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.
Learn more!
HTS
(Hopper Technology Solutions), a leading global travel technology platform,
uses its data advantage and AI-driven travel technology to supercharge its
partners’ direct channels with its travel fintech, AI and e-commerce products.
HTS has the established infrastructure to elevate modern travel portals and the
technical know-how to drive results. Currently powering programs reaching over
400 million cardholders worldwide, HTS is providing a new layer of
infrastructure to power bank-owned travel ecosystems at a global scale,
connecting financial services with the complexity of travel distribution in a
way that is compliant, flexible and customer-centric.