From our Obsession
The New Luxury
Luxury isn't just the stuff we buy—it's a mindset.
The travel and hospitality industry has undergone a complete metamorphosis over the last decade.
For the modern traveller, it’s no longer about getting from point A to point B, or booking accommodation simply to have a roof over one’s head in a place away from home. Today’s traveller sets out in search of a unique, meaningful, and memorable experience.
The desire for such experiences in a 24×7 connected world has made it necessary for travel and hospitality companies to transform themselves to cater to the demands of the new-age travellers. The size of the global hospitality industry is projected to reach $11,382 billion by 2025. Those who want to grow their slice of the pie in this sector have to shed models of the past and adopt technologies of the future.
As we enter a new decade, the question is how will the travel and hospitality sector adapt to the changing landscape? These are the top five trends businesses must keep in mind for 2020.
Tech-driven customer acquisition and retention
Given the rapid pace at which digitisation is taking over the world, especially with the advent of new and emerging technologies, a lot of traditional businesses are planning to reinvent themselves as technology businesses. According to a study by IDG, in order to improve process efficiency, enhance customer experiences, and boost employee productivity, 89% of organisations have either adopted or plan to adopt a digital-first business strategy.
A car rental company, a hotel, or an airline were traditionally very operations-driven. While that remains, and there are technology upgrades required to make each part more seamless, customer acquisition—with a focus on personalisation, mobile-first, and building meaningful relationships through loyalty programmes—has now become digital.
The same can be applied to customer retention strategies as well, which are known to give higher return on investment, given that these customers are familiar with, and have already trusted the company and its processes. This is a void which needs to be filled amongst travel and hospitality businesses today.
Once this has been implemented, the experience delivered needs to be seamless, ensuring that it fits the particular business context, relates to the existing framework and that it has the ability to adapt to dynamic consumer needs. Ultimately, all of this is aimed at bringing about greater profitability, but experience and profitability have become two sides of the same coin, and that needs to be factored in at every step of this transformation.
Verticalisation and new market segments
With the rate at which consumer expectations are evolving and new travel trends are emerging, it is essential for businesses to adapt their approach towards new consumer segments. As the quest for experiences over ownership continues to gain prominence, people today are looking at exploring unconventional ways of travelling, staying at destinations of their choice and having the flexibility to further customise it according to their needs.
In line with this, one of the most prominent travel trends that will continue to rise in the coming year is that of slow travel. Here, travellers seek to immerse themselves in a place they visit, taking their time to learn about it, along with cultures and offbeat experiences on offer, instead of simply checking off a place from their bucket list.
Additionally, while the free independent traveller (FIT) had emerged as a market segment, now there are FIT influencers as well, who use their social media presence and reputation to drive greater awareness and transparency. Their opinions have a huge impact on their target audiences, who trust their choices and are driven by the aspirational factor which they bring about through their posts and social media updates. According to a recent report, this year, Instagram travel influencers are expected to become a $5-10 billion industry globally, with the largest number of influencers recorded in the US and Italy.
Travel companies need to revisit their target segments and reinvent their plans to target them based on such trends. Keeping this in mind, certain companies are now offering revenue management services along with end-to-end social media services, thereby helping travel and hospitality businesses strike the right balance between boosting brand revenue and creating unparalleled experiences for consumers.
Travel planning with social media
The role of social media in influencing travel aspiration continues to gain prominence, with all kinds of travel content readily available on your news feeds across Facebook, Instagram, Google, and travel portals. Liking something and aspiring to visit a certain place is something which all of us have done, but to actually carry out the process and do it, travellers are still opting for sources they can trust. These reliable sources are a combination of travel influencers and blogs they like, but also the opinions of family and friends who have visited these places, or can pitch in on one’s plans.
In 2018, Trip Advisor effectively tapped into this, by launching its Social Assisted Travel feature, which allows people to plan trips jointly. Therefore, instead of going over the tedious process of browsing through hundreds of reviews and pages the platform brings together travel influencers, brands, etc, along with users’ friends and family to create a social feed with everything in one place.
This assists with discovery and inspiration pertaining to specific travel destinations, along with videos, blogs and guides from all these trusted sources. Cleartrip’s Holiday Planner is another product that functions along similar lines, leveraging travel experts and influencers to deliver customized trips and curated itineraries, which can be filtered further according to the user’s preferences.
Search engines turn into booking engines
For the longest time, search engines played the roles of middlemen, presenting you with links to various travel and hospitality businesses’ websites where you could browse and book. Now, these very engines are implementing booking features to give consumers the option to do so directly. For instance, when you search for a destination on Google, it will present tabs like “explore,” “flights,” “hotels,” and “packages,” with prices, recommendations, amenities and other information about the location, making it an all-encompassing booking experience.
Additionally, the company started giving a minimum price guarantee to consumers and has plans to allow you to book with hotels directly in the coming year. With this, the company is ensuring that the user stays within the Google product throughout their booking journey.
As per research by Booking.com, travellers who book activities in advance spend 47% and 81% more on stay and transportation respectively, over those who wait to book activities once they are at the destination. This makes them a valuable consumer segment, especially for those businesses which provide services across categories.
Vacation rentals consolidation on the rise
The vacation rentals industry across the world has witnessed a boom, giving rise to around 800 million users and 115,000 companies. Renting a “home” is now a part of the overall experience that millennials, couples, families and solo travellers desire today, as opposed to the standardised rooms and services that a conventional stay option would provide.
In 2020, as competition continues to heat up and supply outpaces demand, we can expect greater consolidation in this sector to improve distribution and revenue for companies through reduced cost of operations.
Here, both large and small players stand to benefit from their respective strengths, share of expertise, and geographical presence that complement each other. With new technologies coming to the fore, players in the vacation rentals sector are also increasingly getting access to AI and advanced analytics tools to identify opportunities for improvement, as well as to stay ahead of the competition.
Businesses in the travel and hospitality space need to realise that consumers are on the lookout for comprehensive solutions, providing assistance through all stages of travel starting with discovery, to planning and eventually carrying it out, and beyond. New technologies and the dominance of social media are at the core of this change, constantly influencing how travellers interact with a brand and vice versa. In the long run, only those businesses which strategise smartly and tap into these trends to create an experience-driven approach will be able to stand out from the rest, keeping consumers coming back to them, time and again.
We welcome your comments at firstname.lastname@example.org.