For advisors looking to build back from the pandemic in a more financially sustainable fashion, subscription and membership club-based fee models are emerging as attractive options.
"The pandemic gave me time to reflect on how I was working," said Jolene Detillion, owner of Seattle-based agency Your Travel Designer. "I started thinking about how we could get more business from clients we're already working with, while maybe weeding out those clients who are really time-consuming and, when all's said and done, maybe don't bring that much to the bottom line."
The solution Detillion came up with was an annual travel subscription program, which the company began rolling out last year.
"Our good clients understood it," said Detillion. "And I was really frank with them. Talking about why and how we should be compensated for our time was always uncomfortable and felt very transactional. We're happy to provide a wide range of services, but we figured, let's just charge one fee at the beginning."
Your Travel Designer's annual subscription plan starts at $2,500 for up to a family of four, with larger or multigenerational family subscriptions running between $3,000 and $5,000 per year. After paying the nonrefundable, "use it or lose it" fee, subscribers can work with Detillion and her team as much or as little as they'd like.
For new clients, Detillion also offers what she calls a "first date" fee, a one-off $700 to $1,000 planning fee for an initial trip, with that amount then able to be credited toward a full subscription should they choose to continue working with her.
Hotel, restaurant and travel businesses reliant on a membership-based model have adapted in the wake of the pandemic, going into overdrive to justify their value and offering customers increased flexibility.
After roughly a year operating as a primarily subscription-based business, Detillion reports that client satisfaction has been high, with 95% of her clients choosing to renew their subscription for a second year. She currently has around 20 subscribers.
"Before the pandemic, we didn't do a lot of domestic, and then suddenly, it was all domestic, which just doesn't produce the same revenue as international," said Detillion. The subscriptions, she said, "help kind of bridge that gap."
For Ralph Iantosca, owner of upscale Texas-based Iantosca Travel, the pandemic similarly served as something of a wake-up call, motivating him to turn toward a subscription-only model in June 2020.
"I had $5.5 million worth of volume that I produced by myself, with one assistant, and when it all came undone, it was extremely painful," said Iantosca. "I thought, 'What can I do to never feel this way again?'"
Drawing inspiration from membership and subscription concepts like AAA, sports clubs and even Netflix, Iantosca put together a subscription offering, setting the annual fee at $5,000 for 20 hours of time. (Clients can customize their subscription to receive a higher number of hours each year or opt to add hours at a reduced rate should they go over their 20-hour limit.)
The initial response from his existing client base was mixed.
"I started calling the clients I was very close to and let them know I didn't want to work for everyone anymore," said Iantosca. "I want to reduce my client count and am creating this new subscription by invitation only [model]. The reaction was all over the board."
Only 11 of Iantosca's original clients opted to jump on board. Referrals from those 11, however, have been exceptionally strong, and Iantosca ultimately was forced to cap his number of subscribers at 50. He currently has a waiting list of clients hoping to join.
"I'm now producing bigger and stronger business, selling lots of ultraluxury lodges, expeditions to Antarctica, safaris," said Iantosca. "I'm not dealing with people just kicking the tires. I'm actually glad that some people said no, because I realized that made room for a bigger client."
Iantosca's approach has proven so successful that peers have started asking for advice on how to pivot toward a subscription model. As a result, Iantosca has put together an online curriculum for advisors looking to make the switch. He plans to start offering the classes, which he described as being "very hands on," this fall, with the course priced at $2,500.
Annual retainer vs. subscription fee
Of course, the idea of a yearly fee is far from groundbreaking, with advisors long familiar with the concept of an annual retainer. But Iantosca maintains that building a model around the word "subscription" is inherently more palatable. "You retain an attorney," said Iantosca. "But when you think about a subscription, it's much more positive."
For the growing segment of the population that streams videos on Netflix, cooks dinner using Blue Apron and listens to music via Spotify, it is logical to wonder if vacations will soon be booked the same way.
Nowadays, most consumers are quite familiar with subscription and membership concepts, which have surged in popularity across a variety of verticals, including entertainment and music (Spotify), fashion (Rent the Runway) and culinary (Blue Apron).
Although the travel industry has been slower to adopt such models, that's quickly changing. Companies like Inspirato, TripAdvisor and Hertz have been among the many travel players that have debuted subscription-based products in recent years, launching their Inspirato Pass, TripAdvisor Plus and Hertz My Car offerings, respectively.
Like Iantosca, Laura Madrid, founder of Atlanta-based luxury agency Resort to Laura Madrid, agrees that the word "retainer" lacks a certain marketability, recently opting to rebrand her annual fee as a "travel club."
"No one gets excited about an annual retainer," said Madrid, who has utilized an annual subscription-based model since 2012, well before the pandemic.
"I realized I was probably losing opportunities to work with my clients, because they would only call me for a big trip but not that quick weekend getaway," said Madrid. "But I wanted to be the person they call whenever they're not sleeping in their own home."
Recently, however, Madrid increased her annual fee from $1,000 to $1,500 per year. Existing clients are grandfathered in at the original rate, which she said has helped create an incentive for renewals amid Covid. Her travel club currently has around 100 members.
"Certainly, there are people that will decide not to work with me, but that's perfectly fine," said Madrid. "We can't be all things to everybody, but the membership fee means we only work with those that really value the services we provide."