Digitalisation has shifted the power into the hands of the consumer, who can now bypass the traditional travel agent with online travel tools to set up and conduct in-depth research into their travel plans themselves.
Listed below are the key consumer trends impacting the online travel theme, as identified by GlobalData.
Internet connectivity has created a shift change in consumer habits and allows a customer to explore a destination, view prices, analyse reviews, and plan all elements of a trip online. Being able to control every aspect of a trip has shifted the purchasing power and has left the online travel space in a price battle to win bookings.
The transparency the online space allows for an easy price comparison between the offerings of different providers. This is likely to result in a higher proportion of bookings through price comparison websites due to the transparency given and the ability to select an operator based on price.
Holiday package unbundling
Historically travel packages were once formed by travel agents who would package together all components of a trip – flights, accommodation, transfers, etc., and sell these to a traveller as a set package. However, consumer habits have changed and the emergence of the ‘do it yourself’ (DIY) style of booking, enabled by the boom in internet holiday bookings, has led to the unbundling of the traditional holiday package.
Online travel has enabled this accelerated shift to a more dynamic holiday booking process. Package holidays in the traditional sense are likely to decline in favour of a more personal selection process to construct one’s own package, which on occasions has saved the customer money.
The decline of in-store travel purchases has increased online travel sales
The popularity of utilising an in-store travel agent to book a holiday has declined; the introduction of online booking methods has increased the number of bookings made through online channels at the expense of the in-store travel agent.
Millennials and GenZ have grown up surrounded by technology and it is now an integrated component of their everyday lives. This digitally advanced population will be more confident and comfortable using online booking avenues and planning their own trips through advice from online sources. As a result of this increase in online booking methods, more travel agents are closing stores and shifting toward an asset light, online business model.
The experience economy
The experience economy has redefined the travel experience and has altered the purchasing patterns of consumers. More than ever travellers are looking for experience led travel rather than material goods/services. This has led to a huge change in the travel industry with most, if not all, providers shifting their business models to provide a more experience led approach.
Both online and offline travel agents, accommodation providers, and airlines are all pursuing strategies to embrace the rise of the experience economy. One way in which the online travel market has responded to this explosive demand is by allowing a consumer to personalise their trip by selecting the individual components to meet their exact requirements.
The sharing economy
The sharing economy has completely revolutionised the online travel space and provided a new way to connect travellers with services across many different sectors. The ability for a ‘host’ to be connected through the internet to a buyer has changed the way home sharing and ride hailing transactions are made. Firms have been able to utilise technology in the online space to excel. Without technological developments, the sharing economy would not be as large as it is today.
Traveller demand is changing and the popularity of traveling alone has increased. In 2019, there were 251.6 million outbound international solo travellers representing 20.6% of all travellers. The freedom to plan one’s own travel itinerary without the conflicting ideas of another individual has caused a spike in interest. Technology and innovations within the online travel space has made solo travel more appealing and safer.
Travel apps especially have allowed travellers to stay connected and interact in a safer manner with ride hailing and in destination tour options. As more travellers look to undertake a solo trip they will look towards online sources for information and to book. Online travel firms must be prepared for this increasing demand for solo travel.
Last minute travel
Online travel has enabled travellers to book trips as late as possible due to increased accessibility and the issuing of all travel documents electronically. This has allowed customers to search and book a trip for as little as a few hours before a flight, hotel or car rental booking. The ease of booking online, especially through travel apps or mobile friendly websites, gives travellers the power to book and begin a trip almost instantaneously and can suit those with a busy lifestyle or who crave spontaneous experiences.
Instagram has risen as a prime source for the ‘dreaming’ stage of holiday planning, especially for those who fall within the Millennial and GenZ population. The photo sharing network could benefit online travel firms who are looking for alternative marketing avenues to advertise trips. Online travel firms that utilise online social media platforms, especially Instagram, can drive booking through the use of stunning imagery captured by those who have used them to book a trip. Through the use of tagging the travel firm’s page and using hashtags, the photo can gain massive exposure and help firms with free marketing.
Linked to the theme of instagrammability, social media influencers are increasingly being used by travel firms to reach a wider follower base and have become an integral component of the overall marketing strategy. It can be difficult for a brand to establish a strong social media following. By contracting a social media influencer, a brand can access a much wider follower base.
This is an edited extract from the Online Travel – Thematic Research report produced by GlobalData Thematic Research.