If you are managing a consumer fund and travel is not at the top of your considerations, then it might be time to rethink. Not least because the global travel business is expected to boom to $1.6 trillion by 2020, but also because an increasing number of consumers are forsaking high street travel agents and utilising online platforms.
Even the river cruising sector, a segment of the industry with a historically aged consumer base is reflecting these wider changes. Research by our team at onefourzero shows despite demographic data remaining constant, online demand for river cruises has increased 129% year on year.
Indeed, this trend has threatened the formerly comfortable market position of high street travel agents such as Thomas Cook. Data generated on the travel bookings industry should have high street agents looking to make significant changes. Of the top 10 global consumer travel booking websites, all the featured websites are online players.
Looking to the future, this trend is expected to continue. Tomorrow’s consumers will have grown up with a consumer experience like no other; they can book holidays, access authentic consumer reviews and make purchase decisions without interacting with an agent of any kind.
As technology moves centre stage in the travel sector, businesses are increasingly attuned to these developments and in some cases are making appropriate strategic changes to maintain competitive advantages. In the last 24 months alone there have been over 20 travel tech-related deals with the most recent being the acquisition of Momondo by the Priceline group owners of the Kayak brand.
So just how much have consumers behaviour changed? For one, consumers are much more willing to shop around; with 85% of consumers conducting 55 searches before booking.
Consumers are also increasingly sharing and reviewing their holiday and travel experiences. Jane Sun, Executive director of Chinese travel firm Ctrip.com, has highlighted how the increased propensity of consumers to shop around has raised expectations and businesses can no longer rely on information gaps anymore.
The scale and reach of online travel agents, their larger hotel networks, innovative marketing and technological superiority are the primary reasons why consumers prefer OTAs to direct booking.
Mature brands have made recent attempts recently to maintain consumer loyalty through loyalty programmes, increased investments on advertising spend and special offers when consumers book with them. Whether these strategic adjustments will prove effective in the long term remains questionable as consumers are primarily concerned with price as opposed to brand.
At present, Amadeus takes the largest share in the Northern American and European air booking market, with a self-reported 43.5 % market share in Q1 2017, followed closely by Sabre’s 36.3 %.
Google also found that some of the reasons that consumers book on OTAs are due to lower prices, better deals or positive past experiences and recommendations. If travel brands want to attract more direct booking then these are the areas they need to focus on.
There is an urgent need for competitors in the travel market to understand consumer behaviour and communicate effectively and early. A strategy should be in place that determines exactly what travellers are looking for, driven by consumer sentiment analysis.
The future of travel tech (like every industry using tech) is blockchain technology. It aims to help travellers and tourists avoid common issues such as high costs, double bookings and the problems experienced while looking for secure travel and holiday deals.
Globally, companies are creating and investing in innovative travel solutions but if these companies have a good grip on consumer needs, it’s only a matter of time before they are successful in the mainstream travel marketplace.
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