Hotel Subscriptions: Exploring Membership Models

We live in a subscription economy, with many of us paying recurring fees for entertainment (Netflix), for what we read (news outlets), and even for tracking our health (Oura ring). But what about subscribing to hotels?

This article explains what hotel subscriptions are, what different hotel subscription plans look like, and how (if at all) they differ from loyalty programs.

What are Hotel Subscriptions?

The global subscription economy market size has grown by more than 435% in the past decade. While subscription services are nothing new, the digital age and the shift towards an experience economy have made subscriptions an increasingly attractive business model—and interestingly, a highly underutilized one in the hospitality industry.

Hotel subscription plans are memberships guests can purchase, offering access, discounts, and more in exchange for a recurring fee, often monthly or annually. The origins of hotel subscriptions are often traced to the surge in remote workers, or ‘digital nomads,' a trend that accelerated in the aftermath of the pandemic.

Different hotel subscription plans include:

• Access-based: guests pay monthly or annually for discounted rates or member pricing

• Credit-based: guests receive a monthly credit towards stays in exchange for a recurring fee

• Unlimited stays: guests pay a flat fee for unlimited nights

What makes subscription models so attractive is that they bring in predictable income for the business in question—an especially intriguing concept for hotel businesses, infamous for revenue fluctuations, whether the culprit is seasonality or geopolitical tensions. The recurring payments from a hotel subscription model can, in theory, ensure profitability.

How is a hotel subscription pass different from a loyalty program?

Both loyalty programs and subscription plans have the same aim, namely, to lock in repeat guest behavior and build direct relationships. Even the perks look similar, often including discounts and upgrades, which can make subscription plans look like loyalty programs with a price tag.

The key difference is that income from a hotel subscription pass is not use-based but an upfront payment for access. Guests are essentially buying into a community or brand to gain long-term benefits and discounts, which ties them in and makes them more committed to using the benefits offered.

Put simply, loyalty programs reward past behavior, while subscriptions are a bet on future behavior. This flips the commitment dynamic, with the guest paying upfront and extracting value only over time.

Challenges of Hotel Subscriptions

Introducing hotel subscriptions does not come without its woes for brands. For instance, revenue management and capturing the right customer with the highest willingness to pay have to be weighed against the benefits of predictable revenue.

The same applies to the exclusivity of hotel subscription plans and the level at which they can be scaled before they begin to unravel.

Case study on Inspirato

A commonly cited example in the domain of hotel subscriptions is the membership club Inspirato. The luxury travel subscription launched in 2019, offering luxury travel for a monthly flat fee of $2500.

As for Inspirato’s business model, the company purchases unbooked inventory at partner hotels at much lower rates than those available to the average traveler. This way, they are able to remain profitable regardless of how much the member pays for the pass.

The hidden benefit for luxury hotels is that they can discount their inventory without publicly disclosing it, thereby avoiding a compromise of their premium positioning.

The only caveat for program members is that it requires flexibility. Availability is often communicated last minute, and members may have to keep their destination options open—a trade-off that many have found reasonable.

However, the more members a scheme like this attracts, the more it erodes its core value proposition: availability. Today, Inspirato has capped its member capacity at 2,500 in an effort to protect this exclusivity.

Yet other changes have affected the members' perceived value of the program—the annual price tag now sits at $40,000, and some bookings carry price premiums over open market rates, leading members to report finding better deals independently.

The Future of Hotel Subscriptions

Aside from services dedicated entirely to purchasing unbooked inventory and providing memberships, we also have global chains adopting the business model.

Accor launched its ALL PLUS subscription, which allows frequent travelers to buy into a specific membership card that grants free nights or discounts, valid across 30 brands and all tiers. As a global hotel company with thousands of properties, Accor can leverage its unsold inventory by directing it to guests tied to the subscription while also generating recurring, predictable revenue.

For smaller or independent operators, however, the benefits of hotel subscriptions can be less straightforward. For example, Zoku and CitizenM have both dabbled in subscription models but have moved away from offering unlimited or free nights as part of their subscriptions.

This is because unlimited stays wreak havoc on yield management. When a subscriber occupies a room that could be sold at peak rates, predictable subscription revenue can quickly become a profitability liability. Zoku’s offering is now solely tied to its co-working spaces, while the citizenM subscription offers a consistent discount on direct bookings.

In short, generating predictable income, utilizing unsold inventory, and encouraging loyalty in guests are key features of hotel subscriptions. That said, revenue management and exclusivity considerations can make hotel subscription plans an unviable route for many hoteliers.

For now, hotel subscriptions remain a niche play, but as guest expectations around flexibility evolve, the model may yet find its moment.