The global travel industry is witnessing a resurgence, surpassing pre-pandemic levels with an expected 4.7 billion people projected to travel in 2024, according to a December 2023 forecast by the International Air Transport Association (IATA).
This historic peak in travel activity marks a significant rebound from the 4.5 billion travellers in 2019, signalling a robust recovery, especially in the Asia Pacific region which is set to fully recover by early 2024.
Data from Collinson on consumer airport lounge visit patterns tells a similar story. Passenger visits across our network of more than 1,500 airport lounges and travel experiences have continued to trend upwards in 2023. Data indicates a 17 per cent increase in Asia Pacific lounge visits compared to 2019.
This surge reflects a strong consumer commitment to travel despite economic pressures evident during the pandemic. In fact, a 2022 Collinson Global Traveller Sentiment Survey revealed that many consumers prioritise travel over other expenses. 30 per cent of respondents would rather cut back on dining out, 26 per cent would give up their gym memberships and 21 per cent would forgo their streaming services to maintain their travel budgets.
In a 2022 Visa study, 42 per cent of Asia Pacific consumers said travel was the category they were most eager to spend on.
This enduring interest in travel is significantly shaping consumer behaviour, with 93 per cent of respondents in Collinson’s 2023 Asia Pacific consumer insights report – The New Rules of Engagement: Customer Expectations Revealed – stating that travel-related rewards prompt them to engage more frequently with brands.
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Moreover, 97 per cent of frequent travellers (those taking more than 10 trips a year) are influenced by such rewards when it comes to spending. Even among the less frequent travellers (those that take one trip per year), three out of four stated 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 financial services brands that have enabled travel rewards and travel-related services in their customer proposition. What is different today is that these brands are increasingly using travel as a major competitive advantage, creating substantial opportunities for growth in the process.
How financial services are creating new growth opportunities with travel
But what does this look like in practice? JPMorgan Chase Bank (Chase) in the United States has established a comprehensive travel business agency specifically for upscale leisure travellers. This service allows consumers to plan and book a variety of travel needs such as five-star hotel a specifically for upscale leisure travellers. This service allows consumers to plan and book a variety of travel needs such as five-star hotel accommodation or a safari expedition.
Chase expanded into the travel space by acquiring several companies, including travel agency FROSCH and their family of brands including Valerie Wilson Travel; scalable booking platform cxLoyalty; and The Infatuation, a dining and location guide site.
Additionally, Chase is also developing its own branded airport lounges worldwide, in partnership with Airport Dimensions, known as Chase Sapphire Lounge by The Club.
In a recent filing, Chase claimed its existing travel business – including the Sapphire Reserve travel credit card – is 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$15 billion (SG$ 20.4 billion) in travel sales volume in 2025, up from US$8 billion in 2022. It has also announced plans to roll its travel business . 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 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.
Travel agency Hopper (US$6 billion) which was nine on the list has investments from the likes of CapitalOne, which is integrating Hopper’s services into its banking ecosystem.The travel playbook: Three key principles Asia Pacific financial institutions should adopt
The travel playbook: Three key principles Asia Pacific financial institutions should adopt
Closer to home in Asia Pacific, we see a similar story unfolding. Commonwealth Bank in Australia recently announced an integration with Hopper to provide trave 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. Its 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 cho, 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 the research are access to airport lounges, airport transit hotels, gaming lounges, airport parking and discounted and/or complimentary food and beverage inside the airport.
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, Collinson has identified three key components to building an effective travel playbook.
#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. The bank’s 2022 annual report explains the strategy as follows: “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 explains the strategy as follows: “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.
#2: Develop a strategic value proposition
Develop a core consumer value proposition for your travel strategy that addresses every phase of the travel experience — from planning and booking to experiencing and reminiscing. The value proposition should clarify whether it is providing a benefit to the consumer or solving a pain-point. Consider dividing the travel experience into stages, such as pre-travel, during travel, at airports and within destination countries. In each stage, there are multiple things that can be done to either reduce consumers’ stress associated with travelling by providing access to airport lounges or enhancing enjoyment with shopping deals at destinations. These enhancements are crucial in making your travel proposition stand out as unique, differentiated, and directly relevant to consumersDevelop a core consumer value proposition for your travel strategy that addresses every phase of the travel experience — from planning and booking to experiencing and reminiscing. The value proposition should clarify whether it is providing a benefit to the consumer or solving a pain-point. Consider dividing the travel experience into stages, such as pre-travel, during travel, at airports and within destination countries. In each stage, there are multiple things that can be done to either reduce consumers’ stress associated with travelling by providing access to airport lounges or enhancing enjoyment with shopping deals at destinations. These enhancements are crucial in making your travel proposition stand out as unique, differentiated, and directly relevant to consumers.
#3: Measure, test and learn
Data-driven insights are essential for informed decision-making and scaling up experiences effectively. Do not be afraid to test and learn, but do so efficiently and with reference to clearly measurable success metrics. This strategy will keep you innovating and help you refine and expand your goals.
Our research shows that 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 inves that 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.
Use Collinson’s customer engagement proposition assessment to determine if your customer engagement programme is effectively meet to determine if your customer engagement programme is effectively meeting cardholder expectations and providing clear value.
This article was written by Rohan Bhalla, Asia Pacific vice president of Business Solutions, Collinson.
