Deloitte has recently published its Travel Consumer 2015 report, which provides an invaluable insight into the contemporary travel market. The perspective of Deloitte should make all travel-related companies and destinations sit up and pay attention, as this is the largest professional services network in the world by revenue.
The report particularly examines the digital revolution which has had a profound effect on the travel market in recent years. Deloitte worked with the British Travel Awards and surveyed 40,000 respondents in order to establish the latest trends. Although digital has influence over a raft of industries, it is particularly significant in the travel industry. Deloitte research indicates that 59 percent of holidaymakers compare prices online, with this market predicted to continue its growth in the remainder of this decade.
Trends Accelerate Digital Growth
Additionally, several trends are converging to accelerate this process. The importance of both digital and mobile to the key millennial generation, the new tendency for travel companies to encourage travellers to be potential content creators for them, and the impending popularity and convenience of wearable technology, will all play a major role in digital becoming even more important for travel in the coming years.
So the Deloitte report overall focused on three key digital trends related to holiday purchasing. The first is the rise of a better informed and empowered consumer. The second is the growing role of customer opinions and social media in their decision-making process. And the third is the use of multiple channels and devices.
Fragmenting Travel Marketplace
Deloitte discovered in its report that it is important for travel businesses to adapt to the fragmentation of this marketplace. According to Deloitte’s research, one-third of holidaymakers used at least two devices when researching their most recent holiday. This is further underlined by another statistic which appears in this report; 83 percent of holidaymakers who carried out research via smartphones used another device to book. An increasing challenge for both companies and destinations will be tracking consumer activity across multiple devices and applications and adjusting their overall strategy accordingly.
One should not underestimate the degree to which fragmentation has made it difficult for companies to truly identiy their customers. The Deloitte survey cited research which indicated that 81 percent of travel business shopping baskets are ultimately abandoned without purchase, which compares to the figure of 67 percent across all other areas of online retail. Consequently, it can be more challenging for travel-related businesses to understand and meet the expectations of their customers, as well as identifying key traveller demographics.
Price Comparison and Review Sites
But the Deloitte research found that the importance of digital for travel consumers is crystal clear. And tourists are increasingly utilising digital means in an active fashion to understand all aspects of the travel experience. For example, 59 percent of holidaymakers who responded to the survey indicated that they regularly compare prices of travel online. Price is obviously a primary motivator in the decision-making process, but it is not the only factor which is taken into consideration.
Travel is just one area of business which has been massively affected by the proliferation of social media and review sites. Thus, the Deloitte survey found that 42 percent of holidaymakers utilise review websites on a regular basis, and approximately 60 percent of those surveyed indicated that these sites are in fact a major influence on booking decisions. Nearly half of holidaymakers are also actively seeking feedback and comments by other people online.
The statistics taken collectively indicate that it is incredibly important for travel-related businesses to manage their online reputation efficiently, and engage with users through social platforms and other vogueish websites. It is important not to underestimate the value of a strong critical profile online, and the Deloitte survey in fact indicates that this could be the most important factor in attracting customers to any travel company.
In short, every single consumer is a potential evangelist or critic of every travel-related business. Although not all customers post regular reviews, the percentage that do so certainly should not be viewed as paltry. According to the Deloitte survey, 31 percent of holidaymakers have posted a travel-related review online, while one-in-six have actively discussed holiday experiences via social media. This adds up to literally tens of millions, if not hundreds of millions, of people when taken over the population as a whole.
Although many consumer-driven industries face the same issues as the holiday trade, travel-related companies must understand that the challenge is magnified for their particular industry. The high price involved with many travel-related products, most obviously in relation to flights and hotels, ensures hat consumers are generally more diligent about the purchasing process. This will tend to increase the number of channels being utilised in order to gather information and ultimately make a travel booking, and Deloitte research also indicated that travel consumers are far more likely to use a comparison site than people who purchase products related to other industries.
Deloitte research indicates that usage of travel comparison sites is particularly rife in the United Kingdom, and that such services are experiencing rapid growth. For example, the hotel search site Trivago and travel search site Skyscanner were able to increase revenue year-on-year by 68 percent and 42 percent respectively last year. With a Momondo study indicating that growth in this market will continue at around 40 percent annually over the next three years, this is evidently a key area for travel-related companies and destinations to consider.
It is also informative for travel-related businesses to understand the reasons that companies choose to book with a particular company. Naturally, price plays a particularly central role in this decision-making process, with 56 percent of those surveyed by Deloitte indicating that this was a key consideration. Also, the importance of reputation and the quality of experience should not be underestimated, as previous experience, reputation online, and detailed information on the holiday destination, hotel or travel-related service all played a serious role in the decisions of consumers.
