As inflation reshapes consumer spending, travel giants Expedia, Airbnb and Booking Holdings are adjusting their strategies to drive customer engagement and bookings amid shifting family budgets and evolving preferences.
Expedia is enhancing its One Key loyalty program with a co-branded credit card and expanding its global reach to boost cross-brand engagement. Airbnb is prioritizing unique experiences by adding new quality features like Guest Favorites and Airbnb Icons to increase customer engagement. Meanwhile, Booking Holdings is expanding its Genius loyalty program across accommodations, flights and car rentals to increase customer engagement.
In addition to these efforts, Priceline is advancing its payments orchestration strategy to streamline transactions and enhance the booking experience. Recently, Sabre Corp. and Priceline announced a new multi-year agreement aimed at advancing travel retailing. Under the expanded partnership, Priceline will implement Sabre Direct Pay to enhance its payment process with improved security and automation. Additionally, Priceline will use Sabre’s GDS content and shopping APIs to provide a larger selection of flight and package options.
These initiatives by Expedia, Airbnb and Booking Holdings arrive during changes in spending behaviors among U.S. families. A PYMNTS Intelligence report, “The Last Transaction: Family Spending Habits Reveal Merchant Opportunities in Retail and Travel,” reveals shifts in spending due to inflation.
Parents with children at home have notably reduced their discretionary spending, despite generally higher incomes. The report shows that 62% of married parents with children earn more than $100,000 annually, but these families have cut back on retail purchases from an average of $147 in 2022 to $114 in 2024.
Despite being 77% more likely to make travel purchases, parents with children have cut their travel spending by 11% year-over-year, while childless households have increased their travel expenditure, averaging $620 annually and reaching up to $754 for older individuals. Retailers and travel companies are advised to adapt their strategies to these shifting consumer behaviors and economic pressures.
Expedia continues to leverage its consumer brands, including Expedia, Hotels.com and Vrbo, through its One Key loyalty program, which is available in the U.S. and is set to launch in the U.K. Vrbo benefited from more cross-shoppers via its One Key loyalty program during the second quarter, Expedia CEO Ariane Gorin noted during the company’s second-quarter earnings call.
“Nearly 30% of travelers that earned One Key Cash on either Brand Expedia or Hotels.com and then redeemed it on Vrbo were completely new to Vrbo,” Gorin said. “One Key is a great source of new travelers for the brand. We’re super pleased to see our large growing member base enjoy the flexibility to earn and burn One Key Cash across our three core brands and get great tiered member discounts. Customers who redeem One Key Cash or use member discounts repeat more often. So, this gives us a lot of confidence that the benefits of One Key will build further over time.”
One Key allows travelers to earn and redeem rewards across its extensive marketplace, which includes flights, hotels, vacation homes, car rentals, cruises and activities. This integration means that rewards earned from a Vrbo vacation rental can be used for a flight on Expedia or a hotel stay on Hotels.com, offering members various travel options and elevating the travel rewards experience.
During Airbnb’s Q2 2024 earnings call, CEO Brian Chesky outlined the company’s commitment to increasing customer engagement through major quality and user experience improvements. Chesky detailed efforts such as the removal of more than 200,000 subpar listings, the introduction of popular features like “Guest Favorites,” and the launch of Airbnb Icons to highlight unique experiences.
Since Airbnb launched Guest Favorites nine months ago, there have been more than 150 million nights booked at “these highly rated listings,” Chesky noted.
Airbnb is also expanding its offerings beyond traditional accommodations with the launch of Airbnb Icons, a new category of extraordinary experiences.
“Since launch, we’ve seen nearly 40 million views of icons on our site,” Chesky said, adding the initiative is designed to shift perceptions and highlight Airbnb’s diverse range of offerings.
Chesky said Airbnb is focusing on experiences, including overnight stays at life-sized toy sets like the Polly Pocket house in Massachusetts and Prince’s Purple Rain house in Minneapolis. But he realizes awareness is the key to engaging consumers and earning their loyalty.
“You wouldn’t know we sell experiences,” he explained. “Most people don’t know we offer experiences even though we launched them eight years ago. So, we’re going to actually market them and tell the world about them.”
There is no doubt about the impact on customer engagement from the Genius loyalty program, according to Booking Holdings CEO Glenn Fogel.
“Our Genius loyalty program at Booking.com plays an important role in helping to drive more travelers to choose to book directly with us over time,” Fogel explained during the company’s Q2 earnings call.
“We see a meaningfully higher direct booking mix for Genius users versus other users,” he added. “And that direct mix percentage steps up at each higher level of Genius status. We are encouraged to see continued success and more of our travelers moving into the higher Genius tiers of Levels 2 and 3, which now represent nearly 30% of our active travelers.
“In addition to a higher direct booking rate, we also see higher booking frequency from our Genius Level 2 and 3 travelers when compared to our overall business,” Fogel continued. “In Q2, we drove more Genius benefits to our travelers with a 15% year-over-year increase in benefits. This is primarily driven by accommodation bookings.”
Launched in 2013, the Genius loyalty program has three tiers:
Booking Holdings comprises five primary consumer-facing brands: Booking.com, Priceline, Agoda, Kayak and OpenTable. A network of subsidiary brands includes Rocketmiles, Fareharbor, HotelsCombined, Cheapflights and Momondo.
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