Journey into an uncertain year

With consumers reining in spending, how will the travel industry fare in the face of the credit crunch in 2009? People say they wont stop going on holiday, but are looking for cheaper destinations

Virgin-AtlanticAs the economy slides into recession, with two consecutive quarters of falling economic growth, and most commentators predicting it will last well into 2010, it’s clear that the travel sector is set to see some major changes. Lack of available consumer credit and a weak sterling will both play a part. The sector has been damaged by a number of its most high profile brands hitting the headlines for all the wrong reasons. Finally, and most simply, if the predictions of increasing unemployment, wage freezes and spiralling living costs are accurate, then there is every chance that holidays will simply become one more luxury that will have to be eschewed for more crucial expenditure.

Direct Marketing agency Entire surveyed 2,000 consumers to find out how the downturn will affect their holiday booking habits, and provide some context around motivations and decisions in booking travel in 2009.Nearly a third of consumers surveyed claim the economic turmoil will not influence their holiday plans, although it would be interesting to monitor this figure throughout the year and establish whether worsening conditions claw this number back down. And there is then the fact that 19% of those surveyed say that they will go away less. While a section of the market will remain steady, there is also a pocket of people who are already planning on cutting back.

Looking for the “cheaper option” has already started in earnest, with 12% of people holidaying in the UK and 10% looking for cheaper overseas trips. Perhaps most interestingly for those working in marketing and advertising, we also see the importance of brand play a part as 13% of those surveyed state that they will opt for a financially reputable operator. Now, more than ever, they must focus on reliability, honesty and longevity in their brand communications. We have already seen a shift in marketing strategies as Virgin Atlantic plays up its 25 year anniversary. Reputation is everything.

Unsurprisingly, price is more important than ever. Nearly half of those surveyed claimed that price was the biggest factor in their choice of holiday. The worsening economy will most probably increase this figure, and again there is a clear message for travel brands. For the majority of the consumer audience, a strategy that emphasises reasonable pricing, and good return for that cost will be most engaging.

Conversely, the environment has slipped ever further down the agenda, with just 1% of consumers saying it is the most important factor in their decision. That isn’t to say that brands should shun green policies, or fail to communicate such policies, it means that where as the green message might have formed the central tenet of a brand strategy a year ago, it may now just feature as a supporting theme.

Marketing is a major factor for just4% of consumers, a concerning stat for the industry, and a clear sign that agencies and clients alike must step up their game, if destination and travel brand marketing is to become a major influence. And, as the power of recommendation remains a force to reckon with, with 8% saying it is a major factor, marketers must embrace the newer disciplines that allow them to influence and drive the conversations consumers have. Having said that, travel brands must also get to the heart of their target market before they try to talk to them on the kind of informal level that creates onward recommendation.

Clearly the internet is the central portal of advice for travel research –but again, the power of word of mouth is evident as it comes in second with 11% of consumers saying they research their holidays through friends and family.

The importance of integrating media messages across channels is also highlighted here. While the inter-net remains a key channel, the enduring appeal of guidebooks and magazines means that effective marketing strategies are likely to also incorporate public relations and word of mouth activity. Ultimately, the activity must be customer-centric, so that it is the consumer at the core of the activity, and it is their wants, needs and preferences driving the campaign, not necessarily the product itself.

The research highlights the changing face of the travel market. Although the market is likely to shrink in 2009, it will obviously not vanish completely. Consumers will still be looking to travel, with marketing only increasing its impact if the newer disciplines are embraced. Never has this been more important with the recession now really starting to bite. Value for money, recommendation and reliability will become more important than ever. The brands that will ride the storm will be those that are able to demonstrate the reputation of their brand, show evidence of value pricing and communicate through targeted, relevant and innovative marketing.

Ian Stockley, managing director at Entire Direct Marketing, contributed to this week’s Trends Insight





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