix has revolutionised the television industry with its subscription-based model. The subscription-based model of Netflix works on the principle of providing streaming services for a monthly fee. The idea took off and Netflix entered the streaming business with 7.5 million total subscribers as of 2007. (Source)

About Netflix ‘Subscription Model’

Netflix started as a production house of video content and then evolved as a streamer of that content in the homes of people throughout the globe. The subscription model paid off and translated into huge revenues for Netflix. The company that started back in 1999, now has whopping $42 billion of worth. By one count, Netflix has more subscribers than HBO. The big daddy of entertainment now has 81 million people consuming over 100 million hours of programmes every day. (Source)

What do you think? How Netflix became the ‘it’ thing in such a short span of time? Well, the answer is simple – the subscription model paid off. Before entering the entertainment market, Netflix spent a great deal of time researching into how to serve their target audience well. They found that the customers want DVD for a movie on rental but prefer not going all the way to the rental store for that. Netflix sensed the opportunity and came up with this genius idea of the subscription model. They offered to provide movies or video content, all for a monthly subscription fee. The subscription model came out as a major hit for Netflix when it gained 4 million new subscribers in 2014. (Source)

The Bigger Picture

For businesses, the subscription model is designed in such a way that the revenue generated is much higher than that from one-time purchases. On the other hand, customers find it convenient as they value access to the service over ownership of the product. The biggest advantage of a subscription model is the predictable revenue. This is why companies like Birchbox, Zipcar, the Financial Times, Adobe and Autodesk are operating on this model and inspiring other businesses to shift from selling products to subscription space for incredible growth. Going by the facts, another popular subscription-based service provider, Honest Company surpassed its projected annual recurring revenue of $150 million landing it into $1 billion instead. (Source)

These findings are a definite proof that the customers prefer subscription services over ownership of the product.

Can Netflix Model be applied in travel?

The answer is a sure yes. The Netflix model can be applied successfully to any product that people use frequently. Travel is one of such things. As per the recent findings, the first class passenger volumes in elite airlines such as Emirates, Etihad Airways and Qatar Airways between Europe and Asia Pacific regions has increased to 67% as compared to 47% of Business class. (Source) The unprecedented growth in premium class shows that people these days love to shop travel.

How Netflix model can be applied to travel?

Travel offerings can be given in the form of travel loyalty programs, travel membership programs and more by enrolling members. The travel club subscription can be offered annually, semi-annually or on a monthly basis. The unlimited supply of these services within the subscription model will be a game changer for the travellers as the need to negotiate prices directly with airlines or other local travel merchants will be eliminated.

The travel clubs will help travel companies to scale up their revenues by moving into subscription model and project for a definite ROI which is way higher than selling one-time travel services or products.

Time to launch subscription model in travel

The subscription-based model of Netflix can be incorporated into travel for providing an array of travel benefits such as –

  • Discounts on everyday travel needs: By offering discounts on travel needs, travel clubs will not remain limited to occasional travelers as members for the subscription. In fact, this is what lies at the heart of Netflix Model. The key lies in offering services for the things people frequently use. Our day-to-day travel needs encompass local travel activities, indulgence in food and fine dining, entertainment etc. Travel clubs can offer discounts of up to 50% on local travel needs along with movie tickets, apparel, car rentals, sporting events, theme parks, travel gadgets to take care of all possible travel needs of local as well as global travelers.
  • Luxury travel benefits: Travel clubs can use the subscription model cater to the luxury travel segment. The member benefits may include private medi-jet services, worldwide airport lounge access, frequent flyer alerts, premier and 24X7 travel assistance via chat, email and phone as well as discounts on branded luggage and travel essentials. Business travelers and corporates will find them appealing and worth subscribing to.
  • Air-travel based services: Air-travel based services take up a huge chunk in the travel segment and are growing day by day. Travel clubs can tap into the air-travel segment by providing access to bespoke member benefits such as flight assistance and air travel benefits for travelers who take up skies almost every other week. Members can get seat alert benefit, baggage rebate, complimentary flight insurance, best price for airline fares and also earn rewards on flight bookings.
  • Personalized assistance: Customized assistance will add a touch of personalization to the subscription services that members are buying from a travel club. It will win the trust of members and keep them engaged for years.

The story of Netflix becoming the $42 billion company that it is today shows that the subscription-based model is a hit formula for businesses today. The model fits perfectly well with the needs of consumers within the travel industry who value experience and access to premium services. The success of any subscription based travel club is directly dependent on its ability to harness the travel data and apply it to the travel business in the same way as Netflix does in the television business. Travel clubs can further use these services to cater to a new generation of travelers who like to buy travel on their own terms.

Custom Travel Clubs are the leading B2B membership based travel club fulfillment company that creates, operates and helps market travel clubs for brands and organisations around the world. We provide white label travel club platforms & solutions.

Custom Travel Clubs has partnered with the best in the industry to provide best deals on travels to the members. Our Loyalty program provides the best rewards, benefits and savings to the members. We make it easy for members to save on travel so that they can take the vacations that matter. See the full list of all the travel benefits we provide.

For more info, contact:

Mike Putman
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