Online Travel Affiliate eDreams Odigeo Claims A Competitive Moat In Subscriptions

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Spanish company eDreams Odigeo is building a large subscription program that they claim will be difficult to imitate. But do the big competitors really want that?

Dennis Schall

EDreams Odigeo, the airline-oriented European online travel agency, added nearly half a million members to its flagship subscription program during the fiscal fourth quarter ending in March, and the CEO claimed the company’s subscription program would be too difficult for competitors to match.

“Moving from a transaction-based business to a subscription requires changing every system, process and procedure within the company. Every area of ​​the company needs to be adapted, including revenue management, payments, finance, customer service and marketing,” CEO Dana Dunn told analysts earlier this week. etc.” “This makes it more difficult to iterate for success rather than simply repeat to get a consumer supply.”

EDreams derives about 40 percent of its total revenue from Prime members, who pay about $60 a year to access discounts on flights, hotels, and car rentals and currently number about 2.9 million members. Dunn said they averaged 2.7 more bookings per year than non-subscribers, but the amount of money they spent was “constrained by travel restrictions.”

In a presentation at Skift’s Future of Lodging event two weeks ago, Skift Research’s Seth Borko essentially conveyed a sentiment similar to the one expressed by Dunne this week — that moving from transactions to subscriptions requires an entirely new way of doing business.

Most online travel agencies, which focus on converting viewers into reservations, don’t have systems in place to gauge the momentum of people who buy subscriptions and then cancel or not renew them, according to Porco.

Richard Clarke of Bernstein Research said eDreams have their advantages.

“Having committed members to sign up is definitely a moat — even if the deals aren’t as good as suggested,” Clark said. “Once you become a member, the cheapest place to book is via eDreams, so you’ll continue to use it.”

EDreams claims that Prime members can save $55 on a $499 flight, and up to 50 percent off some hotel reservations. All flights are eligible for discounts, although this is not the case for hotel and car rental reservations.

IIf you build them, will they really come?

One burning question about eDreams’ competitive moat and Dunne’s statement about it is, however, do competitors really want to emulate what eDreams did, and build their own subscription plans?

EDreams started building Prime five years ago, and while companies like Inspirato and Soho House have subscription plans, there hasn’t yet been a huge rush among online travel agencies to launch subscription programs.

Yes, Tripadvisor Plus does have Tripadvisor but this is mostly geared towards hotels, and Tripadvisor had to scale back its ambitions because hotels didn’t like seeing their rates offered with discounts. Aviasales, a meta-search company with a client base in Russia and Eastern Europe, also has a subscription program.

While eDreams can increase revenue from recurring subscriptions and thus reduce their spending on customer acquisition through meta search engines like Skyscanner or Google, major online travel companies like have built highly profitable businesses using search engine marketing. There are no other household name online travel agencies in Europe that have launched subscription plans.

One has to wonder how eDreams could become profitable if he had to keep discounting flights to entice travelers to sign up for Prime. In a very interesting LinkedIn post here, Christian Ljungström wrote about the main eDreams strategy and the alleged traveler’s disadvantages in joining the membership program.

On the earnings call, Dunn said eDreams outperformed the market, including airlines, and saw its market share for its flights in Europe reach 5.4 percent during fiscal 2022, up from 3 percent, two years earlier.

Bookings during fiscal 2022 were 10 percent above pre-pandemic levels, reflecting the company’s travel recovery despite delta and omicron variables.

In the fourth quarter, eDream posted a net loss of 10.9 million euros ($11.6 million), trimming its losses of 20.8 million euros ($22.3 million) in the previous year.

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