This week’s musings, reflections and observations about travel affiliate marketing…

1. I think that the travel companies that underwrite the cost of primary market research, customized surveys and technical studies about the travel industry and subsequently share the results with the rest of the travel industry should be universally lauded for their efforts and largesse.  Although most market research studies are undertaken to validate (or disprove) certain assumptions, in many cases, the findings, conclusions and recommendations that come out of these reports helps all participants in the global travel industry better manage their businesses in uncertain times like these.

During the last several weeks, there has been a spate of reports that have come out from travel suppliers, retailers and associations, which in TravelDividends opinion, travel affiliates can glean a number of particularly useful insights about the travel consumer or the travel market in general which can be then applied to hone the travel affiliate’s operations or marketing campaigns.

The following represent several key learnings from surveys pertaining to the U.S. market:

  • One of the key findings in the USTOA commissioned consumer survey released in late May revealed that 60% of Americans believe that tours and vacation packages offer more value for the dollar than self-arranged vacations comprised of individual components.According to USTOA President Bob Whitley, this reaffirmed a conclusion from a previous survey; “Buying a tour or vacation package can save an average 20%-30% in general,” said Whitley, and “in 2009, because of the stronger dollar, international travelers in particular can save an average 20% over last year’s prices in many destinations.”The survey also revealed that three out of four Americans are planning a vacation trip this year despite the recession, though travelers are modifying their vacations by looking for more affordable destinations and by taking trips that are closer to their home.

    One-in-five survey participants said they are planning to go to Europe, and among those planning international trips in general, Europe ranked as the hottest destination overall, at over 40% of all travelers. Travel to Western hemisphere vacation destinations outside the U.S. came in at a close second at 35%, with Australia/New Zealand/South Pacific third at nearly 20%.

    According to the survey, although the highest income earners (i.e., those earning $100,000+ per annum) were the least concerned about the cost / affordability of their vacations, they were also the most value-conscious. These high income earners were the most likely to look for destinations that offer more value, to book an all inclusive vacation, as well as plan a vacation within 90 days of departure.

  • Two recent surveys from Travelocity suggest ‘good news’ for the travel industry is in the offing, while also corroborating some of the findings from USTOA’s survey.As reported in the mega Online Travel Agency’s (OTA) Traveler Confidence Report released on June 3rd, the dramatic decrease in airfares and plummeting hotel rates around the world have “positively influenced 96% of overall respondents’ summer travel plans and inspiring stronger travel intentions for the season ahead.”Travelocity’s Traveler Confidence Report gauges travelers’ plans and attitudes now as compared to six months prior. In the latest report, the percent of travelers planning to increase their travel plans in 2009 is up significantly, with 21% saying in April 2009 they would increase their travel, compared to only 10% suggesting they would do so when queried in Travelocity’s first Traveler Confidence Report completed last November.

    Citing the same sharp decreases in airline and hotel/resort pricing, Travelocity argues in its June 12th Summer Travel Report that as a consequence of these new reductions, consumers are likely to see price increases as early as this fall. In this survey, Travelocity senior editor Genevieve Shaw Brown said many airlines are expected to further reduce system-wide capacity later this year (see TravelDividends June 12th post for more details about the airline industry’s capacity cuts).

    “Travelers have been spoiled by cheap travel options this year, and we’re seeing that trend continue into the summer season” said Brown, “However, travelers should not expect these prices to last forever. With capacity cuts planned for the fall, now is the time to jump on current travel deals.”

    Travelocity’s internal booking data shows the average domestic airfare has dropped to $299, down 17% from last summer, while the average price of hotels is hovering at about $142 per night, a decrease of 14%. For a family of four booking a ‘typical’ six-night domestic summer vacation, these price drops represent the potential of saving $374 on accommodations and airfare.

    Similarly, with both average international hotel rates ($197) and airfare ($690) down some 14% compared to last year, a family of four on a ‘typical’13-night international vacation can save an average of $847 on airfare and hotel costs.

    Also of critical note for travel affiliates selling international vacation packages, according to Travelocity, because it’s such a tremendous value this summer, most international travelers are deviating from the norm and heading to Western Europe. This new-found propensity for European travel has taken market share from the Caribbean.

