The travel booking world has been undergoing a major transformation, due to the technological advancements and digital tools which caused the travel consumers' journey to go online. Whatever triggers the specific trip decision – the consumer's journey will most probably include an important online component of researching and booking. Indeed, nearly two-thirds of US internet users researched travel via digital channels in 2013, according to eMarketer.
The online travel consumer journey is neither linear nor hierarchical: for example, a traveler may find inspiration on a certain website (or, from an "offline" source such as a friend's recommendation); then start to read about the destination and search for hotels and flights; then return to researching activities, dates, near-by places; compare prices; look for online reviews from friends on the traveler's preferred social network or a booking website; etc.. And taking into account the reality of today's "digital natives" (millennial / Gen Y consumers), who were born / raised into a connected, mobile world, it becomes clear why competitors must sharpen their digital agendas.
The competition in the online booking industry has evolved over the last decade. Travel metasearch engine (an interface that shows hotel or flight availability and pricing information from multiple sources), and Online Travel Agencies (OTAs), are becoming more popular, as travel consumers seek out one-stop shops to compare different brands, products, packages and prices early in the purchase funnel. To compete with the growing success of booking sites, OTAs created or bought back many of the currently existing booking sites. This reality has created tension in the industry, as the interests of OTAs / metasearch engines frequently collide with those of the hoteliers.
OTAs have aggressively focused on hotels to provide a higher share of their revenues as the commission from selling flights has declined, and they have tried to attract consumers by reducing the cost of booking as much as possible. Hotel operators are, obviously, concerned about losing control over inventory and pricing to OTAs. Hoteliers feel there is pressure to enter into long term contracts without exit clauses at rates that they believe are not always commercial. As a result, hotel companies have invested in developing and marketing their own websites. Some hotel companies are even imitating OTAs by offering flights and car hire online, and some of the large hotel chains have also founded the roomkey.com website which is a direct hotel search engine. Yet, analysts expect to see the development of a more collaborative approach: hospitality companies can take advantage of large OTA investments in technology and marketing to achieve common benefits for both.
The various competitors are keeping a close eye on consumer & industry trends, in order to provide the travel consumer with the most compelling booking experience. Some of the most prominent among these trends are:
- Online & Mobile Technology: The travel consumer increasingly expects seamless transitions between different platforms, as the use of various connected devices is on the rise. Specifically, the introduction of smartphones represents one of the most significant technological developments in recent years, and it is having a major impact on the travel industry, as companies can identify the user's location or offer the consumer a customized, immediate deal, leveraging the more impulsive purchase behavior through this channel. PhoCusWright estimates that by 2015, mobile will account for one- quarter of U.S. online travel sales,
driving $US40 billion in revenue. In Europe mobile will account for one fifth of bookings by 2015.
- Personalization & Customization: Gone are the days when a one-size-fits-all booking strategy was enough. Today's consumers expect, and can technologically receive, a personalized, customized experience, based on their previous searches and bookings, social networks, and other preferences. This requires a social identity log-in – the most common are a Facebook log-in or an e-mail address. The more advanced sites are taking the customized experience forward with a customized newsletter, containing on-time tips and discounts based on the traveler's search. One of the best examples for social media integration is the TripAdvisor “Cities I’ve Visited” Facebook application, supporting TripAdvisor's “Wisdom of Friends” initiative, so that if you’re signed in through Facebook, you get a better experience on TripAdvisor.
- Reviews & Referrals: For the traveler, reviews are essential. This insight brought some of the hotel industry players to include consumers' authentic reviews themselves, as a way to maintain control over the purchase journey and keep the consumer on their website. Reviews from the traveler's social network are especially important for the traveler, and the social identity log-in helps the booking website in prioritizing this type of reviews. The social experience is as important for the luxury traveler: according to The Affluence Collaborative research group, 72% of the wealthy are active Facebook members, and they increasingly use Twitter.
- New Business Models: An important force in the industry is peer-to-peer travelling (with vacation rentals on Airbnb.com being the best example), giving the consumers an ability to explore new destinations more thriftily. This is again thanks to the social media technology and lifestyle, making geographic boundaries almost irrelevant. Apartment rentals could point out unmet needs which hotels must address, such as families' need for more convenient spaces, or the need for a unique experience, even at the expense of a consistent hotel experience. The shift of power to the consumers also explains the rise of the reverse-auction websites, which became more and more important throughout the last decade as value for money becomes one of the most important factors for the travel consumer.
- Content Marketing: Most consumers consider the web to be important for travel research and planning – but the web is also a fundamental source of inspiration for new travel. Our research shows that the main tools used to inspire consumers by booking competitors and hotel brands, are Social Media sites and email marketing. Most social media platforms are used to encourage consumers to consider a vacation or to drive consumers to the websites. However, best-in-class competitors leverage their social media presence and own blogs, to provide rich content which would attract the consumers, keep them interested and make them come back for more. This content marketing strategy positions the website as a lifestyle advocate, and a website must clearly define its values, unique sales proposition and, above all, target market, in order to make its content relevant and provide compelling added value to the consumer, saving the consumer money, making the consumer's life a little easier, providing solutions to a problem, or even just helping the consumer find "shareable" content for his/her social network. A significant trend in this regard is video content, which consumers tend to watch while researching a trip according to a Google Think study.
- Building Loyalty: Another common method for driving repeat visit and booking on the website is - loyalty clubs. This method, once the hotels / airlines "secret weapon" against consumers' shift to OTAs, is now used by the booking sites as well. Loyalty clubs usually also grant incentives for friend referrals, and they are prominently featured on the booking websites. An interesting recent Google Think study explores the travelers' loyalty journey.
- Open Innovation & Co-Creation: As long as the consumers are online, hotels and booking sites are tapping them in order to come up with innovative and mostly effective products, services and solutions. Some industry players are offering a specific platform for open innovation and co-creation, on which consumers are encouraged to share their ideas and their feedbacks, thus supporting a more pleasing future development.
- Same Traveler, different needs: An interesting fact stemming from the Google 2013 study, is that business & leisure worlds are blending: 57% of business travelers plan to extend a business trip to include leisure time, and 43% of business travelers plan to research or use peer-to-peer sharing alternatives. This means that booking website need to cater to the different motivations of the same traveler in one journey.
In conclusion: whether it is an OTA, a metasearch site, a hotel website or any other kind of competitor - the travel consumers are looking for mobility, flexibility and easy real-time access to information. They want a personalized experience, advanced tools, seamless transition between devices, convenience, loyalty rewards, and authentic reviews. They want to be inspired, encouraged and, most of all, empowered.