While price was a major factor for 56 percent of those surveyed, 47 percent indicated that having a positive experience with using a company on a previous vacation could be a significant pull factor as well, and 30 percent of took the reputation of a destination or business into consideration. A further 32 percent of those surveyed stated that detailed information provided online could make a serious impact on the decision-making process. So although affordability is an extremely significant factor, and always will be, it is also important for businesses to understand the real value of online reputation and a qualitative assessment of their particular business or service.
Deloitte also found that consumers use a relatively broad spectrum of online resources when planning a trip or holiday. And it is also obvious from the figures obtained that more people are utilising such online information, with 42 percent of those surveyed using review websites on a regular basis. Internet-only travel agencies and travel company websites were also both utilised on a regular basis, and it was clear from the figures garnered that the overwhelming majority of consumers are utilising online resources during the planning stage of a holiday.
Those responding also indicated that review websites and online forums are the most influential resources when booking a holiday. Nearly 60 percent of respondents indicated that reviews on websites and online forums are influential resources, while travel operator websites garnered only 39 percent of responses, with recommendations from friends and family ranked just over 30 percent. The esteem with which people hold online resources was quite clear from this survey, underlining the importance of digital promotion and reputation in the portfolio of travel businesses.
Although this is already a prominent trend, it is one that can reasonably be expected to increase in the immediate future. The digital age is still relatively young, and the generation which is growing up now is expected to utilise digital means as a matter of course. Additionally, Deloitte research actually indicates that the so-called baby boomer generation is already getting online as much as its younger brethren. So Deloitte indicate that there is a generational gap with regard to social media and posting travel-related experience and photographs, with the younger generation embracing these activities more enthusiastically.
But the Deloitte survey ultimately indicates that there are a vast array of digital opportunities available over several demographics, and that tailoring one's digital approach to meet these different mentalities and markets can reap significant reward. It is equally worth noting, though, that the influence of consumers will increase hugely as they continue to move from simply passively consuming content to actively creating it.
The final important finding from the Deloitte report is that consumers are increasingly engaged in a fragmented path to purchase. Certainly travel customers do the majority of holiday research using the Internet, but this doesn't necessarily indicate that the purchasing journey is ultimately straightforward. Deloitte research in fact indicates that one-third of consumers who visited the website of a high street agent, and a quarter of those who visited a travel company website, made their final booking for travel off-line.
1. The last point indicates that although, as the Digital Tourism Think Tank has reported previously, the traditional travel agent is being challenged by this new digital age, it can still plays a significant role in the travel industry. Many consumers still feel reassured by the face-to-face contact that they can enjoy at a traditional travel agent, and businesses should therefore adopt strategies to take this factor into consideration. Digital must be a central part of travel marketing going forward, but it is important to understand the customer relationship with this medium.
2. Travel-related companies must review their business model in order to ensure that the customer perspective is placed at the heart of every business decision. Travel businesses can capitalise on the growth of consumer reviews and social media by utilising word-of-mouth marketing in order to significantly reduce customer acquisition costs.
3. It would be beneficial for travel-related businesses and destinations alike to offer a more personal user experience. This will enable them to differentiate themselves from the competition, and encourage customers to look beyond traditional decision-making metrics.
4. Introducing an integrated experience across multiple channels and devices is essential. This is not only beneficial because consumers are utilising multiple devices, it is also important to understand that the customer journey can take place across several platforms.
5. With this in mind, a particularly valid strategy is to offer consumers incentives to sign in on every platform, in order to enable consumer activity tracking across multiple devices and applications. The act of signing in can potentially offer benefits at every stage of the decision-making process, not merely the final point of transaction. Travel businesses can aid this processor by introducing restricted features that offer personalisation, integration with social media, or collaborative planning with friends and / or family.
6. Device fragmentation can also be reduced by embracing mobile wallets. This technology will enable additional security measures to be put in place along with an improved user experience, and could consequently encourage consumers to complete purchases using existing mobile devices. Although consumers are showing an increasing tendency to purchase with Mobile, they still are somewhat reluctant to do so, as underlined by statistics obtained by Deloitte.
7. Offline venues continue to be key sales channels, and are expected to remain so in the future. However, it is important to integrate these within what is becoming a primarily digital consumer journey.
8. Personalisation should be considered particularly important. There is no doubt that comparison sites have increased both awareness and accessibility of travel-related products, but it must be said in mitigation that they also risk the industry becoming commodified. A more personal user experience can help businesses differentiate themselves in the marketplace, and in the case of destinations can assist in the process of communicating the value of a particular region, area or place. Engaging more directly with consumers, and encouraging them to look beyond the raw metrics such price, star ratings and review scores, can enable travel-related businesses to reduce price competition and increase engagement, and ultimately profit margins.
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