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The Digital Revolution in Travel

  |  February 8, 2012   |  Comments   |  

A personal selection of my favorite trends and future innovations.

Travel is for most of us the ultimate motivator. Ever since our ancestors crossed the land bridge out of Africa, we have yearned to travel and seek out new experiences. Little wonder then that one of the industries that has been most transformed by the digital revolution is the travel industry. A personal selection of my favorite trends and future innovations.

Selling Online

From the 1990's onwards, websites fundamentally changed the way consumers find and buy travel services. Information is power and for the first time this power fell into the hands of the consumer rather than the travel agent secretively looking into their CRS terminal. The challenge was and remains how to effectively aggregate all that information, render it simply, and make the sale.

There is an interesting divergence between traditional network airlines and their low cost rivals. For the traditional players generating bookings online versus you going to your travel agent is an important goal. So important in fact that nothing, no online disruption or distraction, is allowed to deviate the customer from that booking process. Hence the look and feel of their websites.

Compare that to the low costs carriers (LCC). A good example is Ryanair. Over the course of the web experience a LCC will attempt to sell you all manner of incremental travel services (meals, hotels, car rentals, insurance, airport parking, etc.).

This is ancillary revenue and is fundamental to the future of selling travel online. In Ryanair's case it represents around 20 percent of the company's revenue. In an increasingly low margin business, the necessity to squeeze every last travel dollar out of any given journey is critical. LCCs have this in their DNA given their propensity to use loss leading airfares and web only distribution. The network carriers and hotels now need to play catch up and move on this.

More Functional Sites

Several months ago, Singapore Airlines launched a new website. It embarrassingly suffered a number of significant problems, with all manner of complaints and passengers not being able to complete bookings. Which of course is money lost to the airline. It seems that part of the problem may have been due to the overuse of Flash, much loved by fancy brand website and creative types, where form often wins out in the battle over function.

With new, particularly mobile, customer interfaces appearing almost daily and travelers often having to access expensive data roaming or patchy Wi-Fi, effective travel sites need to be functional, fast, simple, and efficient. This suggests going back to some of the basics of the 1990's. Simple flexible designs that load faster, logical user centric layouts, less reliance on images and banners, which when they fail to load leave the traveler helpless and frustrated.

Distribution

The web represented an opportunity for airlines and hotels to sell directly, saving travel agent commissions and build a closer customer relationship. But the Internet also gave rise to online travel agents (OTA), like Ctrip and Expedia, who have perhaps been the real online winners over the past decade. After all customers want choice and options that a single brand cannot offer.

The power of these consolidators and aggregators worries some. The hotel industry is now trying to address this trend with six leading global chains clubbing together to launch their own website Room Key, which looks to direct bookings back to the hotels rather than to the OTAs.

While the industry slugs it out at a macro level, affiliate marketing models are allowing individuals to make money from their own online efforts. For example, a well optimized travel blog can recommend a hotel and receive a commission on every booking made. As this blurs with other social tools it allows social leaders or groups to organize their friends and followers into trips and tours, taking a financial cut, or perhaps earning a free holiday in the process.

The future offers us a perhaps more polarized world of huge aggregators and niche, often individual players that effectively leverage search and affiliate marketing models and group planning and buying behavior that will have the travel providers bidding for their business.

Social and User-Generated Content

Social networks are not new. In travel they started as very niche forums; typically populated by only the most dedicated, or possibly obsessive, of travelers. That all changed with sites such as Trip Advisor that offer compelling consumer-generated insights on hotels, restaurants, and attractions, and also price comparison and money making booking options.

There is nothing like washing a hotel's dirty laundry in public. It clearly has hoteliers spooked judging by the amount of time they spend responding to individual experiences posted (a good thing) or the amount of money some spend on having fake reviews written as they attempt to game the system (a bad thing).

Mobile Payments

Anyone who travels too much ends up with mountains of loose change in all sorts of currencies. The solution to this is in sight with near field communication powering mobile-based payment applications. Fancy a coffee on the Champs-Élysées, wave your handset; want to tip bell boy at the hotel, just bump your phones together. The promise is that it will be that easy and coming soon to a phone near you.

Paying for everything with electronic cash is great, but many travelers are sitting on thousands of FFP miles and as flights get harder to score, they are increasingly looking for more ways to use these miles for treats and experiences while they travel.

Imagine swiping your frequent flyer card to pay for an ice cream, a couple of beers, or perhaps a bridge climb or bungee jump. Leading airlines already offer these sorts of options but advances in mobile connectivity will make it real time and a more instant, impulsive experience. Just look out for your FFP logo next to the VISA and MasterCard logos.

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ABOUT THE AUTHOR

Stephen Hay

Stephen Hay is Asia Pacific regional director for ICLP, the award-winning global loyalty and customer relationship management (CRM) agency. Stephen came into loyalty at Cathay Pacific when e-mail was still something that people in research labs used to send to each other and direct mail was still king.

ICLP works with some of the world's leading customer-focused brands, including Cathay Pacific, Mandarin Oriental, and Juniper Networks; looking to bring brands and customers closer together into a more mutually beneficial and more profitable relationship. Stephen takes a customer point of view on almost everything, not always universally popular, but proven time and again to be the basis for a sustainable, profitable, long-term relationship.

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