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Euro RSCG

Travel trends 2004: New study from Euro RSCG spotlights key trends reshaping the travel industry

Whereas previous generations could only dream of traveling at will, today it`s a reality for many across the globe…

Whereas previous generations could only dream of traveling at will, today it`s a reality for many across the globe. And it`s a dream made possible for an even greater number of people thanks to Internet access to information and deals that were once accessible to travel agents only.

Today`s travel is marked less by luxury than by the essential business practice of creating capacity and filling it as cost-effectively as possible. That has made it ripe for revolution by Internet and has enabled low-cost, no-frills airlines to muscle in at the expense of longer-established brands.

A major new survey by global communications agency Euro RSCG Worldwide shows just how quickly consumers perceive upstart airlines such as Ryanair and easyJet in Europe and Southwest and JetBlue in the U.S. to be gaining ground against their larger competitors. Respondents were asked to rate 500+ brands in terms of whether they had gained ground, lost ground, or stayed the same in terms of popularity among consumers over the past few years. (They also could select not sure.) The results in each of the four countries surveyed in the first legs of the study clearly show that the brand momentum of the low-cost carriers outstrips that of the big carriers as they roll out attention- grabbing services and irresistibly low prices. (To determine the net rating of the brand momentum scores, the percentage of respondents rating the brand as having lost ground is subtracted from the percentage that said it has gained ground.) In the U.S., Southwest shows a net gain of 28 points and JetBlue is 23 points ahead, while United posted a 28-point loss. Across the Atlantic, easyJet earned a 47-point gain in the U.K. and 32 points in France, while Ryanair stands 31 points ahead in the U.K. and 41 points ahead in Germany.

As with utilities, the deregulation, privatization, and breakup of airline monopolies has opened the way to competition and innovation, commented Ira Matathia, managing director, Euro RSCG Worldwide, New York. Low-cost newcomers have proved that travel can be cheap, and in so doing have shifted expectations of what is possible. Flying is now regarded by more people as an ordinary means of travel rather than a special event. That opens up bigger markets for short breaks and impulse trips, and creates niches for new types of companies and services. The price wars are shaking out old and new alike, but those left standing have much more dynamic markets in which to work.

The Internet certainly isn`t the only factor, but there`s no doubt it`s the catalyst behind many of the key developments reshaping the travel industry. Euro RSCG`s study uncovered the following important trends:

Trend: Boutique and Custom Services — As low-cost, no-frills mass travel spreads, so does the appeal of its opposite: high-cost, high-touch exclusivity and pampering. For some, low travel fares leave extra cash to splurge on luxury accommodations and services. The travel industry also has learned that the higher-paying crowd, including jaded road warriors braving the low-cost crowds, need to be kept interested with special treatment such as upgraded lounges and sky beds.

Boutique hotels help restore character and distinctiveness to cities, and their growing popularity shows that travelers welcome a change from the sameness of global chains. The big hotel chains are responding by developing their own version of the Hyatt touch for their best customers, with separate check-in, faster service, and whatever extra effort it takes to make the most valuable guests feel valued.

Trend: De-Hubbing and Style-Lifing — Big cities are facing intense infrastructure pressure, and housing prices are forcing ordinary people to live smaller or farther away. Others are moving away from cities to rural areas in a bid to find a better life balance, de-stress, or even to reduce their families` odds of falling victim to terrorism. Euro RSCG calls these people style-lifers, and they`re growing in number around the world. And that`s partly the result of new technologies.

Relocation is not only more attractive today but also more practicable for those individuals and companies that can conduct most of their business via telephone and broadband links.

At the same time, as capacity limits and intense traffic at major hub airports make for even more frequent delays, low-cost airlines operating from local airports are becoming attractive magnets for relocating companies and style-lifers. As local centers become poles of attraction, they pull in smart people and businesses, which in turn provide incentives to create flight links with other local poles of attraction — e.g. Exeter-Alicante, Bristol-Nice.

Style-lifers are a group marketers need to study, said Marian Salzman, EVP and Chief Strategy Officer, Euro RSCG Worldwide, because they cannot be dictated to in the same way that traditional consumer audiences have been fed lifestyle briefs through marketing and advertising. Style-lifers have chosen to place responsibility for styling their lives in their own hands. These are the people who are mixing and matching haute couture and discount clothing. They`re the ones who are setting their own media diets with Sky+, TiVo, and other devices that let them be their own programmers. And these are most especially the people who are the hardest to reach via traditional advertising.

