By Jessica Duncan, AVP Research & Insights
With the end of August, comes the unofficial end to summer travel. There have been mixed reports on consumer attitudes toward travel following the pandemic – some say trends have normalized to pre-pandemic levels and/or have slowed due to inflation, while others suggest “Revenge Travel” is still influencing customer decisions.
According to a survey conducted by The Vacationer, 42% of respondents stated they planned to travel more during summer 2023 than the previous summer. In addition, 24% said they planned to travel via plane more than once during the same time period.
Perhaps this trend was coming regardless of the impacts COVID had on travel, and it was only a matter of time before financial institutions began offering a travel solution within their own ecosystem as a way to maintain customer loyalty. This edition of Commentary provides a brief look at the existing and newly-launched travel portals and accompanying marketing observed during spring/summer 2023.
Take a minute to think about how you booked your last trip. What platform did you use: the direct site for an airline or hotel, a popular third-party website, or the travel portal offered by your bank/credit card issuer? The travel-booking marketplace is a crowded place, so why are banks trying to compete? The attraction is not only consumer demand, but also a desire to give customers an in-house option that provides discounts or benefits to book through them (while also using their branded card).
Early Adopters: American Express and Chase
American Express and Chase were two early providers of travel portals. Most consumer and business Amex card members can use Amex Travel, but the more premium the product, the better the perks. For example, Platinum customers earn 5x points on airfare and prepaid hotels booked through Amex Travel. They also receive up to $200 in statement credits annually for hotel bookings that are a part of the Fine Hotels + Resorts group or The Hotel Collection. Not all Chase cardholders have access to Chase Travel, the portal is in connection with its Ultimate Rewards program. However, the Rewards-based cardholders gain the benefit of booking airfare, hotels, car rentals, and even dining at a higher earn rate through the portal. Notably, this perk was extended to Amazon cardholders as part of a recent card revamp.
Next Up: Capital One & Citibank
Capital One had a notable launch of its travel portal in 2021/2022. The bank included a feature referred to as Price Drop Protection and promoted that the bank “proactively adjusts hotel prices to guarantee they match or beat Expedia and other travel sites.” These efforts show an understanding of how competitive the travel market is and the importance consumers place on getting the best price. Most Capital One cards are eligible to use the portal and can take advantage of the travel benefits. Marketing for the portal consistently displayed key perks, which often included a callout that customers could save up to 15% on flights by using the price protection and alert features.
With the tagline “Your First Stop to Your Next Destination” Citibank was the next big bank to launch a travel portal in April 2023. Citibank introduced cardholders to the Citi Travel platform in partnership with Booking.com through email and direct mail. The email included a video and cited that over 1.4 million hotel and resort options were available. Following the initial launch marketing, Citibank’s approach to building adoption was somewhat unique. Instead of largely boasting about the perks, the bank worked to position itself as a new travel resource by offering travel tips and suggestions on destinations.
SoFi Joins the Big Banks
In May 2023, SoFi introduced the SoFi Travel site in partnership with Expedia. Notably, all SoFi members can take advantage of the service. Customers who opt-in to using SoFi Travel can access exclusive travel packages and book flights, hotels, and rental cars. Of course, there is still an incentive for SoFi cardholders. They can earn a higher 3% cash back when they use the card for SoFi Travel bookings. The launch marketing sent through email used similarly designed campaigns and featured discounted getaways to entice customers to book a trip. Competiscan anticipates that SoFi will continue to add to its suite of value-add benefits related to travel, as they seem to have their eye on big banks in terms of modeling products and services.
It is likely that more institutions will take the approach that Citi and SoFi took by teaming up with established booking platforms.
What lies ahead: It is probable that more financial institutions will launch a travel service for customers, and they likely will follow the approach that Citi and SoFi took by teaming up with established booking platforms. With this growing trend, we anticipate that there will be two experiential aspects that could influence repeat customer behavior. Extra rewards are always a plus, but when it comes to travel, customer service and booking/change fees will be key differentiators in adoption. If customers experience friction in either area when using a travel portal offered by any third-party, they may find themselves falling back to old habits of booking directly with the airline or hotel brand. On the other hand, if banks can prove themselves, particularly in the area of customer service, this solution could become another pillar of strength for customer loyalty and retention