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Friday, November 21, 2008
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  • Cheap + travel. Search.

     

    In a report we published last month called ?Traveler Behavior in a Slowing Economy

    ?, we discussed how the current economic environment is forcing travelers to reduce their travel frequency and spending.

    We found that 33% of people who took a leisure trip in the summer say they will be more price sensitive than usual in their travel plans. Considering this is already an intensely price sensitive group with the average person researching 3 websites per product, More Price Sensitive is an important shift. In addition, 28% say they will research their travel even more intensely than they have before.

    There are two trends whose implications I?ve been thinking about.

    Last year, we?d seen an increase in branded search terms. I suspect going forward, words like ?cheap?, ?discount? and ?deal? will creep back into top searches.

    I also think we?re going to see travelers start researching earlier. That doesn?t mean they will purchase earlier. But they will be scanning, researching more intensely, and aware to pricing options to their desired destinations.

    The combination of these two behavioral shifts could have a profound affect on all areas of online travel marketing. Search marketers will need to analyze their SEM robustly to determine if, in fact, they are affected by an increase in generic search terms. Promotions may need to start earlier and last longer. Website features will need to support longer planning windows.

    The list will go on. ?new economic reality? + ?travel marketing?. Search.

  • Online travel agencies, the economy and Velveeta

     

    To say Q3 was a tough one for online travel agencies

    would be an understatement. Expedia and Priceline shares lost more than 50 percent each since the beginning of the third quarter, while Orbitz is down 40 percent in that period.

    During Q3, it became abundantly clear that the economic slowdown was driving a serious contraction in demand.

    At that time, there was an opportunity to come forward with a fresh and responsive marketing message to acknowledge the new financial reality.

    Look to retail. Target has a stylish and amusing television campaign based on their ?Brand new day? theme that shows how their products can help people save money as a substitute for activities they are likely to give up due to cost (i.e. a coffee maker instead of going to a coffee shop, an exercise ball to replace gym fees). Walmart has a more direct savings-focused television ad demonstrating that replacing cereal for take-out breakfast can save $900 per year.

    Economy-relevant advertising in not restricted to retailers. For example, Velveeta cheese has addressed its customers? new economic reality with a television ad showing a woman sawing groceries in half to save money but keeping a full block of Velveeta in her cart, along with a web promotion based on Velveeta helping consumers stretch their dinner budgets.

    Over the last few months, online travel agencies have taken a different tack. Most didn?t change their destination marketing strategies to focus on more affordable locations, offer shorter vacation packages or alternative accommodation. Fare alerts remained largely buried. Social media wasn?t leveraged. Instead, there were co-promotions: the last installment of the Raiders of the Lost Ark series and The Amazing Race occupied key homepage real estate for Expedia and Travelocity. More recently, Orbitz has partnered with the latest James Bond movie, focusing on Vienna, Tuscany and Brazil. Not that these aren?t creative joint promotions. They would have been great brand awareness campaigns in 2007. But this is 2008 and the world is very different.

    Vouchers for future travel when savings are required now or discounts on luxury hotels are ignoring the elephant in the room. Suppliers or other marketers offering joint promotion in exchange for travel agency homepage exposure can be a major distraction from what travelers what to hear:

    I understand that you want to travel and that you need to save money. I will help you.

  • Paperless at LGA

     

    The TSA and Continental Airlines launched paperless boarding pass capabilities at LaGuardia Airport this week, bringing the number of airports to host the service to ten. Alaska Airlines, Delta and Northwest are also trialing mobile boarding pass technology.

    There are a host of technical considerations behind the scenes for bar-code boarding passes, including the global encryption standards that were adopted last year by IATA ? the International Air Transport Association. IATA expects all airlines to be bar-code-boarding-pass capable by the end of the year and the TSA has stated it sees tremendous potential for paperless boarding passes.

    In a survey we conducted at JupiterResearch earlier this year, we found that 18% of online travelers are interested in being able to check in for a flight using their mobile device. This number increases to 27 percent among business travelers.

    Certainly the airlines see value in establishing their brand as innovative as well as realizing some airport traffic flow benefit. But that won?t be what drives traveler adoption. Travelers will adopt technology where they see its value. And while there is some value in not having to obtain or produce a piece of paper, that alone is not a compelling force to try something new. The value of so-called paperless boarding will be speed and convenience, which will require confidence in the technology, the ability to make fees payments via mobile or phone, and seamless support from airline staff. At least, that is what customer-centric value is. But that?s not something we hear a lot from the beleaguered airlines these days.

  • American Airlines Unbundling?

     

    According to the Associated Press

    , American Airlines is planning to follow the Air Canada a la carte pricing structure as early as next year.

    Air Canada?s so-called unbundled approach is tiered to allow travelers to select different airfare structures. Tango is the no-frills, with only a portion of frequent flyer miles offered, higher change fees and a fee for advance seat selection. Tango Plus gives 100% status miles, complimentary seat selection, and lower change fees. Latitude and Executive Class follow this pattern with more flexibility and higher prices.

    Once an Air Canada traveler selects the fare, they have the option to pay for additional features or, as Air Canada?s cleverly markets, to ?customize your flight?. This includes baggage check in, prepaid food vouchers, and seat selection.

    When Air Canada launched this pricing structure five years ago, they were rebuilding their brand after entering bankruptcy and having some serious service issues that opened the door for their competitor WestJet to gain share.

