The company hopes that the new feature will help beefen up the proposition for its Plus, Premium and Metal plans – its 3 monthly subscriptions which range from £2.99 to £12.99 per month. As well as 10% cashback on all bookings in Revolut Stays, subscribers to the Metal tier can already benefit from a number of travel-related perks such as global medical insurance, foreign exchange and access to more than 1,000 airport lounges through LoungeKey.
But with the travel market highly saturated and competitive, is Revolut right to move into travel bookings – and will consumers really abandon the incumbent players to book their holiday through Stays instead?
The London-based unicorn has clearly been busy during lockdown, preparing for the eventual reopening of the travel sector. It faces stern competition from existing operators like Airbnb, Booking.com and Expedia – but Revolut Stays is as much about increasing the appeal of the app’s paid subscriptions as it is about becoming a big name in hotel bookings.
Indeed, as you would expect, Revolut Stays in its infancy is glossy but feels somewhat basic and counterintuitive compared to other travel apps, with destination search suggestions that don’t quite hit the mark. It also leans on existing operators for some of its functionality – reviews, for instance, are pulled in from Hotels.com.
If Revolut Stays did want to compete with the incumbents in the travel bookings sector, it faces a daunting task. The 5 most popular sites – Booking.com, TripAdvisor, Expedia, Hotels.com and Airbnb – pull in combined revenues in excess of $20bn a year.
Approximate annual revenues of world’s most visited booking sites.
“Banks have been trying to sell added services since time immemorial, whether its house or breakdown insurance at the retail end of the market or a full concierge at the other end of the spectrum,” says Katharine Wooller of digital asset platform Dacxi. “Travel seems an odd sector to try and challenge; the industry is on its knees and there is no long-term solution for holidaying in the post-Covid world.
“It is important to remember few neo or digital banks are genuinely profitable. It thus makes their optimistic valuations at best concept-based and at worst pure fiction!
“Of course, they have a huge advantage over their traditional banks – they are agile and able to adapt faster by an order of magnitude. Unencumbered by creaking legacy software they can thus provide more technologically advanced solutions to their customers. Data is king, of course, and the neo-banks have a once-in-a-generation opportunity to build an entire ecosystem. Think Amazon starting off in books – it is now an ‘everything everywhere’ e-commerce and IT services business.
“It will be interesting to see what other industries they [Revolut] choose to bolt on, and ultimately disrupt.”
Many will argue that the timing for Revolut Stays could not have been better. Its launch earlier this summer will allow it to compete when the world fully reopens, even if we don’t know yet what the travel sector will look like post-Covid.
It is possible that people will spend more on travel as the world re-opens to make up for lost time. They may also choose to book higher-quality accommodation – such as hotel rooms and holiday homes – to ensure they get the best hygiene standards and more space, something that bodes well for the future of Revolut Stays.
The launch also makes sense in the context of Revolut’s wider product offering – many people have switched to digital challengers when travelling abroad to keep the cost of card payments and foreign currency exchanges low. As we’ve already explored, Stays is a compliment to Revolut’s other travel-based products, many of which require a paid-for subscription to access.
In particular, GlobalData said the current high demand for travel was likely to aid Revolut Stays in its fledgling months. A survey carried out by the company found that demand was high for domestic trips (43%) but that consumers were becoming keen to travel to a different country and even a different continent.
And as for proposition, price and value currently play the biggest role in booking accommodation for 47% of respondents, according to GlobalData’s poll.
Johanna Bonhill-Smith, Travel & Tourism Analyst for GlobalData, said: “Revolut’s app allows travellers to book accommodation ranging from B&Bs to luxury lodges, as well as offering payment end-solutions and currency exchange rates without fees. The online travel space is dominated by large industry brands such as Booking Holdings, Expedia Group and TripAdvisor. Booking Holdings has been working towards its end-to-end booking solution as a ‘connected trip’ for some time but it has not yet come to fruition. Revolut may have seized a market opportunity at the right time.
“Revolut already has a large existing customer base. It currently has 16 million global users and was recently valued at $33bn in its last funding round, demonstrating its competitive stance within the marketplace.”
Bonhill-Smith also points out that, according to GlobalData’s research, consumers are generally spending more time online because of the pandemic and as a result have become more confident making online transactions.
This means that, after the pandemic, consumers “may be more inclined to use a server that holds end-to-end solutions in the booking process,” Bonhill-Smith says, “which bodes well for Revolut’s new venture.”
The fintech has a long way to go to displace the large incumbents – both in terms of revenue generated and consumer awareness when it comes to booking trips. But the fact that Revolut already has such a strong customer base using its app for other features will be an encouraging sign that Revolut Stays can be a success.
Now if only I could remember where I left my passport 2 years ago…