Can the travel industry broaden its mind?

The travel industry is constantly buffeted by forces beyond its control but which have a huge impact on business, from terrorism to the tsunami and Sars. Now it is dealing with the deepest recession for decades and major – and some argue permanent – changes in consumer behaviour.

Beach

Research from a GfK Ascent-MI/TTG network poll showed that 52% of people said that the recession had no impact on their holiday plans this year but 48% did change their plans and half of that figure opted for a cheaper option, while nearly half cut back on the number of holidays.

Industry forecasters say that next year is likely to see just as tough a market with rising unemployment and possible rising interest rates hitting consumers hard. There’s also the added issue of the World Cup in an analogous time zone, as big football tournaments traditionally affect travel patterns.

To survive, just as in other sectors, the travel industry has to figure out what customers really want and how to deliver it. PricewaterhouseCoopers partner and travel group leader Malcolm Preston pointed out at a session at this year’s Abta conference, consumers are “buying clever.”

Within travel, Preston says that this means people are spending more time researching, mainly online, to find the same product at a better price and they are making more use of promotions. They are also trading down and if the experience meets expectations they will continue to do this.

Customers are also looking at the value of the holiday they buy and are more questioning of the elements. For instance, while once it was thought a clever touch to add a vase of flowers to a hotel room, a customer may now wonder who exactly is paying for them and what extra value they add to their individual trip. As Preston says, it’s time for a return to one-to-one marketing and understanding the customer.

This deep development of CRM programmes is something already high on the agenda in other sectors but the travel industry has been relatively slow in using transactional and attitudinal data, cross-relating information and tailoring messages on an individual level with one senior marketer calling the industry’s track record “woeful.”

The move to clever buying raises a big question over the value of brands in the travel market and what kind of brand value can be maintained.

The longer-standing players still believe very much in promoting their brands. For instance Teletext Holidays, which has just appointed Mark Bloxham as its new head of marketing, says that its brand is invaluable because “Teletext” is still used as a key word on internet searches for holidays.

The company is to shut down its analogue TV news and information service soon, which will impact heavily on brand awareness. Managing director Teletext Holidays Vicky Sanders told Marketing Week: “I need to make sure that the brand stands out more than ever.” To this end there will be a turn of year marketing campaign and Teletext is also to open 20 outlets in Tesco stores starting in December.

Customer director for TUI UK Tim Williamson does not agree with PwC that changes in consumer behavior will be permanent. He told Marketing Week that while buying clever will be a long term trend, for the customer there is always a balance between price and time – in a recession the pendulum swings towards price but in a stable environment time will again be important and people will not search as long and as hard “to save a tenner.”

Williamson says that there are not many strong brands in the travel industry, with the exception of a handful of names such as Kuoni and Virgin, and he sees a “great opportunity” to build the Thomson and First Choice brands on the bedrock of “personal care and personal touches.” He says: “We want sales through service, not sales at any cost.”

He adds that TUI has primed itself to emerge in a strong position from the recession by not cutting its marketing or staff training budgets and he still sees TV advertising as a strong tool, especially as it is relatively cheap to buy thanks to the downturn.

With a brand comes the question of brand reputation and the travel industry was one of the early sectors to find customers using digital tools to give feedback and ratings. Sites such as Tripadvisor carry some weight with the industry and First Choice is currently trialing software that allows its PR team to track and monitor conversations about the brand or competition on review sites – the team can then decide whether to engage in any debate.

Despite its travails, the travel industry has always managed to spot opportunities and introduce innovative products. At the Abta Travel Convention Holiday Cottages group launched its new brand Villa4u, which offers villas for rent.

Vice president sales, marketing and operations Nick Rudge believes that the product is in tune with the changing times as it offers holiday-makers the chance to find cottages suited to their individual needs and “puts the power back with the consumer.”

Villas4u will launch a regional TV brand awareness campaign without a price message attached in the New Year. This kind of confidence, if coupled with decisions based on fresh consumer insights, should help the industry survive the economic downturn and thrive once financial stability returns.

Abta Travel Industry Conference, Barcelona

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