Dana Dunne, CEO of European online travel company eDreams Odigeo, said the company's subscription model, which has garnered 4.2 million subscribers as of last month, is key to its success and its growing adoption in the U.S.
eDreams, which says it is Europe's largest online travel company, focuses entirely on leisure travelers with its OTA brands eDreams, Go Voyages, Opodo and Travellink and metasearch site Liligo. The company is making inroads in the U.S., where it launched two years ago and which Dunne said is now one of its fastest-growing markets.
"eDreams is among the top four or five OTAs in the world," said Lorraine Sileo, senior analyst and founder of Phocuswright Research. "They do have a lot of experience expanding to new markets. They started out in Spain, but they're really the top OTA in many European markets, so they have the experience of doing something in a different language, in a different culture and reaching out in different markets. My question is, what is the strategy, the plan, the niche, to really succeed in the U.S.?"
Dana Dunne
Dunne's answer would likely be what he describes as the OTA's focus on customer experience and its subscription model, Prime. Those factors have helped eDreams operate at pre-Covid levels for the past six consecutive quarters, he said, while Europe's travel market overall still lags.
Dunne said Prime was one of the first subscription offerings from an OTA. In early 2017, the company decided to create the program after seeing the success companies like Netflix, Spotify and even Costco were having. But unlike the products from those companies, travel isn't something consumers interact with or consume on a daily or weekly basis.
"It was a lot of problem-solving that we really had to do and try to figure out, how do we make this really work?" he said. "[How do we make it] really captivating for a leisure traveler, that they would want to actually take a subscription as opposed to just do a transaction?"
Dunne contends that Prime works because the company "transformed" itself to accommodate subscribers. "You have to redo all of your processes and procedures," he said.
For instance, subscribers have their own dedicated service center.
"Last summer, there were a lot of flight cancellations and delays in the U.S. and Europe in July and August," Dunne said. "You would wait 30, 60, 90 minutes to speak to an agent. In July and August last summer, for our subscribers we answered the phone, on average, in 60 seconds -- six-zero."
Creating that kind of support structure was an investment for eDreams, Dunne said, but he contends it is why Prime subscriptions continue to grow. Prime membership is $59.99 annually and offers discounts on travel products including flights, accommodations, packages and car rentals. It leverages artificial intelligence to understand member preferences and offer personalized recommendations.
According to eDreams, the value of those discounts exceeds the cost of membership. The company estimates a family of four with Prime membership traveling to Orlando for a week would save $193 across bookings for flights, hotel and car; a couple going to Barcelona for a long weekend could save $111.
At least one travel company is rethinking its subscription model. Tripadvisor launched its Tripadvisor Plus subscription model in 2021, promising savings greater than the cost of membership. But, during the company's most recent results call, CEO Matthew Goldberg indicated it is backing away from the service.
"While we continue to experiment with our paid membership tier, Tripadvisor Plus, we think strengthening the value proposition of a free membership program is the right place to start," he said.
Dunne said eDreams is seeing subscription success because of the aforementioned changes the company made to accommodate subscribers, its breadth of product (more than 2 million hotels) and its end-to-end user experience.
Sileo said the industry is home to some successful subscription products from more niche providers, like ski passes and even some airlines. But one reason she contends a broader subscription product, like that from an OTA, hasn't taken off yet in the U.S. might be because Europeans generally tend to travel more than Americans, making an OTA subscription more valuable to them.
As to eDreams' ambitions with Prime in the U.S., she said, its success hinges on how the OTA plans to penetrate the market and get the word out about Prime.