Strategy: People are obsessed with booking their vacations through Costco — and now there are even more benefits (COST)

Costco Travel offers members some appealing benefits, including 2% cash back on travel purchases by executive members. Costco customers ...

Costco Travel is one of the company's fastest-growing areas.

Costco Travel offers members some appealing benefits, including 2% cash back on travel purchases by executive members.

  • Costco customers love its travel service, which offers members discounts on vacations and car rentals.
  • It also recently started offering benefits like a 2% cash-back bonus on travel purchases for executive members and gift cards for all members on specific purchases.
  • We put the system to the test and found it easy to use.

Costco's travel service is fast becoming one of its biggest assets.

The retail giant has been offering members deals on hotels, flights, cruises, and rental cars since 2000.

While it might not sound like the most glamorous way to book a trip, its customers can't get enough of it — including Business Insider's Kate Taylor, who booked a seven-day trip to Puerto Rico for just over $800, including flights, transportation, and a hotel stay.

On Wednesday, during Costco's most recent earnings call, CFO Richard Galanti explained that the quarter's improvements were partly due to its travel business, which has high margins because of the few administrative costs associated with it.

"It's not the value of that plane ticket and hotel — it's the broker commission," he said.

And it's designed to be a good value for the customer.

"Following the same philosophy as in the warehouses, we offer a limited number of products in an effort to focus on partners who consistently produce high-quality, exceptional value and superb service," Nikki Chellew, a Costco representative, told Business Insider last year. "Costco Travel adds to the overall value of the membership with savings that can exceed the cost of an annual membership."

Costco also recently added benefits like 2% cash back on travel purchases for executive members and gift cards for all members on specific purchases.

We tested what the Costco Travel site is like to use:

Costco's travel site offers its members a selection of deals, including flights, cruises, and rental cars.



The first section of the site is hotels. You can search by a destination and find somewhere to stay, even if it's for that day. We checked out a weekend in New York in April.

Prices started at $220.25 for two nights' accommodation, including taxes, in hotels outside the city.

In central Manhattan, some hotels cost $400 to $500 for the weekend.



We compared this hotel recommendation using the same dates on Booking.com. It initially looked much cheaper, but after factoring in tax, Costco came out with a $50 savings.



You can also buy vacation packages with flights, hotels, and transportation, or things like trips to theme parks.

One downside of the website is that you can't just search for low-cost deals — you need to have a date and destination in mind, though there are a few recommended packages.



Once you select what you want, Costco's travel website is easy to navigate and allows you to customize your trip. That means you won't be limited to flight times that don't work for you.



In the next step, you have the option to upgrade your room.



An alert popped up to warn us about construction next to the hotel, so there would be no surprises.



You then have the chance to change your transportation to and from the hotel, as well as book private transportation for an extra cost.



There is a big premium for wheelchair-accessible travel.



The retailer is up-front about its cancellation terms, which is refreshing, as on some low-cost websites you have to dig for that. There is an option to chat with a customer-service rep if you need assistance.



Another section for cruises features 12 lines, which cover all continents except Africa. Realizing cruises are big commitments, Costco even offers a guide for newbies.



The system of searching for a cruise is straightforward — you can search by any destination and month and sort by price, rating, and duration.



We put it to the test, comparing the cost of booking a six-night Royal Caribbean cruise from Venice to Barcelona on Costco's website with booking directly through the cruise company.

We selected the same dates, room categories, and position on the ship.

The total was the same: $2,408.40 for two people, including tax. But Costco added another perk by offering me a $165 gift card that I could spend aboard the cruise.



Lastly, Costco offers car rental through four brands: Avis, Alamo, Budget, and Enterprise.

We searched for a 24-hour rental in April, and Alamo came out cheapest overall on Costco's site.

We compared that with booking on Alamo's website for the same time. It was $36 cheaper to book with Costco.

Verdict: Costco Travel was an easy system to use, and it was great to have the opportunity to tailor your trip all in one place, exactly the way you want.

The biggest draw is that unlike other low-cost platforms, it's transparent with pricing from the start, meaning you aren't surprised by a higher total cost when you go to book.

Overall, we would recommend.



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