The evolution of technology, the fluctuating economy, as well as many other factors have played significant roles in hotel industry performance in recent years. During a webinar Thursday titled “PhoCusWright’s Hot Topics 2012,” PhoCusWright analysts weighed in on 10 topics and trends that will shape the travel landscape this year…
The evolution of technology, the fluctuating economy, as well as many other factors have played significant roles in hotel industry performance in recent years. During a webinar Thursday titled “PhoCusWright’s Hot Topics 2012,” PhoCusWright analysts weighed in on 10 topics and trends that will shape the travel landscape this year.
Consumer sentiment
The consumer sentiment on travel went from “we can’t” in 2009 to “we shouldn’t” in 2010, according to Carroll Rheem, director of research at the Sherman, Connecticut-based travel industry research company. In 2011, the sentiment was “we’re outta here!” But at the same time, the economic warning signs kept coming. Most consumers are still in the process of sorting through the details, Rheem said. “I wish I could say that this is the year they will be ready to indulge, but unfortunately that’s not really what they have in mind,” she said. The good news is consumers are not going in the opposite direction. “Consumer intentions are indicating that leisure travel will achieve small but positive gains in 2012,” Rheem said.
Social media
Travelers aren’t booking their trips on social-media networks, yet social-media is poised to enhance the travel research experience, said Douglas Quinby, senior director of research for PhoCusWright. “As discussion forums are making a comeback and instant images are growing in popularity among consumers, 2012 is expected to be another big year for social media, Quinby said, noting that social media’s “impact on retailing is just getting started.”
Capital
Now might be the best time in years for travel companies to raise capital, said Lorraine Sileo, VP of research for PhoCusWright. Sileo referenced recent capital raised by relatively new companies in the travel space: Groupon with US$136 million, Bloomspot with US$35 million, Inspirato with US$38.8 million. “What’s interesting is … they all have a unique and different twist,” she said. “Basically if your company has a good management team, good track record, unique technology and product solutions … you should be able to raise capital now.”.
Emerging markets
In more mature markets such as the United States, United Kingdom and France, the percentage of travel booked online is very high. Emerging markets such as China, Brazil and India also are experiencing rapid growth in online travel markets. The reality check, Sileo said, is that it can be difficult to launch an online travel site in those emerging markets because of cultural barriers, as well as other factors.
Marketplace maturity
Growth in the travel industry requires the theft of customers from someone else, Rheem said. “To grow their slice, online companies are going to have to steal their share from other online companies.” It’s going to be harder and more expensive for online companies to expand the flow of traffic to their sites, Rheem said She added Orbitz and Expedia are on the right track with their recent efforts to refresh their platforms, notingthese undertakings are critical for growth.
Supplier vs. OTA
“The pendulum continues to swing back and forth between suppliers and (online travel agencies),” Sileo said. While the airline segment has found incredible success in switching its consumers over to the online-booking platform, it is another story for the hotel industry. Seventy percent of flights booked online are done directly on the airline’s site instead of an OTA, while approximately 55% of U.S. hotel online sales go directly to the hotel’s website, Sileo said. This is becausethe hotel customer being a little less brand loyal and more interested in comparing rates, she said. Rheem said user reviews and ratings also are a powerful element in the decision-making process for hotel consumers, and it will be interesting to see whether hotels will begin posting negative reviews onto their sites alongside the positive ones.
Travel agents
“There’s no question and no debate that how travelers buy their travel has changed. There’s no rush back to offline retailers,” Quinby said. Although agents might be down, they are not out, he said. Those who have showed endurance are focusing on segments of travel that require enhancements in customer service and expertise to stay in the game.
Search
Consumers are confused by distinctions in the travel space, and we cannot blame them, Rheem said. She cited a PhoCusWright survey that asked travelers why they chose particular websites throughout their planning process. The top response -coming in above lower costs- was ease of use. “Whoever makes travel search easy, those are the companies that will win,” Rheem said.
Flash sales
Flash sales are in a period of experimentation, Quinby said. However, there is no denying that right now this environment is appealing to consumers. “Like it or not, for now the deal is on,” Quinby said. He advised hoteliers to be careful with flash sales. “This is going to be an important channel that suppliers can use. They just have to do so very strategically-very surgically, I would say.”
Mobile
The consumer sentiment on mobile is they tend to book on smartphones only as a necessity, Rheem said. Mobile limitations such as small screens, the inability to view multiple browsing windows and awkward typing are disadvantages to many consumers. However, sometimes mobile is the right tool for the job, considering mapping capabilities and last-minute travel opportunities, Rheem said. Travel consumers use their browsers on smartphones rather than apps because most leisure travelers do not have constant interaction with traveling. They do not want to download an app that will sit on their phones for ages without much use. “For 2012, we are expecting to see greater experimentation and growth,” Rheem said of the mobile space.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
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