Trend: Grey Geese — All over the developed world the demographic bulge of baby boomers is moving into their retirement years. As the first generation to have experienced mass-market travel for most of their lives, many are used to flying and have become familiar with the usual destinations, including France, Italy, Greece, and Florida. As baby-boomer luck would have it, their approaching retirement coincides with the consolidation of pension-stretching, low-cost flights and the release of equity from elderly relatives` properties. It`s a time for dreams to come true, whether it`s ad hoc travel or purchasing a (second) home in sunnier climes.

The downside for airlines and seniors is that advancing years inevitably increase the likelihood of health problems either en route or away from home –a reality that travel brands are going to have to start taking more seriously.

Trend: Cultural Travel — Now that tourism is one of the world`s biggest industries, it makes sense for towns, cities, and regions to market whatever nature and history have given them and, indeed, to create additional reasons to visit them. Not all have sun-drenched beaches or snow-capped mountains, but most have something that can be packaged as culture — whether it`s local culture as in folklore or contemporary vibe, or heritage sites. Many places that feel a little short on cultural appeal are trying to make up for it by creating an event to appeal to culture lovers-festivals of opera, art, cinema, and literature vie for attention with more recherche attractions such as Star Trek conventions and niche events such as the annual Lebowski Fest in Louisville, Kentucky, a bowling event celebrating all things relating to the Coen Brothers` 1998 film, The Big Lebowski.

Euro RSCG trend researchers are also seeing increased interest in unusual travel destinations, places that offer unique experiences and new travelers` tales. Countries that combine different with safe are seeing a lot of interest: former Soviet bloc countries such as Bulgaria and Czechia, and even Balkan countries, especially Croatia.

The appeal of destinations deemed `safe` shouldn`t be underestimated these days, said Ira Matathia. Euro RSCG`s new survey findings show only small minorities of people believe that travel is less risky today than it was five years ago: 24% in France, 20% in Germany, 26% in the U.K., and just 19% in the U.S. And, good news for smaller carriers, similarly small percentages of respondents in each country think the major airlines are safer than budget or regional airlines.

Trend: First Stop, Internet — More and more of what happens in travel is starting with and passing through the Web. And that makes sense. The Internet is the domain of information, and information about options, bookings, and capacity-allocation is the essence of the travel industry. The Internet is also many people`s starting point when researching major purchases, which certainly includes travel. A majority of Euro RSCG survey respondents in Germany (67%), the U.K. (63%), and the U.S. (52%) agreed that for major purchase decisions, their first stop is usually the Internet. In France, just 38% of respondents agreed with that statement, but that included 48% of men.

Now that so many people have Internet access, the medium has undermined traditional travel agents` business, since it gives consumers direct access to much of the information that agents typically package and sell. It also gives online agents the tools with which to undermine the traditional packaged-tours business by enabling travelers to assemble DIY packages online using dynamic packaging; customers can put together elements of their trips on-screen, including flights, hotels, car rental, local tours, and tickets to theater or sporting events.

The Internet is also enabling airlines themselves to bypass agents and connect directly with travelers, thereby achieving greater efficiency — especially when the airline adjusts prices moment-by-moment to reflect and direct demand. By getting customers to do everything online with no contact costs, the airlines are also able to slash staff and reduce spending. And even when voice-to-voice contact is required, today`s customers get up to speed online before booking in person, and that makes contact faster and more efficient.

Another Internet benefit for airlines is more frequent direct connections with consumers, said Matathia.

This expands airlines` scope for creating brand-building interactions with consumers by making contact more frequent than just at the time of travel.

Trend: Costing for Heavyweight Travelers — Globesity is a growing phenomenon at a time when rising fuel costs and tighter margins make every ounce count. The steadily growing additional passenger weight alone is bound to have an impact on aircraft loading calculations. One obese passenger with a full luggage allowance can easily weigh as much as two other passengers. It`s becoming increasingly hard for airlines to justify charging a 140-lb passenger for 20 lbs of excess luggage without charging a 260-lb passenger for excess body weight.

It`s looking increasingly likely that passenger weight will be factored into ticket pricing with a personal weight allowance, which will mean that heavy passengers will either have to pay extra or not travel. At a time when being overweight is becoming more the norm than the exception, airlines will be facing tricky calculations to fill their seats without overloading their aircraft. It`s not hard to imagine the day when airlines start using 10 pounds extra personal weight allowance — FREE! to secure a competitive edge.

ABOUT THE STUDY

Findings from the initial stages of Prosumer Pulse 2004: A Global Study- Anticipating Consumer Demand are based on an online survey of adults in the United States (n=1,982), United Kingdom (n=2,127), France (n=2,000), and Germany (n=3,158). The study is also being fielded in China and India. Market Probe International conducted the surveys in winter/spring 2004.

Co-Founder & Managing Editor - TravelDailyNews Media Network

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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