    And, while Air Canada passengers certainly recognized that previously free items were now charged essentially the unbundled structure was transparent and gave travelers choices. Air Canada met the challenge with what I believe is a best practice website in terms of conveying information to help travelers choose.

    If, in fact, American Airlines is planning to un-bundle fares, I expect it won?t be long before we see this across US carriers (assuming Air Canada?s GDS issues with their pricing structure won?t be duplicated).

    Unbundling in the US would happen in more challenging marketing environment; driven by cynicism and frustration after months of fare and fee increases, it will be a tougher ? though imperative ? marketing message to communicate this is about traveler choice.

  • Online travel gets greener

     

    There are undoubtedly varying shades of green. We discussed this in a recent report called ?Green Online Travelers
    Assessing the Brand Impact of Travelers' Environmental Concerns? in which we determined that, while 42 percent of online travelers agree with the statement that they are concerned about the environment, those ?dark green travelers? who have actively consider sustainability in their travel decisions is more of a niche at 7%.

    Two new websites have launched aimed squarely at that 7 percent.

    Vroom Vroom Vroom

    offers car rentals offers car rental through major companies and will purchase carbon offset programs for each rental. (Ok, I admit it: I was tempted to telephone directly just to hear someone answer the phone making cartoon car noises.) Green without costing more will certainly appeal.

    We also saw the launch of Whole Travel

    this week, which lets travelers undertake open-ended destination and accommodation searches of sustainable hotels. Hotels have a ?whole ranking? based on their (1) Environmental practices, (2) Economic management, (3) Social and cultural support, and (4) Customer interaction.

    Both sites will have to establish credibility. Vroom Vroom Vroom will need to establish credible carbon offset information (see our upcoming report on ?Identifying Best Practices Promoting Carbon Offset Programs?. Whole Travel?s rankings are self-reported with plans to use local organizations for verification.

    At the same time, both sites offer potential benefits that can extend beyond their green offerings. Vroom Vroom Vroom?s lowest rates. Whole Travel has an inventory of unique properties that will appeal to people looking for a different accommodation experience.

  • Airlines Getting Stricter On Business Travel

     

    Reuters

    reported yesterday that airlines are going to be cutting corporate discounts or pulling contracts if businesses fail to meet their air travel commitments.

    Preferred rates are negotiated with the expectation of a certain level of sales delivered. Aggressively pulling back on the discounts or contracts is new, but reflects the imperatives of today?s economic environment.

    For businesses, this will create a challenge. Cutting back travel will save money on travel expenses yet compromise preferred contracts. Robbing Peter to pay Paul, so to speak. Corporate travel will increasingly be viewed with more scrutiny, heightening the importance of reporting tools.

    At Jupiter, we are spending a lot of time talking about the impact of the economy on travel. This impact will be discussed in our upcoming US Travel Forecast. We?re also fielding the Frequent Business Traveler Survey in the next couple of weeks with the report scheduled for November. I suspect we?ll see an increase in compliance policies, both for booking with the selected provider and preferred airline.

  • Hotels.com Launches Photo Filters for Accommodation Recommendations

     

    Hotels.com has launched a new feature

    called Visualiser that will generate hotel suggestions based on a range of images travelers have selected on topics such as the type of trip they want, how they want to feel, what a fun evening is, etc.

    The system was quick, easy to use, and intuitive. My first attempt had some unsual recommendations: I searched for a beach holiday and was surprised to have San Francisco listed as an option. The neighborhood of North Beach was recommended (perhaps this is the logic that put San Francisco on a beach list). The hotel I was recommended was surprisingly not in located in San Francisco but instead in Redwood City.

    Subsequent searches garnered much more relevant searches. It is an inexplicable programming truth that an analyst or journalist will always unearth the last glitch.

    Overall, I like the idea of using photographs to filter. People have some emotional aspiration with their leisure travel, and it is an interesting way to use photographs to identify those aspirations.

  • United Airlines retreats on eliminating transatlantic meals

     

    Earlier this summer, United Airlines announced plans to stop providing meals to coach passengers on its transatlantic flights. Today

    , the airline emailed its customers to advise that they had changed their mind based on the feedback they?d received.

    United Airlines is positioning this as responding to what travelers value. You may not be a fan a airline food. But if your flying from San Francisco to Frankfurt, a box of microwaved chicken looks a lot better than the Starbucks egg salad sandwich that has been in your carry-on for 10 hours.

    I don?t blame United for trying to eliminate transatlantic meals. Cost cutting is essential right now. I don't know if they had any focus groups prior to the initial announcement. But it is somehow reassuring to know that passengers out cried and United listened.

  • Starwood Preferred Guest Takes To the Skies

     

    Starwood?s loyalty program, Starwood Preferred Guest, has allowed members to transfer SPG to airline loyalty programs, which has been useful if not occasionally cumbersome benefit. However, now the program has gotten even better ? SPG points can be used to book flights directly on www.spg.com/flights

    .

    It gets better: there are no black out dates. On my first try comparing SPG Flights to an airline site, I found SPG offered several loyalty point options while the identical route on the airline's Web site indicated there were no loyalty point flights available.

    And, it gets better still: While airline redemption programs impose fees on airline mile redemption flights, SPG Flights redemption includes taxes and booking fees in the price of the flight.

    This is great news for travelers, the savviest of whom should be signing up for Starwood American Express cards from their desks in the Sheraton. It is also interesting for the travel industry ? the most competitive loyalty program to book flights is now run by a hotel.

Diane Clarkson Tue, 18 Nov 2008 13:12:36 -05:00

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