ABTA Travel Convention: The travel industry is still a robust business but seems under regular siege with constant pressure on margins.
In the past 18 months it has had to deal with the ongoing civil unrest in the Middle East, affecting bookings to key destinations like Egypt, a Eurozone crisis, the Icelandic volcano closing airspace and squeezed household incomes.
All these factors and more make travel a demanding business, as can be seen by the now traditional annual collapse of a tour operator or closure of a travel agent – two small chains have already gone down this year.
These factors suggest mainstream travel is pushed towards being a commodity-driven business, as companies fight for share by offering the lowest price, and long term investment in brand building goes by the wayside. The sales cycle would support this, being geared to two big periods a year.
However, the travel companies are still aware of the importance of brand investment and, in the mass market particularly, the importance of a trusted name that has awareness and delivers on its brand promise has some value. Latest data from trade body Abta revealed at The Travel Convention in Mallorca says 55% of customers still look to book with established brands.
Marketing director of online travel agent On The Beach Alistair Daly told Marketing Week: “No doubt that both PLC’s and private equity backed travel businesses have to focus on monthly or quarterly sales targets but I am convinced that both sets of shareholders are in total agreement in that we all believe that investment in the brand whether through service, product or advertising does drive recognition, purchase intent and advocacy.”
Recent marketing appointments in the travel industry have brought in skills and experience from other sectors, for instance communications director Christian Cull at TUI UK has worked at Sainsbury’s while Thomas Cook marketing director Michael Johnson held senior posts at BT and Abbey. Daly himself once worked in advertising, agency-side.
TUI UK focuses on two core brands with its First Choice proposition now concentrating on all-inclusive holidays to meet the demand for value from hard-pressed families. It also has the Thomson Holidays brand in the marketplace and feels that investment in both these brands is worthwhile when the natural tendency in any sector would be to consolidate.
Cull says: “Thomson and First Choice are distinctive brands. They offer clarity of choice between one another and against all our competitors. This is an important part of our strategy.
Rival Thomas Cook, also owner of a suite of brands from Club 18-30 to Neilson, has one of the oldest names in travel. The company has had a turbulent year in regard to profit warnings and the departure of its long-standing chief executive. It is in the middle of a strategic review but Johnson, speaking to Marketing Week ahead of The Travel Conference, stresses that the company will not lose focus on its branding.
He says: “Our customers tell us that Thomas Cook stands for trust, reliability, and innovation and is the place they come for the “right advice” on their travel needs. A brand that means that to customers is incredibly powerful and we have to respect it and nurture it.”
He adds that in the fast-moving world of travel brands cannot stand still. He points out that customers want choice across the whole spectrum of their experience – from booking channels to type and destination of holiday. “The Thomas Cook brand must be the over-arching mechanism that brings it all together – therefore, one may argue that brand is more important today than it was a few years back.”
Daly explains that branded advertising doesn’t deliver sales in the month of activation “but in the subsequent two months, which means there is always this delicate balancing act marketers need to play as a portion of your marketing investment in the month does not deliver short term sales but if you do not invest, your branded traffic in subsequent months diminishes.”
He adds: “There is no doubt in my mind that when you pull marketing investment back your share of brand traffic (a very good indication of brand strength) can suffer over the long term.
It’s not only the mass market players who have to defy the pressure to commoditise. Tom Marchant, founder of bespoke adventure vacation brand Black Tomato, told Marketing Week before the convention that even the premium end of the holiday market can have trouble with differentiation.
“Even in the luxury sector of travel it can feel like quite a commoditised offering. A number of operators are offering similar stuff and some of the branding might not seem as strong.
“We never want to fall into the trap of being all image over substance. We back it up and our marketing has to be on a foundation of strong destination knowledge. We wrap our brand values around that.”
“We focus on developing an interesting holiday – but the product we have is part of the brand architecture. If you are not clear what you stand for you may charge off down a route developing products that might give the company a short term boost but undermine what you really stand for.”