Technological advancements continue to shape the hotel industry, causing the traveler’s path to purchase to rely heavily on digital means throughout the exploration, research, booking, traveling and departing process.
The most relevant technology trend is the rise in smartphone penetration, which enables competitors to offer a seamless, omni-channel experience for the traveler’s journey and create significant service innovation. Another trend is that of “big data” which – when analyzed properly – can offer personalized experiences to the consumers. The penetration of artificial intelligence and bots in self-service, is also beginning to increase.
The online booking trend is relevant to all generations; but apparently, mobile apps are more relevant to Millennials than to Generation X consumers and to boomers. Mobile constituted 11% of digital accommodation booking among Millennials, compared to 7% among Gen-X consumers and 4.5% of Boomers.
Competitive Landscape
OTAs - Online Travel Agencies such as Expedia and Priceline, and hybrid / aggregator sites such as TripAdvisor, have been competing hotels to drive accommodation booking. Increasingly, they are also offering other elements of the trip, such as flights, car rentals and restaurant reservations. Search engines, led by Google, pose an additional challenge to the industry’s traditional players.
Apartment rentals, led by Airbnb, are based on the promise of “traveling like a local”, competing with hotels not only in terms of channels / commissions – but also in terms of experience / business model. A vacation rental is an alternative lodging option to hotels accommodation that involves the short-term rental of myriad properties, such as apartments, farm stays, private homes, cabins, beach houses, villas, cottages, or chalets, to travelers and tourists. These units are offered on a nightly, weekly, or a monthly basis.
Some of the biggest players in the travel industry have entered the apartment rental market: Choice Hotels launched a vacation rental business working strictly with vacation rental management companies rather than with individual property owners; Priceline Group said that vacation rentals will be an important source of growth. The category already accounts for almost half of Priceline’s property roster thanks largely to Villas.com, which Priceline’s Booking.com business launched in 2014. In 2015, Expedia acquired HomeAway for $3.9 billion. Onefinestay, founded in 2009, was acquired in April 2016 by AccorHotels for $170 million. Hospitality service Onefinestay provides temporary travel accommodation using high-end, luxury apartments. It targets high class client segment.
The Travel Consumer’s Journey
The pre-travel stage can be triggered by an ad, social media content or the consumer’s own search. It tends to be a stressful stage, during which the consumer searches information and reviews on destinations and service providers. Online reviews, and aggregation of content / comparisons, are crucial at this stage. Today, reviews and comparisons are offered by hotels as well as by third party websites, as hotels identify that the consumer will research the various options any way.
Travel costs are the top influencing parameter of the trip destination choice. Competitors use several price-related tactics, including: Best price guarantee; bid / reverse bid; last minute deals; and price alerts. Yet, rates are not the only determinant of value, though: perks, loyalty benefits and extras all play a part in the consumers’ reservation decision.
Note that, the entire travel might stem from content (including through social media) or loyalty offering rather than the traveler’s initial decision to go on a trip; as this creates opportunities for travel companies, it is important to remember to establish a long-lasting connection throughout the consumer journey.
Sometimes, these activities take place on several devices, starting on one device and proceeding on another – and so, transparent shift between channels should be taken into consideration, usually through log-in (with your email, social media identity or membership card).
At this stage, the leading resource for the consumers’ research is the OTA website. This provides OTAs with an opportunity to offer value to consumers and drive reservations. This also means that, in order to become the first stop for consumers, hotels should provide content, information and reviews that influence the decision process.
According to Review Trackers, more than 50% of global travelers made a purchase decision based on online reviews and recommendations. Online reviews (88%) rank second only to price (93%) as the most important factor considered by travelers looking for accommodations.
During the trip: the trip itself drives new needs, such as check-in, room service and check-out, but also cross-services and products such as event tickets, entertainment and dining. Competitors are responding to such demands by launching / acquiring services such as online restaurant reservations, attraction reservation etc. Other trends – such as self-service, mobile service, content sharing on social media, research and personalization – are also relevant to this stage.
At this stage, the use of big data and personalization is of high importance. Bots are increasingly utilized for service, with artificial intelligence such as Amazon Echo (Alexa) beginning to penetrate the travel market. Concierge service via apps is becoming extremely important as hotels, as well as OTAs and other travel competitors, offer self-service mobile solutions. Check in / out, room service, information and chats are available to guests.
Post-Travel – consumers are encouraged to leave a feedback and reviews, post pictures and recommend services to their friends. Competitors are turning to CRM in order to drive repeating purchases, via email marketing, referral programs and loyalty programs. Companies use the data received by the consumers to offer personalized solutions, and encourage trips. Shared content is also used to inspire friends’ travels.
While the post travel stage is the least considered one, we recommend to pay more attention to relevant tactics such as loyalty and content, generation of reviews etc. This is important not only for future visitor pipeline, but also for repeat purchase, in face of the ever-increasing competition.