  • However, in its updated U.S. lodging forecast released on June 2nd, PricewaterhouseCoopers LLP (PwC) contradicts Travelocity’s projections for a rebound for the U.S. lodging industry, as the respected consulting firm projects a continued softening in U.S. hotel room demand until 2010.Although PwC expects a resumption of growth in the U.S. economy in the second half of 2009, they nevertheless project hotel occupancy levels and average daily rates (ADR) in the second half of 2009 to remain below the results achieved for the same time periods 2008. Likewise, lodging demand in the third and fourth quarters of 2009 is forecast to be 6.4% and 1.2% below last year’s levels, respectively. These factors combined will result in a 15.7% decrease in room revenue per available room (RevPAR) in 2009.

Meanwhile, over in Europe, several other surveys reveal some interesting consumer and market dynamics that European travel affiliates should be reckoning with their marketing strategy.

  • In a recent study by Yahoo! Europe, ‘trustworthiness’ has emerged as a key differentiator for successful online travel players. Gleaned from some 11,000 Internet users, the survey findings point out that visitors to travel websites want social media and user-generated content, with 38% of users preferring recommendations and advice from other users when booking a holiday online.According to Yahoo! Europe, approximately 60% of respondents across the continent selected trust as the most important consideration over other characteristics including simplicity, friendliness, informative and professionalism.In the UK, however, consumers are looking for simplicity and clarity, with 68% of respondents listing these as the most important factors. UK users wants and needs seem to mirror those in the U.S., as special offers and deals, a price comparison tool, information on accommodation, travel guides, and photos and video footage are also high on their needs list from a travel services purveyor.
  • According to Euromonitor International, the global economic crises will cause the travel and tourism industry to shrink in 2009, and growth is expected until 2010, though the projected growth rates are pegged well below prior forecasts.The study concluded that hotels were forecast to grow by 4.8% in 2009 but are now expected to shrink by -3.6%. Air travel, originally forecast to grow by 5.3%, will now decrease by -2.3%. Additionally, travel and tourism arrivals, departures, hotel and air value sales are now predicted to contract by -1.1%, -0.9%, -3.6% and -2.3% respectively in 2009.

So, what are the ‘take-aways’ from these surveys? From a business perspective, how one approaches identifying and leveraging them obviously differs widely, based on whether one is a travel affiliate, travel supplier or affiliate network, and within that context, the characteristics of your business.

However, from a strategic level, TravelDividends thinks there are several obvious ones that apply irrespective of where one plays in the value chain of the travel affiliate distribution channel:

  • Keep a close eye on the market…conducting regular environmental scans of is critical for any business, regardless if they are a Fortune 500 company or a one-person travel affiliate shop. Make sure you’re current on market structure, customer needs, government regulations, economic and travel trends, technological advances, competitors and other competitive factors that make up our business environment.
  • Be nimble and flexible… be willing to work in different ways as your – and your customer’s – needs change.
  • Manage your business based on fact-based decision making…the kind of facts and insights about your customers, partners and competitors that come from legitimate sources like these research reports

What do you see as the business take-aways from these reports?  What tactics, strategies, program adjustments or process changes do you think you should implement in your business as a result?  We encourage our readers to share their thoughts and ideas.  Drop us an email with your comments…we’d very much appreciate hearing from you!

2. I also think that the travel industry would benefit immensely if similar types and levels of market research were conducted by players in the travel affiliate channel about our industry sector.  I continue to be stunned – and saddened – by the meager quantitative or qualitative research available today…hopefully this will change as affiliate marketing is embraced by more and more travel suppliers around the world.

3. As an appropriate ending to today’s Things I Think I Think column, I thought I’d leave you with some additional key insights from another survey for you to ponder.

It seems that the sour economy is not a deterrent for new online travel sites; news about new online travel sites being launched appears almost weekly.  However, according to Hitwise, few players – new or existing – create strong loyalty among their users.  Recent Hitwise data shows that 30% of user visits to OTAs are from people who were looking at another OTA’s Web site.  Moreover, Hitwise suggest that online travel agencies receive more visits from other OTA sites than they do from search engines, presumably because consumers are constantly looking for a better deal.