Sam’s Club Returns to Travel, But Little Threat Seen

Walmart is getting back into the retail travel business with a bang. In the past couple of weeks the nation’s largest retailer launched a discount travel site for members of its Sam’s Club big box stores, along with promotions to sweeten the deal.

For traditional travel agents, the latest big box incursion into their territory doesn’t pose much of a threat, but it could cut into OTAs’ market share, observers said.

Getting into the game
Sam’s Club in June began offering $10 in Cash Rewards for every $500 spent on all Sam’s Club purchases; then on June 23 it debuted a new chip-enabled MasterCard offering 3% cash back on travel purchases, up to $5,000 a year. Then it topped off its offerings with the new Sam’s Club Travel program.

According to Sam’s Club Travel, it offers 90,000 hotels, more than 6,000 attractions in 800 cities, 150 airlines, 18 car rental brands and 13 cruise lines.

Scott Benedict, senior director of member services, said Sam’s Club worked with wholesaler Tourico Holidays “to create a seamless, convenient online booking portal with an amazing breadth of options and savings.”

The online booking service will offer travel and entertainment options designed to appeal both to individual travelers and small businesses.

Innovative partner
Sam’s Club is promising savings up to 50% on hotel bookings and 15% on cruises, “compared to average market prices,” as well as exclusive offers. It also offers 24/7 customer service through “Sam’s Club Travel experts” who provide “multi-channel, U.S.-based member support.”

Sam’s Club has been “searching for the right travel solution for our members for a while,” Benedict told Travel Market Report. The warehouse store has sold travel in the past but discontinued its travel services several years ago.

Last year it identified Tourico Holidays as “an innovative travel service partner” whose relationships in the travel industry “could provide distinguished service, seamless navigation and deep savings,” he said.

Small business, millennials
Despite rising air transportation and fuel prices, Sam’s Club was attracted to travel because leisure and business trips are expected to rise by almost 2% this year over last year, Benedict said.

“We can be the travel agent for small business owners who want to maximize savings,” he explained, and for millennials who are “seeking accessible, affordable ways to get to the multiple weddings, showers and reunions on their calendars.”

Sam’s Club will market the program via digital and traditional channels throughout the peak summer and fall travel seasons. It plans to deploy a mobile app dedicated to travel services by year-end.

No need for panic
While the knee-jerk reaction over having Walmart as a competitor calls for gnashing of the teeth, it is not really a big threat to traditional travel agencies who know their business, said Robert W. Joselyn, CTC, president & CEO of Joselyn, Tepper & Associates and of Travel Agency Management Solutions (TAMS).

About two years ago TAMS asked travel agents to predict who their top competitors will be in 2017. Their answers:

#1: suppliers
#2: mega online retailers
#3: independent agents
#4: big box stores

And those competitors, in that order, remain today, Joselyn said.   

Different customers
“I don’t see Sam’s Club Travel as an Armageddon,” Joselyn said. “Walmart has a great reach, but by its very nature it’s to the bargain-seeking customer, and the majority of the traditional travel agency community has drifted away from that market.”

Today’s travel agency customer is someone seeking expert advice on a complicated premium trip.

“Customers who are planning safaris are not going to Walmart,” Joselyn noted.

A challenge to OTAs
The real threat posed by Sam’s Club Travel and other big box stores that sell travel is to online travel sites that sell mass-market products to cost-conscious travelers. The big box stores that sell travel, including Costco and BJ’s, are competing for the same online travel customers.

“I’m not sure [Sam’s Club Travel] is going to expand the online market. It’s just going to make it more competitive,” Joselyn said.

In short, “if you’re an agency that sells low-price mass-market vacations and don’t add value to the relationships you have with customers, or if you play in the online arena, then this is a competitor,” he said. “But if not, I wouldn’t lose sleep over it.”