Don't forget about Thatch when mentioning travel creator economy :) We have 8,000 creators selling in 80+ countries. ( Far more than many others mentioned combined)
With respect to the benefits of eDreams' Prime program, don't you, in part answer your own question as to its benefit? You save 87 euros on the flight booking........
Correct. I was wondering about the renewal and churn levels to understand this program's profitability for eDreams better. If members sign up solely to make that one transaction cheaper and place no value on any other possible program benefits, then the churn could be significant.
With respect to flights in Europe, eDreams basically serves as a point of customer service (app, 24/7 phone lines, etc.) for customers, as airline customer service offerings leave much to be desired, but let's dive deeper into the savings.
First, that 87 Euro savings is for one ticket. A Prime member gets the same savings for each person that travels with them, so savings for a family of 4 equals 348 euros. Then there is the matter of subsequent trips throughout the year. Also, let's not forget hotels. eDreams gives away their booking fees to customers, and makes money on Prime. Hence, they can under price other offerings (such as Booking). Savings from a Prime subscription can add up quickly.
Regarding churn, the investment in Prime runs through the income statement. They may pay google to be introduced to a customer with the hopes of converting them to Prime. After they are a Prime member, customers tend to go to eDreams directly to book travel. So, a customer is expensive in year one, but highly profitable afterward. In March of 2022, eDreams had 2.7mm Prime members, up from 875K the year prior. Their Cash EBITDA margins were 10.4%. As the percentage of older Prime members grew relative to new Prime members, their margins expanded, up to 18.0% for the FY ending March 24. If churn was an issue, it would be reflected in the margins, thus far, it is not.
Thx a lot for your input. Very insightful. If I am the new Prime member who bought the ticket for my family of four, I am getting a discount of 348 euros. For eDreams to break even with me with that single transaction, I would need to stay a paying member of eDreams Prime for 5 years.
How are you basing your assumption that customers value eDreams customer service more than airline customer service? That doesn't seem to be supported from what I read in forums out there.
Also, how are you basing youir statement that "After they are a Prime member, customers tend to go to eDreams directly to book travel"? We would be seeing drastic decreases in marketing costs, and that has not happened in the past 7 year. The trend is the opposite of that.
Are you an eDreams Prime member? I am interested in hearing your personal experience on the above matters.
eDreams' business model is akin to Costco (US examples). They are giving you their booking fees that they would charge their non-Prime customers. They are only making the Prime subscription fee on you. The "cost" to them, is the opportunity cost of the forgone booking fee - in your case 348 euros - its not a hard expense that they need to bet a return on. If you book a hotel, they will do the same thing - give you the take rate - and be happy that you pay them the subscription fee for years to come.
As for the marketing cost, the cost you are seeing is them getting new subscribers - that is why you see high costs. Over time, as the number of one-year or older prime subs overwhelm the number of new subs, the margins go up. This is what we are seeing.
With respect to customer service. A lot of airlines in Europe don't have functioning apps or 24/7 customer service phone lines. eDreams has one of the best travel apps in the business. Regarding the forums, nobody leaves you a good review for a flight that landed on time. I would just point to the rising margins, which is indicates a low churn rate.
Yes. Used it on flights, airport shuttles, and a hotel last summer in Europe. It was nice to have one place to go to have access to all of my travel information. I recommended it to a friend on his recent 3 week trip to Europe. The airport shuttles cost him around 2,000 on edreams vs. 6,000 from a local travel agent, without sacrificing the quality of the vehicles (Mercedes vans). I think he is treating me to a nice dinner soon.
URL vs IRL. Music industry suffered due to streaming services etc. The new stream of income are concerts and music festivals. And not this gets sold as "in real life"? Nice marketing idea.
Don't forget about Thatch when mentioning travel creator economy :) We have 8,000 creators selling in 80+ countries. ( Far more than many others mentioned combined)
Thx! Added.
With respect to the benefits of eDreams' Prime program, don't you, in part answer your own question as to its benefit? You save 87 euros on the flight booking........
Correct. I was wondering about the renewal and churn levels to understand this program's profitability for eDreams better. If members sign up solely to make that one transaction cheaper and place no value on any other possible program benefits, then the churn could be significant.
With respect to flights in Europe, eDreams basically serves as a point of customer service (app, 24/7 phone lines, etc.) for customers, as airline customer service offerings leave much to be desired, but let's dive deeper into the savings.
First, that 87 Euro savings is for one ticket. A Prime member gets the same savings for each person that travels with them, so savings for a family of 4 equals 348 euros. Then there is the matter of subsequent trips throughout the year. Also, let's not forget hotels. eDreams gives away their booking fees to customers, and makes money on Prime. Hence, they can under price other offerings (such as Booking). Savings from a Prime subscription can add up quickly.
Regarding churn, the investment in Prime runs through the income statement. They may pay google to be introduced to a customer with the hopes of converting them to Prime. After they are a Prime member, customers tend to go to eDreams directly to book travel. So, a customer is expensive in year one, but highly profitable afterward. In March of 2022, eDreams had 2.7mm Prime members, up from 875K the year prior. Their Cash EBITDA margins were 10.4%. As the percentage of older Prime members grew relative to new Prime members, their margins expanded, up to 18.0% for the FY ending March 24. If churn was an issue, it would be reflected in the margins, thus far, it is not.
Thx a lot for your input. Very insightful. If I am the new Prime member who bought the ticket for my family of four, I am getting a discount of 348 euros. For eDreams to break even with me with that single transaction, I would need to stay a paying member of eDreams Prime for 5 years.
How are you basing your assumption that customers value eDreams customer service more than airline customer service? That doesn't seem to be supported from what I read in forums out there.
Also, how are you basing youir statement that "After they are a Prime member, customers tend to go to eDreams directly to book travel"? We would be seeing drastic decreases in marketing costs, and that has not happened in the past 7 year. The trend is the opposite of that.
Are you an eDreams Prime member? I am interested in hearing your personal experience on the above matters.
Take care, and thanks again,
M
eDreams' business model is akin to Costco (US examples). They are giving you their booking fees that they would charge their non-Prime customers. They are only making the Prime subscription fee on you. The "cost" to them, is the opportunity cost of the forgone booking fee - in your case 348 euros - its not a hard expense that they need to bet a return on. If you book a hotel, they will do the same thing - give you the take rate - and be happy that you pay them the subscription fee for years to come.
As for the marketing cost, the cost you are seeing is them getting new subscribers - that is why you see high costs. Over time, as the number of one-year or older prime subs overwhelm the number of new subs, the margins go up. This is what we are seeing.
With respect to customer service. A lot of airlines in Europe don't have functioning apps or 24/7 customer service phone lines. eDreams has one of the best travel apps in the business. Regarding the forums, nobody leaves you a good review for a flight that landed on time. I would just point to the rising margins, which is indicates a low churn rate.
Yes. Used it on flights, airport shuttles, and a hotel last summer in Europe. It was nice to have one place to go to have access to all of my travel information. I recommended it to a friend on his recent 3 week trip to Europe. The airport shuttles cost him around 2,000 on edreams vs. 6,000 from a local travel agent, without sacrificing the quality of the vehicles (Mercedes vans). I think he is treating me to a nice dinner soon.
URL vs IRL. Music industry suffered due to streaming services etc. The new stream of income are concerts and music festivals. And not this gets sold as "in real life"? Nice marketing idea.