Quick Takes on Travel: Part III


While no one can predict the future, we’re in the best position possible to anticipate what travel recovery will look like in the era of COVID-19 and beyond. Backed by the latest data and armed with historical insight, CEO Clayton Reid provides a snapshot of the most critical travel marketing questions. Read his quick takes below and click here for even more in-depth research, insights and webinars.

Will shifts in the economy change how travelers spend?

Coming out of recession and crises, the traveler responds in fundamental ways. They do travel. But they either move upmarket because rates have come down and they have the confidence to book at the higher end; or they move downmarket because they lack confidence or don’t have the same economic strength they had before. We see the midmarket being the challenge coming out of a crisis like this. The economy brands do well, luxury brands do well, and the ones in the middle sometimes struggle.

We also expect that trip volume will come back much more quickly than spending. Travelers may not spend as much for each trip, and they might change the length of their trip, but the volume will come back quickly. The best example of that is families who have been quarantined at home. We can see them taking short-haul weekend trips, staying in an economy hotel and trying to get into the community to do what’s available to them. They might trade one long-haul trip a year for three or four trips at a lower spending level. Based on our historic data, we expect to see more trips and less spending for at least a year.

How will channel distribution be impacted?

We have a pretty high level of confidence that OTAs are going to be more important for suppliers, as will aggregators, in recovery. They will have a large share of voice and the ability to engage customers more readily. Customers in a value market look to aggregators more frequently because they want one point of contact where they can shop and compare the price of their trips.

Suppliers have created additional traction against the OTAs, but we think they’re going to lose some of that traction based on the crises. The other thing is that Google continues to play a massive role in the way travelers are making decisions, and how they choose to play in concert with the OTAs and suppliers still remains to be seen.

Margins for OTAs have been coming down, and while they’ve been relying more on up-funnel traffic to market or monetize their models, we think in this environment they’ll actually get more tracking at the bottom of the funnel. They’ll be able to monetize more of the traffic into booking because the value inducements are going to play in their favor.

Will the future of luxury travel be changed?

Travel advisors, especially the consortia like Virtuoso and Signature Travel Network, will play bigger roles. Customers are initially going to be wary, yet luxury travelers will still want to make those big trips. They’re going to expect more curation around those trips to better understand what’s open, what’s not, what social distancing will look like, and more. 

Tour operators are going to look at packaging differently. What’s available in a package and how that plays into the narrative of fear or understanding will be really important.

There will have to be some give back on rate and fare across every travel category probably for the next six to 12 months. It’s going to be hard for even luxury operators to get full fare, full rate and full margin like they were getting before the crisis because it’s natural that even the wealthiest travelers will expect a discount or value add.

We also know that affluent travelers are the most resilient, broadly speaking. They’re the ones that will start to take long-haul trips first, and certainly the strongest of luxury operators are going to fare better than the mid-market and the economy categories.

How is content consumption shifting?

News viewership is up triple digits in the United States, and up close to triple digits around the world. People are also spending more time engaging with travel content. Social and search analytics tell us that while people aren’t going to travel today, they’re thinking about it. So we do think that the marketers and our own clients that stay aggressive in targeted advertising in search and social – maybe at a little bit of a reduced level – can create some equity and value for those who will be traveling.

Over time we’ll see that content shift; people will move away from news, go back to the same patterns of affinity-based content from before, and they will probably become a bit more distracted than they are today. But the predicted shift gives permission for smart marketers to find that tempo. We have to be tone appropriate in the creative message so that it gives credence to the fact that people have been fearful. We have to connect with a traveler based around needs so that they’ll be traveling with your brand first. That’s the type of content that you have to really be keyed into based on the research and what your own travelers and customers are telling you.