Why travel is the new battleground for bank loyalty

Travel influences consumer behavior more than any other category of spending. Consumers consistently rank it first among discretionary priorities, and even in times of economic uncertainty, consumers say time and time again that they will invest more in travel, cutting back on categories like eating out and online shopping. 

What we are seeing change today, however, is not whether consumers are choosing to travel, but how they are planning and purchasing their trips. They are looking for ways to offset the rising cost of travel and get more from their rewards. And at a time where travel brand loyalty doesn’t have the foothold it once did, we are seeing other players gain momentum. With established consumer trust and relationships, financial institutions and banks are rising as key players and uniquely positioned to capture more share and become the travel booking platforms of choice.

Travel unlocks top-of-wallet

Modern credit card usage is fragmented. In the face of economic headwinds and inflation worldwide, consumers hold multiple cards and optimize for rewards across their wallets. As a result, the coveted "top-of-wallet" position is being determined by reward quality—nearly half of consumers choose their primary card based on rewards.

Among the rewards that credit cards offer, travel has emerged as the most significant differentiator. No other spending category generates the same combination of large transaction sizes, emotional engagement and repeat behavior. It is the main loyalty lever for credit card companies and largest opportunity for growth in the financial industry. 

Meeting consumers where they are

It’s not just consumers’ credit card usage that is opening this opportunity for financial institutions and banks. Travel brand loyalty is eroding, and travelers who once defaulted to third-party booking platforms are increasingly turning to their card's travel portal. McKinsey found that travel brand loyalty programs lost half their spend influence in six years. Consumers are defecting to credit card platforms that offer more flexibility and better value. 

At the same time, inflation has fundamentally changed how consumers think about travel. Rewards have become a lifeline for those looking to subsidize major travel expenses. In fact, 79% of travelers in the United States depend on loyalty programs to book their trips. And according to Barclays Travel Rewards and Loyalty Report, 82% of U.S. travelers acknowledge they would have to travel differently, or not at all, without travel rewards.

Younger consumers, who are building wealth and establishing spending habits, are leading the charge. According to Barclays, millennials use rewards the most to stretch their travel budgets (72%) and are more likely to use strategic techniques to earn more points (94%) compared to other generations. Gen Z consumers are also getting in the credit game—new data shows that Gen Z is opening credit card accounts at higher rates than any other generation. More than a quarter of Gen Z adults between 18 and 29 with a FICO Score opened at least one credit card in the past year, higher than any other generation. 

Taking ownership of the traveler journey

The majority of financial institutions have historically served as intermediaries, treating travel as a redemption mechanism rather than a customer relationship to be owned and deepened. While banks were treating travel as a cost center, travel has become the most powerful loyalty lever available to them. 

What these financial institutions didn't have until recently was the technology to make their travel products genuinely competitive. Today, we are seeing financial institutions begin to lean on modern technology solutions to launch end-to-end travel booking portals with the goal of owning the entire travel relationship. In doing so, they are creating direct-to-consumer channels that allow customers to earn and burn on travel. This keeps spend in their ecosystem and adds tangible, marketable value to the customer experience. 

The infrastructure powering loyalty

Owning the travel experience is not a matter of building a better booking interface. It requires sophisticated travel infrastructure that can seamlessly manage the inherent complexities of travel. 

Competitive travel portals require, at baseline, real-time rewards ledgering, global supply connectivity across airlines, hotels and experiences and the highest levels of global regulatory compliance. Leading portal offerings dive deeper on consumer benefits that elevate the traveler journey with data and AI-driven products—for instance, flexibility ancillaries that fuel rewards, AI-powered servicing capable of handling complex itinerary changes at scale and world-class, adaptable UX/UI. 

Across travel-focused loyalty programs, HTS has seen users booking with rewards convert four times more often than those without and those customers are 20 times more likely to return and book again.

This shift in consumer behavior poses one the largest opportunities for financial institutions and banks looking to drive growth and bottom line. The companies that act will not only own the share of consumers’ travel wallet, but the emotional equity that comes with helping customers attain the experiences that matter most to them. In the battleground for loyalty, travel rewards isn’t a short-term play, it’s the deciding factor for future wallet share.