TL;DR

• We partnered with a major financial institution to test competitive pricing for hotel bookings—results showed +57% transaction volume and +52% bookings‍
• Premium cardholders drove 60-77% booking growth at stable or higher order values, proving they seek value not discounts—competitive hotel rates paired with travel benefits delivered disproportionate engagement without requiring deeper subsidies
• The test enabled data-driven optimization and acquisition strategy: apply competitive hotel pricing for all cardholders, redesign premium benefits around value delivery, and target first-time bookers who showed 57%conversion lift and high price sensitivity

The Strategic Question

Travel portals operated by banks face a defining tension: loyalty pricing - the strategy to dynamically raise hotel prices to help fund accelerators and other card benefits - protects program economics but risks losing members who compare shops and book elsewhere. Over-discount to compete, and you train members to wait for deals while eroding program economics. Hold rates high, and booking volume can stagnate.

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A major financial institution partnered with us to measure their customers' hotel price elasticity - not just to understand pricing sensitivity, but to drive two critical outcomes: make their travel portal part of members' consideration set when price shopping and ultimately convert that awareness into actual bookings.

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The institution needed to understand how to optimize their complete travel value proposition, including pricing, benefits, and acquisition strategy, to shift member behavior from "check the portal occasionally" to "book through the portal consistently." Working together, we designed a controlled experiment to answer these questions before committing to a full program rollout.

What We Found

The test revealed that competitive hotel pricing unlocked massive latent demand—members who had been comparison-shopping elsewhere returned to book through the portal.

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Key Results

• +57% total transaction volume and +52% bookings—far exceeding expectation
• Average order value increased by 3%—members didn't trade down; they chose higher-value properties and premium options at competitive rates
• Significant improvement in price competitiveness (14p.p. gain vs peer programs)—bringing the portal to near-parity with OTA rates

The Customer Behavior Insights‍

While all customers received identical pricing, different cardholder segments showed distinct booking patterns, revealing how the institution's existing card benefits interact with competitive hotel pricing.

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• ‍Premium travel cardholders: 60-77% booking growth with increased average order value —these are value seekers, not bargain hunters. They book quality inventory when confident rates are competitive.
• First-time bookers: 57%growth with high price sensitivity and high conversion potential for future acquisition campaigns.

The insight: Premium cardholders with travel-focused benefits are highly engaged when competitive hotel rates validate the value of their existing card benefits. They don't need deeper discounts—they need confidence that portal rates are competitive with what they'd find on OTAs. Once that pricing friction is removed, they actively choose higher-value inventory because their accelerators and benefits deliver clear incremental value on top of competitive base rates.

Strategic Implications

The experiment provided the data foundation to optimize this institution's complete travel value proposition, moving from assumption to measurement. Knowing this institution's unique customer price elasticity, we're applying insights into their card portfolios.

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Benefits Design: Premium cardholders have made a strategic investment in travel-focused card products, and the data validated this direction. These customers showed 60-77%hotel booking growth when competitive rates validated the incremental value of their existing accelerators and benefits—they seek value delivery, not subsidies.

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Acquisition & Marketing: First-time bookers showed 57% conversion lift with high price sensitivity. This insight drives targeted acquisition campaigns and promotional strategies designed to convert skeptics into repeat portal users, growing wallet share of travel spend.

What does this mean for other financial institutions?

The case demonstrates the value of measuring your unique customer price elasticity rather than assuming universal truths. This institution's customers proved highly price-sensitive for hotel bookings. Other institutions have different customer bases and may see different results. The strategic value isn't in copying this outcome, but in testing to discover your own.

Key Takeaways

• Test before committing—Controlled experiments let you measure elasticity without risking full-program revenue‍
• Understand your specific customers—This institution's cardholders showed high hotel price sensitivity; your customers may differ significantly. Measure, don't assume‍
• Optimize holistically—Competitive hotel pricing delivered high growth, but only as part of a complete strategy including benefits design (premium cards with travel perks), acquisition campaigns (first-time booker targeting),and ongoing experimentation.

No single lever works in isolation—pricing, benefits, customer service, inventory breadth, and site usability all contribute to travel portal success.