— Expedia Group
Despite persistent inflation, the looming threat of a recession and other economic headwinds, demand for leisure and business travel remains high as consumers continue to make up for time lost due to a lack of travel opportunities during the pandemic.
Expedia Group recently completed new consumer research with Wakefield Research, gaining insights into the categories travelers plan in, changes in spending from the prior year, and factors that will help retain wallet share in the coming months, including sentiment around reward and loyalty programs.
The research showed that business travel intent is increasing year-over-year, and leisure travel plans remain strong. Eager to keep traveling, consumers are cutting their budgets as compensation. They plan to spend less in areas like retail, which includes clothing, souvenirs and luggage, and restaurants.
In addition, the research revealed that rewards and loyalty programs can increase opportunities for travel providers to engage with consumers and increase spend, with booking discounts and other price incentives topping respondents’ list of preferences for rewards offers.
“Loyalty members are high-value travelers: they travel more, spend more and stay longer,” said Ariane Gorin, president of Expedia for Business. “That’s why travel providers want to attract these customers. However, what travelers value in loyalty programs has evolved. Understanding these changes is key to creating a loyalty program that stands out.”
Here, SkiftX highlights insights from Expedia Group’s March 2023 online survey, which surveyed 5,500 adults ages 18+ from the US, UK, France, Canada, Mexico, Germany, Japan, and Australia, to Help travel providers and professionals understand consumer loyalty behaviors.
Travel spending remains strong, despite economic concerns
Despite continuing fears of a recession, inflation continues to show signs of moderation, falling in the US for the 11th straight month to 4.9 percent in April, according to a June report from the Bureau of Labor Statistics. That’s down from the June 2022 peak of 9.1 percent, the highest reading in more than 40 years, according to the washington post. However, even with inflation abating, travel prices remain high. Skift Investigation found that 71 percent of US consumers experienced higher travel prices when booking their personal travel in the first quarter of 2023 compared to the first quarter of 2022.
Regardless of these higher prices, the demand for travel is strong. Just 5 percent of Expedia Group research respondents said they plan to significantly reduce their budget for a single trip compared to last year, and 81 percent said they plan to increase spending or maintain their budget for 2022 for a just travel. Respondents expressed less enthusiasm for travel-related retail spending, planning fewer purchases of new clothes for travel (46 percent), souvenirs (43 percent), and new luggage (42 percent).
Leisure and business travelers are making plans
The majority of respondents (72 percent) said they plan to travel more for leisure in 2023 to make up for lost travel opportunities in recent years. That figure rose to 78 percent among Gen Z and millennial respondents. Consumers in the Americas and the EMEA (Europe, Middle East and Africa) region continue to lead in travel intent, with 83% and 84% planning leisure travel, respectively.
Respondents indicated they are planning trips to “relax and unwind” (62 percent), “connect with family or friends” (50 percent) and “explore a new location” (39 percent), but business travel is also they are the most important thing.
The number of American consumers planning to travel for business increased significantly year-over-year, from 29 percent in July 2022 to 51 percent, according to the research. And 39 percent of those surveyed said they plan to take a business trip in the next 12 months, up from 32 percent in July 2022.
Flexibility, price and convenience bring more leverage to travelers
Travel providers may find Expedia Group insights valuable when considering loyalty and rewards program updates or changes. First, consumers want to use travel rewards across different elements and brands of travel, with 77% saying they are most interested in rewards that can be applied to any individual element of a trip, such as a flight or a hotel, regardless of brand. That was especially true among younger consumers: 83% of millennials and 82% of Gen Z indicated interest in more flexible rewards.
However, members of travel rewards programs are willing to keep their options open. About half said they look outside of their rewards programs to book with alternative providers, especially if another provider offers a cheaper option. Meanwhile, 40 percent of members said they would book with brands or providers they’re not members of if they find options that work better with their travel dates or times.
“Our new rewards program, One Key, was designed to give travelers the flexibility they want while giving our travel partners information, tools and strategies to grow their businesses,” Gorin said. “With One Key, our members have the flexibility to earn and spend rewards on Expedia, Hotels.com and Vrbo. For our travel providers, this translates into accelerated demand and increased exposure to high-value travelers.”
On average, reward members plan 3.06 leisure trips over the next 12 months, compared to 1.38 trips for non-travel reward members. It is well worth the travel providers’ time and focus to listen to consumer feedback on the incentives they want and how they hope to use them.
Suppliers will be pleased to find that loyalty and reward program members are more confident to travel in the next 12 months, as 95% of reward members indicate they plan to travel for leisure in the next 12 months, compared to with 67% of those having no reward. members
“Reward programs present a phenomenal opportunity for travel providers to connect and engage with travelers,” Gorin said. “The key to success is creating a program that can evolve as traveler expectations change. At Expedia Group, our goal is to help our travel partners navigate these changes and drive opportunities, while giving travelers the choices they value.”
For more information on Expedia Group’s One Key travel rewards program, Click here.