Well, looky here. It isn't just short-term rentals and digital nomads "reinventing travel." eDreams Odigeo claimed a piece of that boast as it projected turning travel's business model upside down and having more than seven million members in its Prime subscription program by mid-2025.
The transaction-based business model for travel companies is so risky, and overrated isn’t it? Just listen to eDreams Odigo executives, who claimed the company is instead becoming a subscription business relying on repeat customers, and is “reinventing travel.”
Well, we’ll see.
Barcelona-based eDreams Odigeo, a collection of five online travel brands, said this week that it has nearly two million members in its eDreamsPrime subscription program, which means it doubled that roster in the past six months, ahead of its own targets. The company, which primarily offers flights and secondarily hotels, projects it will have 7.25 million members in its subscription program by mid-2025.
eDreams’ volumes are now higher than they were pre-Covid.
At a membership cost of around $60 per year, eDreams claims to offer up to a 10 percent discount on a euro 299 ($337) flight, for example, so a member would make back the subscription fee when booking two flights. The company claims hotel rates for members are lower than on Booking.com, and are up to 50 percent off published rates.
“We believe that we are reinventing travel and are at the forefront of the innovation that is enhancing and changing the way travel is consumed through a really attractive customer proposition,” CEO Dana Philip Dunne told investors last week when the company reported earnings for its fiscal 2022 second quarter, which ended September 30.
Subscriptions are a hot-button issue in travel. Tripadvisor recently had to reverse course on how its subscription business operates because hotels objected on rate parity grounds to the company showing their discounted rates at times in front of the Tripadvisor Plus paywall for members. Tripadvisor is transitioning toward offering cash back to members when they check into a property rather than up-front discounts at the time of booking.
Tripadvisor announced Friday that Lindsay Nelson, who played a role in the development of Tripadvisor Plus, will be leaving her post as chief experience and brand officer. She will stay on in an advisory role through the end of February. CEO Steve Kaufer announced that he will be leaving the company pending the appointment of a successor.
eDreams’ Prime discounts come right when travelers make a booking, and it has an advantage over Tripadvisor because it is flight-oriented and not subject to the same level of pushback from hotels as is Tripadvisor.
eDreamsPrime — has an Amazon Prime cease and desist letter arrived yet? — operates differently from Tripadvisor’s program in a few ways. First, eDreamsPrime has more of a flights’ focus than hotel-oriented Tripadvisor Plus. Second, a traveler can’t buy just an eDreamsPrime subscription on its own, like one can for Tripadvisor Plus, but eDreams’ customers get offered a membership as an add-on when paying for a flight or hotel.
eDreams officials said Prime members accounted for 39 percent of its flight bookings in its latest reporting period, and the company estimated that number would jump to a whopping 66 percent in mid-2025. Hence the boast about reinventing travel but sporadic transaction revenue to those more reliable subscription renewals.
“The customer take-up is very strong, and it has enormous future potential,” Dunne told investors. “And we transition our business from a riskier transaction-based business to a much more appealing relationship, subscription-based business that has strong growth prospects.”
Of course, eDreams’ subscription business involves transactions, as well, although flight bookings often arrive with small or no commissions from airlines. Customers only get Prime discounts when they book a flight or hotel — in other words, a transaction. But the company can indeed rely on whatever revenue it can generate from those transactions, as well as recurring revenue from subscription renewals.
eDreams officials said they are gaining market share from the airline-direct channel, online travel agencies, and offline alternatives. eDreams’ volumes in the quarter were 74 percentage points higher than the airline industry as a whole, as reported by the International Air Transport Association.
eDreams generated adjusted earnings were $3.04 million in its September quarter versus a loss of $2.37 million a year earlier. The company’s net loss on a generally accepted accounting principles basis was $15.3 million in its fiscal second quarter versus red ink of $23.7 million a year earlier.
The company said its bookings in the second quarter were 22 percent higher than in the same period in pre-covid 2019.
Photo credit: Iberia planes at Barajas airport, Madrid in December 2009. eDreams is offering discounts to eDreamsPrime members on flights and hotels.