What travelers require is constantly evolving. As a result, online travel intermediaries will have to change and adapt to meet future demands. Within the online travel industry, there has been an increasing focus on personalization by online market players as loyalty to a particular brand is being replaced by a traveler’s loyalty to their own preferences. In addition, social media has become a strategic channel for marketing and customer service.
Listed below are the consumer trends impacting the online travel theme, as identified by GlobalData.
One of the biggest trends in the travel and tourism industry that has emerged from the digital revolution is that of personalisation. Hence, addressing consumer desire for personalisation is now more important than ever as loyalty to a particular brand is increasingly being replaced by travellers’ loyalty to their own preferences.
Machine learning (ML) and artificial intelligence (AI) capabilities have changed the extent of personalisation to allow for tailoring on a regional and even personal level. Feeling unique and like the brand is catering to your personal taste is what today’s travellers demand. Nevertheless, travellers in different generations and locations have distinct preferences that will affect the expected brand interactions, preferences, and data that users opt to be monitored.
A study by the American Express revealed that personalisation is so important to millennials that 83% of respondents would let travel brands track their digital behaviour to collect data and yield a more personalised experience. Respondents from the Silent Generation may be warier of being tracked and monitored and are likely to value privacy over personalisation.
Company leaders within the personalisation theme will connect disparate data sources and data-driven insights to understand more about each individual and know more about its target market. Machine learning can also be leveraged to drive personalisation and targeted content.
Covid-19 accelerating move towards online booking
Across virtually all travel products—including accommodation, transportation, tourist attractions, car rental, and other ancillary products—the online market value has overtaken that of offline.
As the constantly growing digital landscape has facilitated greater personalization and the unbundling of the package holiday, travel intermediaries and other travel product and service providers cannot afford to overlook their digital strategy.
Covid-19 is likely to have accelerated the dominance of online travel options as it highlighted the need to reduce physical contact and consumers are now more likely than before to carry out a transaction online rather than in a physical store. Furthermore, in-store bookings will see smaller growth relative to online travel intermediaries as online options gain traction and technology continues to be adopted.
Prior to the pandemic, there was a growing trend towards consumer preferences for valued experiences and making memories above spending money on material things. Entering the Covid-19 pandemic, this type of experience economy in travel largely vanished. However, with pent-up demand for travel and experiences, there is an opportunity for brands to prepare for the rebound by aligning with people’s desires and mindsets in the coming months, as demand for experiences will likely return.
Furthermore, with prolonged travel restrictions in 2021 and the potential for more in 2022, there is a heightened awareness of wellness, and the desire to spend more time and money on self-care, wellness, and stress relief is likely to continue growing. What is more— wellness tourism will continue to see growth in the long term. For online travel providers, there is room to offer more personalised wellness experiences, from specific products to entire retreats, and promotional activity geared towards wellness travel and experiences.
Shorter booking windows and longer stays
Holidaymakers are looking for new ways to have meaningful travel experiences by working around current restrictions, including taking longer trips. According to the World Travel and Tourism Council (WTTC), in 2021 over 52% of global travellers indicated a preference for longer stays, with approximately one in four (26%) favouring stays of more than ten nights. This increase, despite the pandemic, further highlights the pent-up demand and suggests the trend towards extended stays will remain in the long term. Furthermore, onerous and costly Covid-19 testing regimes and quarantine protocols will drive the desire for longer holidays to make the cost seem more worth it.
The trend for longer stays will be further bolstered by hybrid models gaining traction and greater demand from travellers to blend work with leisure. So-called, ‘bleisure’ (a portmanteau of ‘business’ and ‘leisure’) trips such as ‘workcations’ or ‘flexcations’ enable more travellers to experience new destinations and are helping to spur the recovery of travel and tourism.
Amid ongoing uncertainty, travellers are also looking to get away in much shorter time frames, with booking windows of under one week gaining popularity, according to metasearch engine Skyscanner. Seemingly, travellers are reacting in real-time to quickly changing travel restrictions and sometimes contradictory government advice.
Social media has already become a mainstay in a travel brand’s marketing. As Covid-19 kept many people at home, which furthered digital acceleration, developing a social media presence is now more important than ever. For instance, many destination marketing organisations (DMOs) have opted to market the destination through Instagram, Twitter, and Facebook to extend reach and entice prospective travellers.
Social media also plays a significant role in travel companies’ customer service. The mutual benefits of easy brand accessibility via Twitter, Facebook, Instagram, and other platforms allow for easy customer contact and engaging social interaction, providing brand building and widescale contact through multiple channels.
With social media’s evolving popularity, travel companies have moved to where their customers are. As such, social media has become an integral part of companies’ strategic operations and specific roles and teams managing social media output are commonplace. Typical roles include social media executives, customer support agents, marketing, and PR.
Influencers and user-generated content
Alongside social media’s growing popularity, influencers are a growing trend within the travel industry, especially as many technology-engaged travellers become more trusting of content posted by influencers rather than online advertisements or brands themselves. Many destination management organisations (DMOs) and tourism companies have identified this and have subsequently recruited influencers to advertise the destination or product through authentic experiences across various social media platforms, directly to the influencer’s followers.
Livestream shopping—a blend of entertainment and instant purchasing—offers retailers, brands, and digital platforms a new channel with enormous scope for creating and delivering value. Live stream shopping started with Alibaba’s Taobao in May 2016 and has grown in popularity ever since. According to McKinsey & Co, the first 30 minutes of Alibaba’s Singles’ Day presales campaign on Taobao Live generated an impressive $7.5bn in total transaction value. The concept generally involves incorporating an online live stream broadcast with an e-commerce store to allow viewers to watch and shop at the same time.
Covid-19 certainly accelerated both the consumer and business shift to livestream shopping, as businesses fought to keep consumers engaged and consumers looked to businesses for engagement. Greater expectations for brand engagement bode well for livestream travel shopping as this is generally less transactional and more focused on fostering a long-term relationship.
Furthermore, livestream shopping could be a potentially novel and enticing way to attract the next generation of travellers, especially as this generation shows the most confidence in traveling following global Covid-19 lockdown measures.
Promotion of virus prevention and uncertainty alleviation
Going forward, travel decisions will account for a multitude of risk factors. This includes health, financial, social, ethical, and recreational. Holidaymakers and business travellers alike will be concerned about financial risks, such as being able to book alternative flights if quarantine or lockdown rules change. In addition, travellers will be considering health risks. As domestic and international travel recovers from the impact of the Covid-19 pandemic, the online travel industry will have an additional responsibility in making travellers feel safe when booking a trip through the promotion of virus prevention and uncertainty alleviation.
To keep up with customers’ changing demands during the pandemic, flexible travel arrangements that allow for changes in travel dates or cancellations post-booking for no charge have been introduced or revised. GlobalData’s Global Ads Database shows that several companies are promoting their flexible travel options and features.
Covid-19 and the Omicron variant continue to affect numerous countries and international travel restrictions hamper tourists’ ability and willingness to travel abroad. However, after multiple lockdowns, there is pent-up demand for travel and domestic destinations. As such, capitalising on domestic travel demand will be key to maximising potential in 2022 and beyond. These markets are going to be critical to recovering from the pandemic and will be the leading source of demand for OTAs, accommodation providers, and ancillary product providers for the foreseeable future within many countries.
Nevertheless, concerns over future waves and the rapid evolution of the virus mean that this could all change in an instant. This is pushing a rise in short search windows and longer stays. It also means that this dynamic of low-performing international travel, but strong internal demand, will continue in the future.
This is an edited extract from the Online Travel, 2022 Update – Thematic Research report produced by GlobalData Thematic Research.