Industry Trends

Travel Purchase Lifecycle Opportunities in the Experience Era

January 3, 2025
By
Varun Suresh

In the ocean of endless social media content, there’s one category that regularly coaxes attention with its siren call: travel. It’s easy to get submerged into a digital deluge of people exploring the world, from trekking in the snow-soaked Himalayas, to sipping coffee in a plush Qatar Airways Qsuite thirty thousand feet in the air.

Part of the allure of travel social media content might be that it serves as an ersatz new experience. We know that new experiences are powerful, as popularized by several studies that have found a correlation between “new and diverse experiences” and “enhanced happiness”. Travel, generally, is itself an inherently new experience.

However, the role of travel as an experience-generator, and therefore happiness-generator, is shifting according to a joint study by McKinsey and Skift. They claim that whereas travel has historically been an experience, we’re now seeing a shift where travel is a way to experience.

The difference is subtle, but important. It means that people are choosing experiences first, and then choosing a destination afterwards. For example, someone may decide that they want to go on a ski + spa trip, and then narrow down the destinations to Japan, Switzerland, and Vermont, versus starting from saying “I want to travel to Japan” and then deciding what to experience in Japan.

This mindset is especially prevalent among Millennials and Gen Z, who take nearly 5 trips a year on average compared to less than 4 for Gen X and Baby Boomers. Millennials and Gen Z also spend more of their incomes on travel compared to their preceding generations, and 52% of Gen Z in particular state that they “splurge” on experiences.

This trend shift gets even more interesting when contextualized with a 2023 Expedia study on how consumers make travel purchases. The study found that around 60% of travelers either did not have a specific destination in mind or had multiple destinations in mind when they first got the first inklings of wanting to go on a trip. Overall, the travel purchase lifecycle is:

  • 33 days spent in the “Inspiration” phase when they start to think about going on a trip
  • 38 days spent in the “Research & Planning” phase where consumers narrow down their focus in terms of trip logistics
  • 73 days is the typical gap between the customer making a purchase at the end of “Research & Planning” and the actual trip start date

During the Inspiration phase, consumers are especially influenced by advertising, including promotions or “content highlighting interesting experiences”. Advertising ultimately directly or subconsciously impacts the decisions a consumer makes in the Research & Planning phase.

As customers shift more towards experiential travel over destination-based travel, there is a significant opportunity for travel operators to increase customer retention.

Enter: Obsidian’s digital layaway product, which allows customers to store funds, earn rewards, and make purchases within merchant digital ecosystems. Digital layaway can inspire the Inspiration phase of the travel purchase lifecycle.* Let’s see how this would work with an example partnership between an airline and Obsidian:

Digital Layaway Impact on Travel Purchase Lifecycle

Here’s why the digital layaway opportunity works and is amplified by the trend shift to experiential travel: in location-based travel, customers may only select an airline like JetBlue during the Research & Planning phase, and may totally ignore the airline if they don’t offer routes to the destination a customer has in mind. In experiential travel, customers may actually end up looking for experiences they can access with JetBlue during the Inspiration phase rather than just viewing the airline as a commodity to get them to their destination. In other words, with digital layaway the purchase funnel goes from:

(Location) I want to travel to Japan or Hawaii -> (Airline) Japan Airlines or Hawaiian Airlines

To

(Experience) I want to go windsurfing -> (Airline) JetBlue -> (Location) Barbados, Puerto Rico

JetBlue also has an organic channel for engagement marketing to inspire customers with experience possibilities, such as sending an email that states “use digital layaway to journey to Barbados this summer and take a world famous windsurfing class!”

The shift towards experiential travel will open up opportunities for travel operators to shape the travel purchase lifecycle, and digital layaway is one of the ways innovative airlines, hotels, and other operators can compete.

There are also other ways travel operators can increase customer acquisition and engagement in the world of experiential travel.

  • Merchant-funded Offers: incumbents such Mastercard and Visa or fintech challengers such as Kard offer merchant-funded offer programs, where customers can earn increased rewards when making purchases at the travel operator with a partnered financial product. Travel operators can partner with merchant-funded offers providers to make their brand more top of mind in the Inspiration or Research & Planning phases by offering limited time promos such as “5% back on VRBO” to eligible debit / credit cardholders
  • Partner with Curated Experience Operators: Curated tour experience companies like Modern Adventure, El Camino Travel, and Lesbifriends Travel are shaping the future of experiential travel. Incumbent travel operators can look to partner with these new entrants by offering discounts or bonus points / miles for international flights for curated tour experience customers, as international flight costs are typically not included in the cost of a tour package. Alternatively, curated tour experience operators can provide their customers with post-trip reward credits that can be redeemed at partner airlines and hotels as a powerful “your next experience is on us!” loyalty play

Innovative, future-looking travel operators that embrace the rise of experiential travel can transform themselves from journey facilitators to creators of unforgettable adventures, sculpting not just where travelers go, but their inspirations and experiences.

Sources

Disclosures

* The author of this article is the CEO & Co-founder of Obsidian, a fintech startup that plans to offer the digital layaway product mentioned in this article. The JetBlue example mentioned in the article is for illustrative purposes only; there is currently no partnership between JetBlue and Obsidian