Subscription model comes to luxury travel
What does luxury travel now have in common with grocery shopping, music streaming, and shaving?
The subscription model.
In mid-July, Denver-based travel club Inspirato launched its Inspirato Pass, which allows customers to book unlimited stays in luxury vacation homes, as well as legacy five-star hotel brands such as Ritz Carlton, starting at $2,500 a month with no other nightly rates or fees. Thirty-two rooms at hotels, homes and resorts in Sonoma and Napa counties were listed on Aug. 7.
The subscription e-commerce market has exploded in the past decade, generating more than $2.6 billion in sales in 2016, according to a 2018 report by management consulting firm McKinsey & Co. About 15% of online shoppers have signed up for one or more monthly subscriptions.
Although such subscription service companies as Netflix, Blue Apron, and Dollar Shave Club are widely known, this model has yet to become commonly used in the travel industry. There have been such entrances into the market as that of FinalPrice, which launched in 2017 to offer hotel, flight, and rental car deals for $99 a month, and Flightpass, a pass valid for 10 flights that Lufthansa Innovation Hub tested out in 2017. There are also many membership options in the private jet arena.
But the Inspirato Pass marks the first time the upscale leisure travel industry has tried the model.
Inspirato founder and CEO Brent Handler came up with the idea as a way to solve a common luxury travel problem — unbooked inventory, especially in the high season. He saw this phenomenon plenty in the normal business of his company, which uses long-term leases to manage $1 billion in homes and hotel rooms. Inspirato’s goal is to create a complete and comfortable vacation experience for families or groups of friends, usually in houses.
“I knew that was happening with Inspirato,” he says. “It’s not just low season in a resort or hotel, where inventory spoils” — or goes unused, in other words. “When inventory spoils, let’s say, in a ski area in February, it’s even more costly.”
In Inspirato’s traditional model, members — currently 15,000 — pay a $20,000 entrance fee to join and then $3,600 each year, not counting the cost of a specific trip. The membership allows them access to stays at properties Inspirato handles. Rates run from $300 to $8,000 a night, depending on the property.
But with the travel pass, users pay a flat monthly fee to book stays at three types of inventory: more than 350 Inspirato homes, rooms in five-star hotel brands, and Inspirato-only experiences such as cruises and safaris, all updated daily.
For $2,500 a month, customers can make a fresh reservation as quickly as one week after checking out of a prior reservation. An additional $500 a month allows users to share the pass with friends or family when not traveling.
But say they want to plan ahead and make multiple vacation plans for the year. For $5,000 a month, they can have two active reservations at a time, and for $7,500 a month they can have three. (To share these passes with friends or family requires an additional $1,000 a month and $1,500 a month, respectively.)
“For instance, a lot of New Yorkers would buy or rent a place in South Florida,” Handler says. “You can still go to South Florida with the Inspirato Pass, but you can also go to Paris. You’re not locked in or tied in to a single place.”