By way of background, apart from consulting to a number of travel agency brands, 5 star hotel groups, tourism destinations, government tourism authorities, cruise lines, airlines, loyalty clubs, resorts and even a travel magazine, I’ve also owned a retail travel agency in Sydney, an online cruise business and a holiday cottage. So I understand a tad about the category.
And it’s starting to smell like 1999 – again. I’ve written about this before, but for those old enough to remember the great dot-con, chaos reigned in 1999 just before the stock market crash. Brands were spending a fortune to get people to visit their websites – and mostly failing – as history proved.
I was working in New York and one hopeful dot-com darling was standing on a street corner with a suitcase full of business cards with his URL printed on them. His marketing tactic was to stuff them into as many people’s hands as possible. Search engines weren’t very sophisticated, so the tactic of soliciting people in the street was the cheapest option – yes it’s true dear reader.
The travel industry is one that has been seriously disrupted by technology – particularly the internet. But while many new online brands have opened to provide all sorts of travel services, there appear to be clouds forming on the horizon for purely online travel services.
You only have to watch an hour of television to see the signs. Trivago, Webjet, Hotels Combined, Hotels.com, Expedia, Trip Advisor et al are spending a fortune on television advertising to get people to go to their websites. The reason is simple. It’s generally cheaper to use broadcast media than online advertising to generate new customers in highly competitive consumer categories.
And ask their marketing people, if they could only use one media channel what would it be – the answer is television.
The cost to buy clicks from generic travel search terms is hugely expensive. Consequently the travel and tourism category is the third largest revenue earner for Google. And as online travel companies have very thin margins, they must find the cheapest ways to acquire customers, or go broke. So they need traditional media to generate leads and brand awareness.
Another reason the travel brands are struggling is the churn rate of customers who shop online for the cheapest flight, hotel or tours. These customers aren’t as loyal as customers of bricks n mortar agents, because they have no personal relationship with an agent.
They’re more like the old Yellow Pages shoppers – always chasing the cheapest price. So they flit between aggregators with no feeling of loyalty to any of them. Many online travel services have become nothing more than classified advertisers of commodities – rooms, flights, etc. Their brands have very little intrinsic value.
Another issue for online travelers is the lack of support available when something goes wrong. They have no humans to turn to for assistance, just websites. Most online travel services do everything they can to avoid providing human beings for customer service. It’s one reason the retail travel agents aren’t disappearing as quickly as predicted.
I was recently interviewing a senior marketer at Flight Centre – one of the world’s most successful travel agencies – both online and in the high street. They continue to open new retail stores around the world.
They ran an experiment whereby they rang customers who had booked their travel on the Flight Centre website, not via a physical travel agent. The customers were pleasantly surprised and thankful to receive a personal call.
But the real insight that Flight Centre discovered was that more than 50% of the customers had incorrect visas or out of date passports – simple facts the customers wouldn’t have discovered until they arrived at customs on the first day of their holiday.
This insight will help Flight Centre revise the content on their website, but it highlighted the continuing problem of the web. It’s a DIY culture – and most users cannot – do it themselves that is. If you’re not a travel expert, how will you know you even require a visa, the validity requirements for your passport, the vaccinations you need? The list is endless when traveling to exotic locations.
But there’s an even bigger elephant in the travel agency. And it’s called Google – the search engine that benefits so much from the travel industry. It seems Google is getting into the travel business. And to say that the industry is nervous is an understatement.
Imagine if Google set up in competition to you, using all its knowledge about the search behaviour in your industry, not to mentioned its bottomless money pit? Frightening really.
I need to have a quiet respite and plan what to do in case of Google. I wonder what deals there are to get away to an isolated retreat or resort?
Better check on Google – oh sh*t…