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

1. I think that rail travel represents a fairly solid travel affiliate opportunity, particularly for European travel affiliates.  Unlike the US, rail in Europe has always enjoyed a strong position within the European inter-modal travel/transportation system; that position continues to grow in both in terms popularity among travelers as well as in overall market share versus the other modes of transportation, despite the state of the European travel industry and EU economy.

Recent statistics released by Eurostar, the high-speed passenger service linking the UK and mainland Europe, suggests that this recent growth foreshadows much greater share expansion expected in the years ahead.

For example, compared to similar months in 2008, traveler numbers from Dutch cities such as Amsterdam are up by 34%, while Germany has spiked-up even higher, by 38%.  The high-speed train operator says these and other country-wide increases result in-part because of the continuing Europe-wide traveler trend of shifting from planes to trains for short-haul journeys, the far greater on-board productivity achieved by business travelers while traveling on trains, the significantly lower impact on the environment for train versus air travel, as well as reflecting the continuing overall expansion of the European high-speed rail network.

Commenting on these phenomena, Nick Mercer, Eurostar’s Commercial Director, said: “Travelers are now recognizing the advantages of high-speed rail for longer trips across Europe…and that it’s possible to avoid the airports for journeys beyond Eurostar’s own cities in Belgium and France, by making simple connections that carry them onward to destinations in neighboring countries across Europe.”

Mercer also added that “With new high-speed lines in Germany and The Netherlands, Europe’s high-speed rail network continues to expand.  By 2020, passengers will be able to travel faster point-to-point by high-speed rail than by plane on nearly half of Europe’s busiest air routes.”

Eurostar has a strong travel affiliate program, though participation is channeled through its European operations; the travel affiliate sign-up sheet can be found at Online Media Group (OMG) Services, their preferred affiliate network.

2. I’ve always thought that travel affiliates should cast a wide net when looking for sources of strategic information that can potentially be beneficial to their enterprise.  However, sometimes you can’t take the strategic information at face value.

Case in point, M. Silver Associates recently came out with some suggestions as to where U.S. travel companies, organizations and enterprises can look for new customer segments to replenish lost business that has resulted from the economic maelstrom.  Speaking to online travel news portal Travel Mole, Virginia Sheridan, President, M. Silver Associates suggested four very large customer segments which are “robust and recession resistant markets” that players in the travel trade can target to “… fill your hotels and resorts, destinations, attractions and other tourism facilities when your traditional customer base is tapped out.”

The four market segments are as follows:

  • Gay and Lesbian Travel: With an average annual household income of $80,000 and numbering more than 15 million US travelers, Sheridan points out that 97% of the Gay and Lesbian travel market has taken a vacation in the past 12 months.
  • Hispanic Travel: As the largest and fastest growing ethnic group in the U.S., Sheridan notes that Hispanic travel has increased by 20% in the past two years, and that the majority of Hispanic travel is with family or friends. Additionally, Hispanics often merge business and leisure travel, bringing family along to meetings and conferences.
  • African American Travel: M. Silver Associates points out that African American purchasing power will break the $1 trillion mark by 2012); travel preferences for this large group of travelers include seeking-out travel experiences and destinations where they can enrich their sense of community, such as social group and family travel.
  • Asian American Travel: Asian-Americans have, on average, the most affluent households in the US. These travelers, according to M. Silver Associates, are most likely to travel by plane, go first or business class, spend more on a per-trip basis, and take longer trips than the average US traveler.

Considered by many as one of the top mid-sized public relations firms in the United States, M. Silver Associates specializes in helping its clients find and motivate new vacation and business travel customer segments.  TravelDividends believes this PR firm’s reputation is well deserved.

However, while we think that the four customer segments may present new business opportunities to some players in the travel trade – including travel affiliates – our sense is that other than perhaps the gay-lesbian market, none are “recession proof,” as to some extent, each has also been negatively affected  by the poor economy.  If M. Silver Associates has the empirical data to substantiate their claim, we’d love to see it…

3.  I think the short blurb in last week’s edition of Travel Weekly about the number of consumers shopping at online travel agencies (OTAs) is quite telling, but not simply for the reasons mentioned in the article.  Citing statistics from Compete, Travel Weekly reports that while the number of overall visitors shopping OTAs in May grew 4% from the previous month, when compared to May 2008, traffic “…was virtually unchanged since last year.”

Noting in their article that, in terms of year-over-year comparisons, among the competitive set of OTAs, “…only Priceline, Hotels.com, Expedia and Hotwire experienced traffic growth.”  Travel Weekly also pointed that in this time-window, the big winner was Priceline (recording a whopping best year-over-year traffic growth performance of +34%), while Cheaptickets was the big loser (Orbitz’ sister company experienced the worst decline -36%).  Meanwhile, although Travelocity and Orbitz showed month-to-month improvement, their 2009 results significantly lagged last year’s numbers.

Given that May was the third month into most OTA’s ‘no air booking fee’ promotion (launched by Expedia on March 11, 2000), I think it’s fair to say that the increase in traffic wasn’t a surprise.  Rather, the ‘surprising’ element of the Compete analysis is how little upswing the OTAs derived (except Priceline) as a result of the no-booking fee tailwind.

Given all the hoopla surrounding the temporary elimination of the air booking fee, is this the best the OTAs could do to shore-up their declining competitive position against the airlines?  And, what are the OTA’s prospects now that the fee has been eliminated altogether?

TravelDividends acknowledges that one month does not make a trend, so we’re anxious to see the June traffic numbers; for it was in June that all of the major OTAs had announced that the promotional air booking fee waiver was now permanent. We shall see…

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