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Cost-of-living and travel chaos, how can brands win back customer loyalty?

The travel industry has faced an uphill battle over the past few years. Covid-19, cancellations, labour shortages and rising operating costs have all beset the industry with issues. 

Many punters have in turn forgone their normal holidays abroad or ditched the business travel, swapping flights to Portugal for trains to Cornwall and face-to-face meetings for Zoom calls.  

It was therefore unsurprising that as restrictions lifted, travel spend skyrocketed as consumers made up for lost time, splashing the cash to make their next trip better than ever. 

Cardlytics spend data across 24 million UK bank accounts shows that travel brands across the sector have seen spend increase in the past year. Total spend on airlines grew 542% between 2021 and 2022 whilst package holiday’s (496%), holiday rentals (222%) and even UK retreats (111%) saw significant rises in the same period. 

However, headwinds loom. The industry is facing unprecedented staff shortages, while a cost-of-living crisis is likely to put a squeeze on the amount consumers are willing to spend on their holidays. 

Looking to the next 6 months, how can travel brands win back customer loyalty as we head towards the winter travel and January holiday booking season?

Invest in certainty

Overall spend on package holidays has increased by 171% in the past six months compared to prior same period, pointing to the fact that consumers are increasingly opting for package deals that offer more protection and support when things go wrong.  

Investing in certainty will go a long way in helping to rebuild trust and get consumers booking their trips again, whether it is offering extra protection on holidays or the choice for free cancellation, giving consumers choice and backup options will help to incentivise bookings. 

Focus on affordable getaways

Despite the post-Covid boom in bookings, the cost-of-living crisis will tighten purse strings and as consumers cut-back on non-essential spending, luxuries like holidays could be one of the first things to go. Recent Cardlytics consumer polling of 2000 UK adults shows that two in five (42%) consumers are already planning to reduce the number of holidays they take this year.

As travel brands struggle themselves with increased operational costs and inflation, prices are only set to rise. The average spend per purchase across the travel sector has already seen an increase of 26% in the past 6 months compared to the previous 6 months.

With prices increasing, consumers are likely to opt for shorter mini-breaks and more affordable destinations. For brands, this is an opportunity to offer more flexible and value driven options that suit peoples’ needs now but help to retain customers in the long term.

Reward customers and build loyalty

Disposable income is continuing to decline, leading to more consumers turning to loyalty programmes and discounts to save. Our consumer research showed that 59% of consumers are reacting by utilising discounts, rewards, and offers by searching for more discount codes online before they make a purchase.

Travel brands need to seize this opportunity to offer tailored incentives to help their customers save money but also build loyalty and ensure they keep coming back. The travel industry is renowned for its loyalty programmes, now is the time to take them up a notch. 

List with price comparison sites to increase exposure

Consumers aren’t just looking to discount codes to save their spending. Cardlytics consumer polling showed that 73% of consumers plan to shop around more this year for the best deals whilst 58% intend to use price comparison sites more. 

Brands need to tap into this savvy customer base by featuring on price comparison sites. This not only increases visibility and exposure but also makes it easier for customers to find a brand’s deals.

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