Across the globe, the travel sector has rebounded after a tough pandemic-induced hiatus. A December 2023 IATA forecast indicates that some 4.7 billion people are expected to travel in 2024, a historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019. The full recovery of Asia Pacific’s travel sector is also anticipated in early 2024.
Collinson data on consumer airport lounge visit patterns tells a similar story. Passenger visits across our network of more than 1,500 airport travel experiences have continued to trend upwards in 2023. Despite China not being back to pre-pandemic levels, Asia Pacific still witnessed a 17 per cent increase in airport lounge visits from January to December in 2023, versus 2019.
Even in the midst of the pandemic, Collinson research commissioned in 2022 revealed that while economic challenges loomed, travel remained robust: consumers said they would rather give up dining at restaurants (30 per cent), gym memberships (26 per cent) and streaming services (21 per cent) than reduce their travel budgets. This resilience was also evident in a 2022 Visa study, where 42 per cent of Asia Pacific consumers said travel was the category they were most eager to spend on.
When it comes to brand loyalty, the resiliency of travel’s value means it remains a significant influence on behaviour – especially when presented in the form of travel rewards and benefits. As Collinson’s 2023 Asia Pacific consumer insights report – The
New Rules of Engagement: Customer Expectations Revealed – highlighted, 93 per cent of respondents said that the availability of travel-related rewards is what encourages them to engage regularly with brands. Ninety-seven per cent of frequent travellers (that is, those that take more than 10 trips a year) said their spending behaviour is influenced by the availability of travel rewards and benefits. Even among the less frequent travellers (those that take one trip per year), three out of four state the availability of travel rewards encourages them to stay loyal to a brand.
Such strong consumer sentiment and corresponding industry growth trajectory puts the spotlight squarely back on the travel and hospitality sector. Leading the trend are those financial services brands that have enabled travel rewards and travel-related services in their customer proposition. What’s different today, however, is that these brands are now starting to leverage travel as a key competitive advantage – and in the process, orchestrating outsized opportunities for growth.
Creating new growth opportunities with travel
But what does this look like in practice? JPMorgan Chase Bank (Chase) in the United States has launched a full-service travel business aimed at the ‘premier leisure traveller,’ which consumers can use to plan and book a range of trips. Chase expanded into the travel space by acquiring travel agency FROSCH and their family of brands including Valerie Wilson Travel, scalable booking platform cxLoyalty, and The Infatuation to meet cardmembers at the inspiration phase of their journey from location guides to dining recommendations. In partnership with Airport Dimensions (a Collinson company), Chase is also building its own branded airport lounges worldwide known as Chase Sapphire Lounge by The Club.
In a recent filing, Chase claimed its existing travel business – including the Sapphire Reserve Card – is already so successful that its customers account for one of every four dollars spent on leisure travel in the United States. With its new offerings, Chase believes that it could capture US$15 billion in travel sales volume in 2025, up from US$8 billion in 2022. It has also announced plans to roll its travel business out across the bank.
Travel is one of the most important spend categories for banks and credit card issuers. It is also a highly involved purchase, one that consumers are passionate about – from planning to booking, experiencing and then reliving. Vertical integration in this category allows brands to control larger and larger spend shares, while also gaining access to valuable underlying data and insights that can enable intelligent recommendations.
Financial services players understand this and are making inroads into an industry that has already seen much disruption and aggregation over the years. Travel Weekly’s top ten list of the most powerful travel agencies in 2023 – based on 2022 revenue – featured three financial services brands, including American Express Business Travel (US$23 billion) at number three and American Express Travel (US$9.2 billion) at number seven. Also, brands like Hopper (US$6 billion) at number nine have investments from the likes of CapitalOne, which is integrating Hopper services as part of its banking ecosystem.
Transforming existing travel strategies in Asia Pacific
Closer to home in Asia Pacific, we see a similar story unfolding. Commonwealth Bank in Australia recently announced an integration with Hopper to provide travel services to bank customers. When it comes to travel benefits, Citibank has been a leader for years, thanks to the launch of its Citi PremierMiles cards. Here, consumers can earn points and get access to a host of travel benefits, including airport lounge access through Priority
Pass.
In Collinson’s 2023 Asia Pacific consumer insights report, 83 per cent of credit card holders said that having travel-rewards encourages them to stay with a banking partner, while 73 per cent said they would choose a bank based on the availability of such rewards. The top five most appealing travel-related benefits cited by consumers in our research are access to airport lounges, airport transit hotels, gaming lounges, airport parking and discounted and/or complimentary food and beverage inside the airport.
Building an effective travel playbook
While travel remains a key revenue and margin driver for financial services brands, and an aspirational benefit for their consumers, the battleground for travel-related rewards and benefits remains hotly contested. Winning in this fast-changing, highly competitive environment requires brands to devise specific strategies around travel that can generate the greatest impact to businesses.
In our work with leading brands, particularly in the financial services and travel sectors, across the region, we’ve identified three key components to building an effective travel playbook.
Step 1: Define clear ambitions and objectives
Chase’s strategic investments in travel are based on its ambition to become a major player in customers’ travel journeys. According to the bank’s 2022 annual report, “The strategy here is straightforward: lean into what our customers do on our cards all the time – spend on travel, dining and shopping – and invest in digital experiences for Chase to win in discovery, booking, paying and borrowing across these journeys.”
Other brands may be more focused on leveraging travel as an acquisition driver, or for retention. Whatever the ambition, brands should clearly articulate the objectives and outline the key performance indicators (KPIs) that will help keep them aligned with these objectives.
Step 2: Develop a strategic value proposition
Develop the core consumer value proposition for your travel strategy considering the entire travel journey from planning to booking to experiencing and then reliving. The value proposition should articulate whether it is creating a gain for the consumer or solving a pain-point. For example, an experience can further be divided into pre-travel and during travel, at airports and destination countries. In each of these, there are multiple things that can be done to either reduce the consumer stress associated with travel by providing access to airport lounges or creating gain through shopping offers in destination markets. This is a key factor that will truly make your proposition unique, differentiated, and relevant to consumers.
Step 3: Measure, test and learn
Finally, data-driven insights are critical to empower your decision-making and enable experiences at scale. Don’t be afraid to test and learn, but do so efficiently and with reference to clearly measurable success metrics. One way to do this is by running effective communication with consumers at every stage of their engagement with your brand. This gives an early pulse of receptiveness, is measurable and allows optimisation to create maximum impact. That approach will ensure you are constantly innovating while feeding back and growing your ambition.
As our research indicates, travel remains a key pillar of revenue and margin for financial services brands. It also correlates closely with consumer loyalty and brand perception. In this environment, a travel playbook is an essential go-to-market tool for financial services brands that wish to extract the most value from their investments in travel.
Take Collinson’s customer engagement proposition assessment to find out if your customer engagement programme is truly meeting cardholder expectations and delivering recognisable value today.
