I have made this blog post based by Visit Finland Optimizing digital channels for marketing and promotions in the travel industry -article.
The project’s background and mission revolve around developing Finland’s travel destination brand, marketing Finland to travelers abroad, and aiding Finnish travel companies in attracting visitors and expanding their businesses. During the research process, they crafted a framework to comprehend the emerging trends and factors influencing the global travel sector. In determining the most effective digital channels for each region, they considered four key elements: technology, customers, region, and leading digital platforms. They extensively reviewed influential publications on the travel industry worldwide, identifying eight emerging mega-trends.
The mega-trends are:
- Increased Travel Market Growth:
- The global travel market was smaller in 2016 than in 2014 due to political uncertainty and currency fluctuations.
- The global travel sector is anticipated to expand, with Asia Pacific leading gains as its online and mobile environments mature.
This mega-trend is closely connected to the rise of mobile tourism in China and the development of digital travel services.
- Airlines Pushing Boundaries:
- The global airline industry faces growth challenges, with competition from low-cost carriers impacting fares.
- Low fuel prices have allowed airlines to adopt more competitive pricing, reducing margins. Airlines are refocusing on online distribution and digital retailing for both business and leisure travelers.
The expanded presence of low-cost carriers, such as Ryanair, has intensified competition, leading to lower airfare prices. Due to low fuel prices, airlines are implementing more competitive pricing strategies to attract passengers.
- “Shared Economy” Enters Mainstream:
- Private accommodations are becoming mainstream, disrupting traveler expectations and presenting challenges for suppliers and OTAs.
- U.S. private accommodation gross bookings are estimated to reach $34.4 billion in 2017, comprising 18% of total hotel, lodging, and private accommodation (HLPA) gross bookings. In 2016, 66% of U.S. travelers considered renting for their last leisure hotel stay. China is a significant driver of smartphone growth.
With the sharing economy, travelers increasingly rely on peer reviews and recommendations when choosing private accommodations. Traditional hotels and online travel agencies face challenges competing with the alternatives offered by the sharing economy.
- Hotels Face More Pressure:
- The hotel industry is under pressure from various sources, struggling to maintain robust direct distribution amid OTA and metasearch site growth.
- Increasing difficulty countering competition from private accommodation organizations like HomeAway and Airbnb. This trend is expected to persist, particularly as millennials favor online intermediaries.
Airbnb has become a popular alternative to traditional hotels, offering travelers unique and local lodging options. Online services like Booking.com provide user-friendly platforms for travelers to directly book private accommodations.
- Growth of Mobile & Chat:
- Mobile usage will continue to rise among travelers, especially in China, but desktop booking remains dominant.
- Younger travelers, making their initial trip research and bookings, will drive the trend toward increased mobile and smartphone usage. Messaging, voice search, and artificial intelligence (A.I.) will contribute to innovative mobile practices in the travel sector.
Airlines, hotels, and travel agencies are developing increasingly user-friendly mobile applications to provide their customers with an efficient way to make reservations, check flight schedules, and receive real-time travel information. An example could be an airline’s application that allows passengers to manage their travel plans from one place. Travel industry companies use chatbots to enhance customer service and support travelers. For instance, hotel chains can offer a chatbot that assists customers in making reservations, provides recommendations, and quickly and efficiently answers common questions.
- ‘In-Destination’ Innovation:
- The travel activities sector is highly fragmented, yet new startups are introducing tools to assist travel providers and tour operators in managing their backend operations.
- There is a notable industry push for supporting in-destination activities, reflecting the growing trend of travelers booking activities through mobile devices while in their destinations.
Innovative startups developing mobile applications that allow travelers to explore and book local activities seamlessly. Initiatives by travel agencies to integrate in-destination offerings into their digital platforms, making it convenient for travelers to plan and book activities during their stay. For example, in the Finnish ‘Aurinkomatkat’ app, you can easily book trips on your own.
- Changing Sales Funnel:
- The online travel segment, once segmented clearly, is now undergoing changes as companies seek to control positions across the digital funnel.
- Booking companies are acquiring search companies, while search companies are venturing into booking services, breaking down barriers between these segments. All brands are striving to remain competitive.
Booking platforms integrating search functionalities to provide a seamless booking experience. Search engines expanding their services to include direct booking options. Travel brands acquiring or partnering with technology companies to cover multiple stages of the customer journey.
- China Driving Smartphone Growth:
- The APAC region, especially China, represents significant growth opportunities.
- China, the world’s second-largest travel market, is poised to become APAC’s most highly penetrated online market in 2017. Growth is fueled by consumer comfort with smartphone purchases and a fiercely competitive OTA environment offering substantial discounts for app-based bookings.
Chinese travel companies investing heavily in mobile technology and user-friendly interfaces to cater to the growing demand for smartphone-based travel services. Chinese consumers widely adopting mobile apps for travel bookings.
In this article discussed important topics related to future tourism and chaching situations in tourism. All megatrends are important for the future of tourism and it is important to recognize them.
Sources:
Visit Finland Optimizing digital channels for marketing and promotions in the travel industry