by Bill Furlong, CEO
Peter Yesawich, President and CEO of the Ypartnership, the PR agency used by the VRMA, gave a very informative and entertaining presentation on how the consumer travel landscape is changing. The following were his main points:
...Travel is down from the peak
- 55% of households took 1 trip/year75 miles or more from home.
- That number has dropped from a peak of 66% in 1999 and 63% as recently as 2007.
...the Web is the dominant way people are planning travel
- % of households with web access has increased from 11% in 1996 to 80% in 2008 and 2/3 of that access is high-speed.
How do people plan and purchase travel:
- 61% use the Internet exclusively
- 24% use a travel agent and the internet
- 7% use a travel agent
- 8% use neither
(sample base is leisure travelers using airlines and hotels in 2009)
- % of people using the web was 53% of people in 2002. That number has increased to 66% by 2009.
...and the % of people using the Web to book travel is also a majority
- 35% used the Web to book travel in 2002. 56% of people used the web to book by 2009. BUT, the % using the web to book has been flat from 2007-2009.
... what do people think is important on a Web site
- 87% lowest fares and rates
- 74% easy booking
- 72% photos
- 46% user reviews
...the next generation of search is meta-search sites like Kayak that search a large number of travel sites for rates, availability and more and let people compare
- only 5% of travelers use meta-search today.
...Meta-search powered price shopping will make it more important to build equity into a brand
- But consumers today care less and less about the brand.
- A survey asked people when they fly whether they prefer to use a legacy carrier that they have used before, a low fare carrier or had no preference. 21% said a legacy carrier; 29% said the lowfare carrier; 50% said they had no preference. So half of consumers didn't care about the airline brand.
- A survey asked people how important the lodging brand name was. 57% said the brand name was very or extremely important in 2006. That number has dropped to 44% in 2009. So brand importance is dropping for hotels.
... blogs and advisory/review sites are increasingly important.
- 19% use blogs and advisory sites today to plan travel.
- 1/3 of next generation, younger travelers use them.
- What do they use? 42% use YouTube, 33% use Facebook, 30% use MySpace, 27% use TripAdvisor.
... The web empowers "conversational marketing"
- Consumers have a voice like never before. Google Spirit Airlines and see the gripes of a past customer who felt they were mistreated.
... We're entering the era of the 3rd screen
- 1st screen was TV; 2nd screen was the PC; 3rd screen is the cellphone.
- Cell phones are becoming dominant. in 2004 5% had only a cell phone and not a land line; by 2009 that was 19%. And among 25-29 year olds that number is 35%.
- 1/5 of phones are Internet enabled in the US. But compare that to ~half in Germany and 80% in Japan and South Korea.
- Get ready for "intercept marketing" where offers are deliverered at the right time based on the GPS location information available via the cell phone.
... Families are a very important audience
- The % of people taking trips with kids in 2000 was 25%; by 2009 it was 38%.
- But only 1/3 of households have kids, so how is that possible?
- Answer is multi-generational travel. 35% of leisure travelers are grandparents. 28% of grandparents took at least 1 trip with their grandkids in the past year.
... Special life events are also important travel drivers
- 70% of travelers have taken a trip around a special life event.
- Main two events are birthdays and anniversaries.
- Milestone years are any that are divisible by 5.
- Disney has made a major investment in that by launching a marketing campaign and program to give free entrance to their parks on someone's birthday. They found that the total amount spent on entrance fees, hotel and food by other travelers makes it all worthwhile.
... People increasingly want variety in their travel
- 64% of people say that on their next vacation they want to go someplace they've never been before.
... How much do people use vacation homes?
- 8% of all households have stayed in a vacation home.
- That percent increases to 11% when it is measured as a % of leisure travelers in 2008; and the % has increased to 14% in 2009.
- For households with income over $150k, 46% say they are interested in renting a vacation home in the next two years.
... The current economy is tough and driving consumer price sensitivity
- The travel sentiment index was ~100 in Feb 2007; dropped to 75 in late 2008; has rebounded to 90 by October 2009.
- The affordability of travel as perceived by consumer has skyrocketed; the index is up 97% from October 2008 to Feb 2009.
- How are people dealing with the recession? 87% plan to book packages to save; 64% will comparison shop for price; 51% will stay fewer nights.
- Good news is that it looks like in 2010 people are more inclined to trade down (shorter stays) rather than trading out (not traveling).
- One example of a company dealing with that is Liberty Travel, the largest seller of package trips. They aren't marketing by destination any more; they are listing their trips by price point.
- And don't think that affluent customers aren't price sensitive. They are. And the number of millionaires has dropped from 9.5 million households to 6.7 million as the financial markets have declined.
- Shorter trips are also a big trend. 48% of vacations are weekend trips. People take speed vacations where they hurry up to relax. Those short trips mean that the radius of marketing efficiency is shorter and shorter as people max out at 6 hours of travel for a weekend trip.
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